Raytheon Company awarded $127M for Small Diameter Bomb II integration and testing by the Air Force

Contract Overview

Contract Amount: $126,871,061 ($126.9M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2021-04-04

End Date: 2027-12-12

Contract Duration: 2,443 days

Daily Burn Rate: $51.9K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: SMALL DIAMETER BOMB II LOT INTEGRATION & TEST

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $126.9 million to RAYTHEON COMPANY for work described as: SMALL DIAMETER BOMB II LOT INTEGRATION & TEST Key points: 1. Contract awarded on a cost-plus-fixed-fee basis, which can lead to cost overruns if not managed carefully. 2. The contract was not competed, raising questions about potential price discovery and value for money. 3. Significant duration of over 6 years suggests a long-term need for these services. 4. The contract falls under ammunition manufacturing, a critical defense sector. 5. The award is a delivery order against a larger contract, indicating a phased approach to procurement. 6. The contractor, Raytheon Company, is a major defense industrial base participant.

Value Assessment

Rating: questionable

The contract's cost-plus-fixed-fee structure necessitates close oversight to ensure costs remain reasonable. Without a competitive bidding process, it is difficult to benchmark the pricing against market rates or alternative providers. The total value of $127 million over more than six years requires careful monitoring of expenditures to ensure it aligns with the delivered value and program objectives. Further analysis would be needed to compare specific cost elements to similar integration and testing contracts.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. This approach is typically used when a specific vendor possesses unique capabilities, intellectual property, or is the only source capable of meeting the requirement. The lack of competition limits the government's ability to leverage market forces to achieve the best possible price and terms.

Taxpayer Impact: Sole-source awards can potentially lead to higher costs for taxpayers as there is no competitive pressure to drive down prices. It also reduces transparency in the pricing negotiation process.

Public Impact

The U.S. Department of the Air Force is the primary beneficiary, receiving critical integration and testing services for the Small Diameter Bomb II. This contract supports the development and sustainment of advanced munitions capabilities for national defense. The contract is being performed in Arizona, potentially impacting the local workforce and economy in that state. The services delivered are crucial for ensuring the operational readiness and effectiveness of air-based weapon systems.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may result in suboptimal pricing.
Cost-plus-fixed-fee contracts require robust oversight to prevent cost overruns.
Long contract duration increases exposure to potential scope creep or changing requirements.
Dependence on a single contractor for critical integration and testing.

Positive Signals

Award to a known and experienced defense contractor (Raytheon Company).
Contract supports a critical defense capability (Small Diameter Bomb II).
Clear end date provides a defined period for services.
Delivery order structure allows for phased funding and execution.

Sector Analysis

The defense sector, particularly munitions manufacturing, is characterized by high barriers to entry, significant R&D investment, and long procurement cycles. Contracts like this are essential for maintaining technological superiority and operational readiness. The market for advanced munitions is dominated by a few large, established defense contractors. Spending in this category is driven by evolving geopolitical threats and the need for precision-guided munitions.

Small Business Impact

This contract does not appear to have a small business set-aside. There is no indication of specific subcontracting requirements for small businesses within the provided data. This means opportunities for small businesses to participate in this specific contract may be limited unless they are direct suppliers or partners to the prime contractor.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Air Force's contracting and program management offices. Given the sole-source nature and cost-plus-fixed-fee structure, rigorous financial and performance monitoring is crucial. Transparency may be limited due to the non-competitive award, but contract performance reviews and audits by relevant government agencies would be standard oversight mechanisms.

Related Government Programs

Small Diameter Bomb (SDB) Program
Air Force Munitions Procurement
Defense Contractor Integration Services
Cost-Plus-Fixed-Fee Contracts
Sole-Source Defense Acquisitions

Risk Flags

Sole-source award
Cost-plus-fixed-fee contract type
Long contract duration
Lack of publicly available performance data

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $126.9 million to RAYTHEON COMPANY. SMALL DIAMETER BOMB II LOT INTEGRATION & TEST

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 $126.9 million.

What is the period of performance?

Start: 2021-04-04. End: 2027-12-12.

What is Raytheon Company's track record with similar defense integration and testing contracts?

Raytheon Company, now part of RTX, has a long and extensive history of providing complex integration, testing, and manufacturing services for a wide array of defense systems, including munitions, aircraft components, and missile systems. They are a prime contractor on numerous large-scale defense programs for the U.S. military and allied nations. Their track record includes successful delivery of advanced technologies, but also instances of contract modifications, cost adjustments, and performance reviews common in the defense industry. Specific performance metrics for integration and testing contracts would typically be found in internal government performance reports (e.g., CPARS) which are not publicly available in detail for this specific award.

How does the pricing of this contract compare to similar integration and testing services in the defense sector?

Directly comparing the pricing of this $127 million contract for Small Diameter Bomb II integration and testing is challenging without access to detailed cost breakdowns and market intelligence. As a sole-source, cost-plus-fixed-fee contract, its pricing is not subject to competitive benchmarking. However, the cost-plus-fixed-fee structure implies that costs are reimbursed plus a predetermined profit. The overall value and duration suggest a significant scope of work. To assess value, one would need to compare the labor rates, overhead, material costs, and profit margins against industry standards for similar complex defense systems integration and testing, which often involve specialized expertise and proprietary technologies.

What are the primary risks associated with this sole-source, cost-plus-fixed-fee contract?

The primary risks associated with this contract are twofold. Firstly, the sole-source nature means the government did not benefit from competitive bidding, potentially leading to a higher price than might have been achieved through competition. This limits price discovery and negotiation leverage. Secondly, the cost-plus-fixed-fee (CPFF) structure carries inherent risks of cost escalation. While the fee is fixed, the government reimburses allowable costs. If costs exceed projections due to inefficiencies, scope creep, or unforeseen technical challenges, the total expenditure can increase significantly. Robust government oversight is critical to manage these risks by scrutinizing costs, ensuring efficient performance, and controlling scope.

How effective is the Small Diameter Bomb II program, and does this contract contribute to its overall success?

The Small Diameter Bomb II (SDB II), also known as the GBU-53/B StormBreaker, is designed as a multi-mode guided, network-enabled, small-yield precision weapon capable of striking moving targets in adverse weather. Its effectiveness is crucial for air-to-ground combat, particularly against dispersed and mobile threats. This contract for integration and testing directly supports the development, refinement, and operational readiness of the SDB II system. Successful integration and thorough testing are paramount to ensuring the weapon performs as intended, meets its performance specifications, and is safe and reliable for deployment by the Air Force, thereby contributing directly to the program's overall success and warfighting capability.

What are the historical spending patterns for Small Diameter Bomb II integration and testing, and how does this award fit?

Historical spending data for the Small Diameter Bomb II program, including integration and testing phases, would typically show significant investment over several years, reflecting the complexity of developing and fielding such advanced munitions. This $127 million award represents a substantial, but likely phased, component of the overall program lifecycle costs. Previous awards would have covered research, development, initial testing, and potentially earlier integration efforts. This specific contract, spanning from April 2021 to December 2027, appears to cover a significant period of sustainment, further integration, and ongoing testing, possibly related to upgrades, new platforms, or ensuring continued operational readiness. Understanding the total program cost requires examining all related contracts over its lifespan.

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: $129,091,592

Exercised Options: $129,091,592

Current Obligation: $126,871,061

Subaward Activity

Number of Subawards: 12

Total Subaward Amount: $3,256,671

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA867217D0004

IDV Type: IDC

Timeline