DoD awards Raytheon $274M for Small Diameter Bomb Increment II, facing limited competition
Contract Overview
Contract Amount: $274,144,563 ($274.1M)
Contractor: Raytheon Company
Awarding Agency: Department of Defense
Start Date: 2020-04-28
End Date: 2024-12-31
Contract Duration: 1,708 days
Daily Burn Rate: $160.5K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: FIXED PRICE INCENTIVE
Sector: Defense
Official Description: SMALL DIAMETER BOMB INCREMENT II
Place of Performance
Location: TUCSON, PIMA County, ARIZONA, 85756
State: Arizona Government Spending
Plain-Language Summary
Department of Defense obligated $274.1 million to RAYTHEON COMPANY for work described as: SMALL DIAMETER BOMB INCREMENT II Key points: 1. Significant contract value of $274 million for advanced munitions. 2. Raytheon Company is the sole awardee, indicating limited competition. 3. Potential risk associated with single-source procurement and long contract duration. 4. Spending falls within the Ammunition (except Small Arms) Manufacturing sector.
Value Assessment
Rating: good
The contract's fixed-price incentive structure aims to control costs while incentivizing performance. Benchmarking against similar advanced munition contracts would provide further insight into its value.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was not competed, suggesting a sole-source award. This limits price discovery and potentially increases costs compared to a competitive process.
Taxpayer Impact: Taxpayer funds are being allocated without the benefit of competitive bidding, which could lead to higher overall expenditure for this munition system.
Public Impact
Enhances Air Force's precision strike capabilities with advanced munitions. Supports ongoing military operations and strategic defense initiatives. Long-term contract duration suggests sustained demand for this weapon system.
Waste & Efficiency Indicators
Waste Risk Score: 75 / 10
Warning Flags
- Sole-source award limits competition and price discovery.
- Long contract duration (over 4 years) may increase cost escalation risk.
- Lack of small business participation noted.
Positive Signals
- Award to a major defense contractor ensures established production capabilities.
- Fixed-price incentive contract structure can align contractor and government interests.
- Supports critical defense modernization efforts.
Sector Analysis
This contract falls under the Ammunition (except Small Arms) Manufacturing sector, a critical component of defense spending. Benchmarks for similar advanced munition development and production contracts would be relevant for comparison.
Small Business Impact
The data indicates no specific small business participation in this contract. Given the nature of advanced munitions manufacturing, opportunities for small businesses may be limited to subcontracting roles.
Oversight & Accountability
The sole-source nature of this award warrants close oversight to ensure fair pricing and effective program execution. The Department of the Air Force should monitor performance and costs diligently.
Related Government Programs
- Ammunition (except Small Arms) Manufacturing
- Department of Defense Contracting
- Department of the Air Force Programs
Risk Flags
- Sole-source award
- Lack of competition
- Long contract duration
- No stated small business participation
Tags
ammunition-except-small-arms-manufacturi, department-of-defense, az, definitive-contract, 100m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $274.1 million to RAYTHEON COMPANY. SMALL DIAMETER BOMB INCREMENT II
Who is the contractor on this award?
The obligated recipient is RAYTHEON COMPANY.
Which agency awarded this contract?
Awarding agency: Department of Defense (Department of the Air Force).
What is the total obligated amount?
The obligated amount is $274.1 million.
What is the period of performance?
Start: 2020-04-28. End: 2024-12-31.
What is the justification for the sole-source award of the Small Diameter Bomb Increment II contract?
The justification for a sole-source award typically stems from unique capabilities, proprietary technology, or urgent needs where only one contractor can fulfill the requirement. Without specific documentation, it's presumed that Raytheon possesses exclusive rights or critical expertise for this advanced munition, necessitating direct procurement to meet defense objectives efficiently.
How does the fixed-price incentive (FPI) structure mitigate risks associated with the long contract duration?
The FPI structure aims to control costs by setting target costs and prices, with shared savings for performance below target and shared cost overruns above target. For this long-duration contract, it incentivizes Raytheon to manage production efficiently and control expenses to achieve a mutually beneficial outcome, thereby mitigating some of the inherent risks of extended procurement timelines.
What is the projected taxpayer impact of awarding this contract without competition?
Awarding this contract without competition likely results in a higher taxpayer cost compared to a fully competed scenario. The absence of competitive pressure means Raytheon may not be incentivized to offer the lowest possible price. This could lead to a less efficient use of taxpayer funds, necessitating robust oversight to ensure the price remains reasonable and justifiable.
Industry Classification
NAICS: Manufacturing › Other Fabricated Metal Product Manufacturing › Ammunition (except Small Arms) Manufacturing
Product/Service Code: AMMUNITION AND EXPLOSIVES
Competition & Pricing
Extent Competed: NOT COMPETED
Solicitation Procedures: ONLY ONE SOURCE
Offers Received: 1
Pricing Type: FIXED PRICE INCENTIVE (L)
Evaluated Preference: NONE
Contractor Details
Parent Company: Rockwell Collins Australia PTY Limited
Address: 1151 E HERMANS RD, TUCSON, AZ, 85756
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $276,841,369
Exercised Options: $274,144,563
Current Obligation: $274,144,563
Subaward Activity
Number of Subawards: 349
Total Subaward Amount: $347,943,433
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: NO
Timeline
Start Date: 2020-04-28
Current End Date: 2024-12-31
Potential End Date: 2026-04-23 00:00:00
Last Modified: 2025-04-23
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