Raytheon Company awarded $36.3M for missile and space vehicle manufacturing, a sole-source contract

Contract Overview

Contract Amount: $36,333,775 ($36.3M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2008-03-03

End Date: 2015-10-20

Contract Duration: 2,787 days

Daily Burn Rate: $13.0K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: FOT&E, CCRP, ENHANCED DOT&E, AIRCRAFT INTEGRATION SUPPORT

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $36.3 million to RAYTHEON COMPANY for work described as: FOT&E, CCRP, ENHANCED DOT&E, AIRCRAFT INTEGRATION SUPPORT Key points: 1. Contract awarded for missile and space vehicle manufacturing, indicating a focus on advanced defense capabilities. 2. The contract's duration of over 7 years suggests a long-term need for these specialized services. 3. Sole-source award implies limited market alternatives or unique contractor capabilities. 4. The cost-plus-fixed-fee structure may incentivize cost management by the contractor. 5. Geographic location in Arizona suggests a concentration of defense manufacturing in the region. 6. The contract falls under Guided Missile and Space Vehicle Manufacturing, a critical defense sub-sector.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without specific performance metrics or comparable sole-source awards. The cost-plus-fixed-fee (CPFF) pricing structure can sometimes lead to higher costs compared to fixed-price contracts if not managed diligently. However, for complex, R&D-intensive projects like missile and space vehicle manufacturing, CPFF can be appropriate to cover unforeseen development costs. The total award amount of $36.3 million over nearly 8 years averages to approximately $4.5 million per year, which may be reasonable for specialized defense manufacturing.

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 typically occurs when a specific contractor possesses unique capabilities, proprietary technology, or is the only source capable of meeting the government's requirements. The lack of competition means there was no direct price comparison through bidding, potentially limiting the government's ability to secure the lowest possible price.

Taxpayer Impact: Sole-source awards can result in higher costs for taxpayers as the government does not benefit from competitive bidding to drive down prices. It also raises questions about whether alternative solutions or contractors were adequately explored.

Public Impact

The Department of Defense benefits from the acquisition of advanced missile and space vehicle capabilities. Services delivered include the manufacturing of guided missiles and space vehicles, crucial for national security. The contract's impact is primarily within the defense industrial base, supporting specialized manufacturing. Workforce implications include employment for skilled engineers, technicians, and manufacturing personnel in Arizona.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to higher costs for taxpayers.
Cost-plus-fixed-fee contracts can incentivize cost overruns if not closely monitored.
Sole-source awards require strong justification to ensure fair value and prevent potential contractor over-reliance.

Positive Signals

Award to a known entity (Raytheon Company) suggests a level of established capability and performance.
The long contract duration indicates a sustained need and potential for stable program execution.
Focus on missile and space vehicle manufacturing aligns with critical national defense priorities.

Sector Analysis

The Guided Missile and Space Vehicle Manufacturing sector is a highly specialized and critical segment of the aerospace and defense industry. It involves complex engineering, advanced materials, and stringent quality control. Companies in this sector often have long-standing relationships with government agencies due to the high barriers to entry and the need for specialized expertise. Spending in this area is driven by national security requirements and technological advancements. Comparable spending benchmarks are difficult to establish due to the unique nature of each missile and space vehicle program.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. There is also no specific mention of subcontracting plans for small businesses. This suggests that the primary contractor, Raytheon Company, is expected to perform the majority of the work, and opportunities for small businesses may be limited unless they are direct suppliers or subcontractors to Raytheon. The impact on the small business ecosystem is likely minimal for this specific award.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor performance and compliance. The cost-plus-fixed-fee structure necessitates close financial oversight to monitor expenditures and ensure the fixed fee remains appropriate. Transparency is generally maintained through contract reporting mechanisms, though specific details of performance and cost breakdowns may be considered sensitive for national security reasons. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Missile Defense Systems
Space Launch Vehicles
Advanced Weapons Systems
Strategic Defense Initiatives
Aerospace Manufacturing Contracts

Risk Flags

Sole-source award lacks competitive pricing.
Cost-plus-fixed-fee structure requires diligent cost oversight.
Long contract duration increases exposure to changing requirements or economic conditions.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $36.3 million to RAYTHEON COMPANY. FOT&E, CCRP, ENHANCED DOT&E, AIRCRAFT INTEGRATION SUPPORT

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 $36.3 million.

