DoD awards Raytheon $185M for Guided Missile Manufacturing, a sole-source contract spanning 8 years

Contract Overview

Contract Amount: $184,838,927 ($184.8M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2006-02-17

End Date: 2014-12-31

Contract Duration: 3,239 days

Daily Burn Rate: $57.1K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $184.8 million to RAYTHEON COMPANY for work described as: Key points: 1. Significant contract value of $185M awarded to a major defense contractor. 2. Sole-source award raises questions about competition and potential price inflation. 3. Long contract duration of 8 years suggests a sustained need for these missiles. 4. The sector is critical for national defense, but lacks competitive bidding in this instance.

Value Assessment

Rating: questionable

The contract value of $185M over 8 years is substantial. Without competitive bidding, it's difficult to assess if this price is optimal compared to potential market rates for similar guided missile systems.

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 may lead to higher costs for the government compared to a competitive process.

Taxpayer Impact: The lack of competition in this sole-source award potentially results in higher taxpayer costs due to the absence of market-driven price reductions.

Public Impact

Taxpayers may be overpaying for guided missiles due to the lack of competitive bidding. National security relies on the continuous supply of these missiles, but the cost-effectiveness is uncertain. The long-term nature of the contract could lock in potentially inflated prices for years.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award
Lack of competition
Long contract duration

Positive Signals

Critical defense capability
Established contractor

Sector Analysis

This contract falls within the Guided Missile and Space Vehicle Manufacturing sector, a critical component of the defense industry. Spending in this area is often substantial, but competitive pricing is crucial for efficient resource allocation.

Small Business Impact

This contract was awarded to Raytheon Company, a large prime contractor. There is no indication of subcontracting opportunities for small businesses within the provided data.

Oversight & Accountability

The sole-source nature of this award warrants scrutiny from oversight bodies to ensure fair pricing and justification for the lack of competition. Transparency in the procurement process is essential.

Related Government Programs

Guided Missile and Space Vehicle Manufacturing
Department of Defense Contracting
Defense Contract Management Agency Programs

Risk Flags

Sole-source award lacks competitive pricing.
Long contract duration may inflate costs over time.
Limited transparency on price justification.
Potential for vendor lock-in.
No indication of small business participation.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $184.8 million to RAYTHEON COMPANY. See the official description on USAspending.

Who is the contractor on this award?

The obligated recipient is RAYTHEON COMPANY.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $184.8 million.

What is the period of performance?

Start: 2006-02-17. End: 2014-12-31.

What is the justification for awarding this contract on a sole-source basis, and what steps were taken to ensure the price was fair and reasonable?

The justification for a sole-source award typically involves unique capabilities, urgent needs, or the unavailability of other sources. Without further details, it's impossible to confirm the specific rationale. However, the government should have conducted a price analysis, comparing proposed costs to historical data, commercial prices, or independent government cost estimates to ensure fairness.

What are the potential risks associated with a sole-source contract of this magnitude and duration for guided missile manufacturing?

The primary risk is paying a premium due to the absence of competition, potentially leading to inefficient use of taxpayer funds. Other risks include vendor lock-in, reduced innovation incentives for the contractor, and potential difficulties in adapting to future technological changes if the sole source doesn't proactively invest.

How does the lack of competition in this contract impact the overall effectiveness of defense spending in the guided missile sector?

A lack of competition can reduce the overall effectiveness of defense spending by inflating costs and potentially leading to less advanced or optimized solutions. Competitive processes drive innovation and cost efficiency, ensuring that the military receives the best possible equipment at the most reasonable price. Sole-source awards, while sometimes necessary, can undermine these benefits.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Guided Missile and Space Vehicle Manufacturing

Product/Service Code: GUIDED MISSLES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Rockwell Collins Australia PTY Limited

Address: 1151 E HERMANS RD, TUCSON, AZ, 85706

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline