DoD awards $931M Raytheon contract for Small Diameter Bomb II, facing limited competition

Contract Overview

Contract Amount: $9,316,572 ($9.3M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2024-07-23

End Date: 2027-08-09

Contract Duration: 1,112 days

Daily Burn Rate: $8.4K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: SMALL DIAMETER BOMB II

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $9.3 million to RAYTHEON COMPANY for work described as: SMALL DIAMETER BOMB II Key points: 1. Significant contract value of $931.6 million for advanced munitions. 2. Sole-source award to Raytheon Company indicates limited competition. 3. Potential risk associated with single-source procurement and pricing. 4. Spending falls within the Defense sector, specifically ammunition manufacturing.

Value Assessment

Rating: questionable

The contract type is Cost Plus Fixed Fee, which can lead to higher costs if not managed carefully. Without competitive bids, it's difficult to assess if the $931.6 million price reflects fair market value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award to Raytheon Company. This limits price discovery and potentially increases costs for taxpayers.

Taxpayer Impact: The lack of competition for this significant award may result in higher taxpayer expenditure compared to a competitively bid contract.

Public Impact

Enhances Air Force's precision strike capabilities. Supports ongoing defense modernization efforts. Potential for long-term reliance on a single supplier for critical munitions.

Waste & Efficiency Indicators

Waste Risk Score: 83 / 10

Warning Flags

Sole-source award
Cost-plus contract type
Limited transparency on pricing justification

Positive Signals

Provides critical defense capability
Long-term contract duration

Sector Analysis

This contract falls within the Defense sector, specifically the manufacturing of ammunition. Spending in this area is crucial for national security but requires careful oversight to ensure cost-effectiveness.

Small Business Impact

The data indicates that small business participation is not a factor in this contract, as it is a sole-source award to a large prime contractor.

Oversight & Accountability

The sole-source nature of this award warrants close oversight from the Department of Defense to ensure cost controls and performance meet expectations throughout the contract duration.

Related Government Programs

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

Risk Flags

Lack of competition
Potential for cost overruns due to CPFF structure
Limited visibility into pricing benchmarks
Dependency on a single supplier

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $9.3 million to RAYTHEON COMPANY. SMALL DIAMETER BOMB 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 $9.3 million.

What is the period of performance?

Start: 2024-07-23. End: 2027-08-09.

What is the justification for the sole-source award of the Small Diameter Bomb II contract to Raytheon?

The justification for a sole-source award typically involves factors such as unique capabilities, proprietary technology, or urgent need where only one source can fulfill the requirement. A detailed review of the contract's justification documentation would be necessary to understand the specific reasons for not competing this significant procurement.

How does the Cost Plus Fixed Fee (CPFF) contract structure impact the overall cost and risk for the government?

CPFF contracts allow the contractor to recover all allowable costs plus a fixed fee representing profit. While it can facilitate the development of complex or uncertain projects, it shifts cost risk to the government. Without strong oversight and defined ceilings, costs can escalate beyond initial projections, potentially leading to overspending.

What are the long-term implications of relying on a single provider for the Small Diameter Bomb II system?

Long-term reliance on a single provider can lead to a lack of competitive pressure, potentially resulting in higher prices for future procurements and sustainment. It also creates a dependency that could be a vulnerability if the supplier faces production issues or decides to exit the market. Diversification or strategic partnerships might be considered for future needs.

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: RTX Corp

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: $12,277,751

Exercised Options: $12,277,751

Current Obligation: $9,316,572

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