What is the period of performance?

Start: 2008-03-03. End: 2015-10-20.

What is Raytheon Company's track record with similar sole-source defense manufacturing contracts?

Raytheon Company, now part of RTX, has a long and extensive history of performing complex defense manufacturing contracts, including those for missiles and space systems. They are a major defense contractor with significant experience in sole-source and competed awards. Their track record often involves large-scale, technologically advanced programs. While specific details on all sole-source awards are not publicly available, their general performance on major defense programs is well-documented through government reports and industry analyses. Historically, Raytheon has demonstrated capability in delivering sophisticated defense hardware, though like any large contractor, they have also faced scrutiny regarding cost and performance on specific projects. Evaluating their track record for this specific contract would involve reviewing past performance evaluations and any associated corrective actions related to similar sole-source missile and space vehicle manufacturing efforts.

How does the average annual cost of this contract compare to similar sole-source defense manufacturing awards?

The average annual cost for this contract is approximately $4.5 million ($36.3 million / 2787 days * 365 days/year). Benchmarking this figure against similar sole-source defense manufacturing contracts is challenging due to the highly specialized nature of missile and space vehicle production and the variability in contract scope, duration, and technological complexity. Sole-source awards, by definition, lack direct competitive pricing data. However, for context, major defense programs involving advanced manufacturing can range from tens of millions to billions of dollars annually. A $4.5 million annual spend for specialized components or systems could be considered moderate to low depending on the specific technology and quantity. Without access to a database of comparable sole-source CPFF contracts for similar defense articles, a precise comparison is difficult, but it does not immediately appear to be an outlier for complex defense manufacturing.

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

The primary risk indicator for this contract is its sole-source nature. This eliminates the competitive pressure that typically drives down prices and encourages innovation, potentially leading to higher costs for the government and taxpayers. The cost-plus-fixed-fee (CPFF) structure presents another risk: while it provides the contractor with a guaranteed profit margin (the fixed fee), it can incentivize cost overruns. If the contractor's costs exceed initial estimates, the government bears the brunt of these increases, although the contractor's fee is fixed. Effective oversight and robust cost controls by the contracting agency are crucial to mitigate these risks. Additionally, reliance on a single source can create program vulnerability if the contractor faces financial, operational, or geopolitical challenges.

What is the assessed program effectiveness or expected outcome of this contract?

The expected outcome of this contract is the successful manufacturing of guided missiles and space vehicles, which are critical components of national defense capabilities. Program effectiveness is measured by the contractor's ability to deliver these products on time, within budget (considering the CPFF structure), and to the specified technical and quality standards. Given the sole-source nature and the long duration, the program likely supports a specific, ongoing defense requirement where Raytheon possesses unique or essential capabilities. Effectiveness would be gauged by the reliability, performance, and readiness of the delivered systems in their intended operational environments. Continuous monitoring by the Defense Contract Management Agency (DCMA) and program managers is essential to ensure these outcomes are met.

How does historical spending on Guided Missile and Space Vehicle Manufacturing compare to this contract's value?

Historical spending on Guided Missile and Space Vehicle Manufacturing by the Department of Defense is substantial, often running into billions of dollars annually, reflecting the high priority and cost associated with these advanced weapon systems. This specific contract, valued at $36.3 million over approximately 7.6 years, represents a relatively small fraction of the overall DoD budget allocated to this sector. For instance, annual spending on missile programs alone can easily exceed tens of billions. Therefore, while $36.3 million is a significant sum for a single contract, it is a modest investment within the broader context of DoD's extensive procurement of guided missiles and space vehicles. This suggests the contract likely supports a specific component, subsystem, or a limited production run rather than a major new platform development.

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: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Rockwell Collins Australia PTY Limited

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: $43,814,482

Exercised Options: $43,087,900

Current Obligation: $36,333,775

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline