DoD Awards Raytheon $50.4M for Small Diameter Bomb Increment II Ammunition

Contract Overview

Contract Amount: $50,423,688 ($50.4M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2023-03-31

End Date: 2026-01-30

Contract Duration: 1,036 days

Daily Burn Rate: $48.7K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

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 $50.4 million to RAYTHEON COMPANY for work described as: SMALL DIAMETER BOMB INCREMENT II Key points: 1. Significant contract for critical munitions, highlighting defense spending in aviation. 2. Raytheon Company is the sole awardee, indicating a lack of competition for this specific increment. 3. The contract type (Cost Plus Fixed Fee) may present cost control challenges. 4. This award falls within the Ammunition (except Small Arms) Manufacturing sector.

Value Assessment

Rating: fair

The Cost Plus Fixed Fee contract type can lead to higher costs if not managed closely. Benchmarking against similar munitions contracts is difficult without more detailed cost breakdowns.

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 leads to higher costs compared to a competitive process.

Taxpayer Impact: Taxpayer funds are being allocated without competitive bidding, which could result in a less favorable price for the government.

Public Impact

Enhances U.S. Air Force's precision strike capabilities. Supports ongoing defense modernization efforts. Potential for follow-on contracts based on performance and future needs.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competition and price negotiation.
Cost Plus Fixed Fee contract type carries inherent cost escalation risks.
Lack of transparency in pricing due to non-competitive nature.

Positive Signals

Addresses critical need for advanced munitions.
Award to established defense contractor with proven capabilities.
Supports national security objectives.

Sector Analysis

This contract is within the defense sector, specifically for ammunition manufacturing. Spending benchmarks for specialized munitions can vary widely based on technology and quantity.

Small Business Impact

The contract was not competed and there is no indication of small business participation in this specific award. Further analysis would be needed to determine if small businesses are involved as subcontractors.

Oversight & Accountability

The Department of the Air Force awarded this contract. Oversight will be crucial to manage the Cost Plus Fixed Fee structure and ensure effective use of funds.

Related Government Programs

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

Risk Flags

Sole-source award
Cost Plus Fixed Fee contract type
Potential for cost overruns
Limited transparency in pricing
No stated small business participation

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $50.4 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 $50.4 million.

What is the period of performance?

Start: 2023-03-31. End: 2026-01-30.

What is the rationale for the sole-source award of the Small Diameter Bomb Increment II contract?

The sole-source nature of this award suggests that the Department of Defense may have determined that only Raytheon Company possesses the unique capabilities, technology, or existing infrastructure required for the Small Diameter Bomb Increment II. This could be due to proprietary technology, specialized manufacturing processes, or the need for rapid deployment of an existing system without extensive re-qualification.

How does the Cost Plus Fixed Fee contract structure impact the risk of cost overruns for this munitions contract?

A Cost Plus Fixed Fee (CPFF) contract allows the contractor to recover all allowable costs plus a predetermined fixed fee. While the fee is fixed, the total cost can escalate if actual costs exceed projections. This structure shifts some of the cost risk to the government, necessitating robust oversight to monitor expenditures and ensure efficiency.

What is the expected effectiveness and value proposition of the Small Diameter Bomb Increment II for the Air Force?

The Small Diameter Bomb Increment II is designed to provide enhanced precision strike capabilities against a wider range of targets, including moving ones, in various weather conditions. Its value proposition lies in its ability to offer a flexible, long-range, and highly accurate munition, thereby increasing the Air Force's combat effectiveness and reducing collateral damage.

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: $50,423,688

Exercised Options: $50,423,688

Current Obligation: $50,423,688

Subaward Activity

Number of Subawards: 4

Total Subaward Amount: $277,275

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