DoD Awards $378.6M for AMRAAM Production to Raytheon, Lacking Competition
Contract Overview
Contract Amount: $378,632,820 ($378.6M)
Contractor: Raytheon Company
Awarding Agency: Department of Defense
Start Date: 2007-04-13
End Date: 2024-05-30
Contract Duration: 6,257 days
Daily Burn Rate: $60.5K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: FIRM FIXED PRICE
Sector: Defense
Official Description: LOT 21 AMRAAM PRODUCTION
Place of Performance
Location: TUCSON, PIMA County, ARIZONA, 85756
State: Arizona Government Spending
Plain-Language Summary
Department of Defense obligated $378.6 million to RAYTHEON COMPANY for work described as: LOT 21 AMRAAM PRODUCTION Key points: 1. Significant contract value of $378.6 million for missile production. 2. Sole-source award to Raytheon Company raises concerns about price discovery. 3. Long contract duration of 6257 days suggests potential for cost overruns. 4. The Guided Missile and Space Vehicle Manufacturing sector is defense-critical.
Value Assessment
Rating: questionable
The contract value of $378.6 million for AMRAAM production is substantial. Without competitive bidding, it's difficult to assess if this price represents fair market value compared to similar missile systems or previous production runs.
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 lack of competition limits price discovery and may lead to higher costs for taxpayers.
Taxpayer Impact: The absence of competition on this large contract likely results in higher prices than could be achieved through a competitive process, impacting taxpayer funds.
Public Impact
Taxpayers may be overpaying for critical defense equipment due to the lack of competition. The long-term nature of the contract could lock in potentially inefficient production methods. Dependence on a single supplier for AMRAAM production poses a strategic risk.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award
- Long contract duration
- Lack of transparency in pricing
Positive Signals
- Essential defense capability
- Established supplier relationship
Sector Analysis
This contract falls within the Guided Missile and Space Vehicle Manufacturing sector, a critical component of national defense. Spending in this area is typically high due to advanced technology and strategic importance, but competition is crucial for cost efficiency.
Small Business Impact
The contract data indicates that small businesses were not directly involved in this award, as it was a sole-source contract with a large prime contractor. Further analysis would be needed to determine if small businesses are subcontracting.
Oversight & Accountability
The Department of Defense, through the Defense Contract Management Agency, oversees this contract. However, the sole-source nature limits the agency's ability to leverage competition for cost savings, necessitating robust performance monitoring.
Related Government Programs
- Guided Missile and Space Vehicle Manufacturing
- Department of Defense Contracting
- Defense Contract Management Agency Programs
Risk Flags
- Lack of competition
- Potential for cost overruns due to long duration
- Limited transparency in pricing
- Risk of vendor lock-in
- Potential for outdated technology
Tags
guided-missile-and-space-vehicle-manufac, department-of-defense, az, definitive-contract, 100m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $378.6 million to RAYTHEON COMPANY. LOT 21 AMRAAM PRODUCTION
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 $378.6 million.
What is the period of performance?
Start: 2007-04-13. End: 2024-05-30.
What is the historical cost performance of Raytheon's AMRAAM production under previous contracts, and how does it compare to the current award?
Historical cost data for Raytheon's AMRAAM production would be crucial for assessing value. Without access to past performance metrics, including unit costs, overhead, and profit margins from prior contracts, it's challenging to determine if the $378.6 million award represents a fair price. A comparative analysis against industry benchmarks for similar missile systems would also be beneficial.
What are the specific justifications for awarding this contract on a sole-source basis, and have alternative competitive strategies been considered?
The justification for a sole-source award typically involves unique capabilities, proprietary technology, or urgent needs that cannot be met by other sources. Understanding these specific reasons is vital for assessing the necessity of foregoing competition. Exploring whether phased competition or other procurement strategies were considered could reveal opportunities for future cost savings and enhanced accountability.
How does the long contract duration of over 17 years impact the government's ability to adapt to technological advancements or changing threat landscapes?
A contract duration of 6257 days (over 17 years) presents a significant risk of obsolescence and inflexibility. While it provides production stability, it may hinder the government's ability to incorporate newer technologies or respond to evolving threats. Mechanisms for contract modification, technology insertion, or periodic re-evaluation of requirements should be robustly implemented to mitigate this risk.
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
Financial Breakdown
Contract Ceiling: $385,525,862
Exercised Options: $379,303,722
Current Obligation: $378,632,820
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2007-04-13
Current End Date: 2024-05-30
Potential End Date: 2024-05-30 00:00:00
Last Modified: 2025-07-21
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