DoD Awards Raytheon $17.5M for Small Diameter Bomb II Test Equipment, Lacking Competition

Contract Overview

Contract Amount: $17,463,146 ($17.5M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2020-10-20

End Date: 2025-08-29

Contract Duration: 1,774 days

Daily Burn Rate: $9.8K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: SMALL DIAMETER BOMB INCREMENT II LOT 6 TEST EQUIPMENT

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $17.5 million to RAYTHEON COMPANY for work described as: SMALL DIAMETER BOMB INCREMENT II LOT 6 TEST EQUIPMENT Key points: 1. Significant award for critical defense technology. 2. Sole-source award raises concerns about price discovery. 3. Long contract duration (2020-2025) impacts flexibility. 4. Ammunition manufacturing sector is highly specialized.

Value Assessment

Rating: questionable

The contract type is Cost Plus Fixed Fee, which can lead to cost overruns if not managed tightly. Benchmarking is difficult without comparable sole-source awards for similar specialized test equipment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award. This limits price discovery and potentially leads to higher costs for taxpayers as there is no competitive pressure to reduce prices.

Taxpayer Impact: The lack of competition for this significant award may result in taxpayers paying a premium for the test equipment.

Public Impact

Ensures continued testing and development of the Small Diameter Bomb II. Supports advanced munitions capabilities for the Air Force. Potential for cost inefficiencies due to sole-source nature.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award
Cost Plus Fixed Fee contract type
Lack of transparency in pricing

Positive Signals

Supports critical defense program
Long-term contract provides stability

Sector Analysis

This award falls within the defense sector, specifically related to ammunition manufacturing. Spending in this area is driven by national security needs and technological advancements in weaponry.

Small Business Impact

The data indicates that small business participation was not a factor in this award (sb: false). This is common for large, specialized defense contracts awarded to prime contractors.

Oversight & Accountability

Oversight is crucial for Cost Plus Fixed Fee contracts to ensure costs are reasonable and allocable. The Department of Defense's contracting officers are responsible for monitoring performance and expenditures.

Related Government Programs

Ammunition (except Small Arms) Manufacturing
Department of Defense Contracting
Department of the Air Force Programs

Risk Flags

Sole-source award limits competition.
Cost Plus Fixed Fee contract type can lead to cost overruns.
Lack of small business participation.
Long contract duration may not adapt to evolving needs.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $17.5 million to RAYTHEON COMPANY. SMALL DIAMETER BOMB INCREMENT II LOT 6 TEST EQUIPMENT

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 $17.5 million.

What is the period of performance?

Start: 2020-10-20. End: 2025-08-29.

What is the justification for awarding this contract sole-source, and what steps are being taken to ensure fair pricing?

Sole-source awards are typically justified when only one responsible source can provide the required supplies or services. For this contract, the justification likely relates to the highly specialized nature of the test equipment for the Small Diameter Bomb II. The Department of Defense should have a formal justification document outlining these reasons. To ensure fair pricing, the contracting officer would typically conduct a price analysis based on historical data, other government contracts, or commercial price lists, even without direct competition.

What are the potential risks associated with a Cost Plus Fixed Fee contract for specialized defense equipment?

Cost Plus Fixed Fee (CPFF) contracts carry inherent risks, primarily the potential for cost overruns. The contractor is reimbursed for allowable costs plus a fixed fee, creating less incentive to control costs compared to fixed-price contracts. For specialized defense equipment, this can be exacerbated if the scope of work is not precisely defined or if unforeseen technical challenges arise, leading to increased costs for the government. Robust oversight and clear performance metrics are essential to mitigate these risks.

How does this award contribute to the overall effectiveness of the Small Diameter Bomb II program?

This award is critical for the effectiveness of the Small Diameter Bomb II program as it provides the necessary test equipment. Reliable and accurate testing is fundamental to ensuring the weapon system performs as intended in various operational scenarios. Without this specialized equipment, the program's development, validation, and potential upgrades could be significantly hampered, impacting the warfighter's capabilities.

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

Pricing Type: COST PLUS FIXED FEE (U)

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: $20,132,238

Exercised Options: $17,463,146

Current Obligation: $17,463,146

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: FA867219D0001

IDV Type: IDC

Timeline