DoD awards Raytheon $80M contract for MALD J missile risk reduction, with limited competition

Contract Overview

Contract Amount: $80,077,545 ($80.1M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2008-03-31

End Date: 2010-08-31

Contract Duration: 883 days

Daily Burn Rate: $90.7K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: MALD J RISK REDUCTION PHASE II

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $80.1 million to RAYTHEON COMPANY for work described as: MALD J RISK REDUCTION PHASE II Key points: 1. Contract awarded on a cost-plus-fixed-fee basis, indicating potential for cost overruns. 2. Limited competition raises concerns about price discovery and potential for inflated costs. 3. Contract duration of 883 days suggests a significant, multi-year effort. 4. The contract falls under Guided Missile and Space Vehicle Manufacturing, a critical defense sector. 5. Awarded by the Department of the Air Force, highlighting its strategic importance. 6. The contractor, Raytheon Company, is a major defense industry player.

Value Assessment

Rating: questionable

The contract's cost-plus-fixed-fee structure, combined with limited competition, raises questions about overall value for money. Without a competitive bidding process, it is difficult to benchmark the pricing against market rates or alternative solutions. The fixed fee component provides some cost control, but the underlying costs are subject to less scrutiny. Further analysis would be needed to determine if the awarded amount represents a fair and reasonable price for the risk reduction services.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one bidder was solicited. This lack of competition limits the government's ability to explore different technical approaches or secure the most cost-effective solution. While sole-source awards can be justified for unique capabilities or urgent needs, they typically result in higher prices compared to fully competed contracts.

Taxpayer Impact: Taxpayers may face higher costs due to the absence of competitive pressure to drive down prices. The government has less leverage to negotiate favorable terms when only one provider is considered.

Public Impact

The primary beneficiaries are the Department of Defense and specifically the Air Force, which will receive enhanced capabilities for missile defense. The contract supports the development and risk reduction for the MALD J missile system, crucial for modern warfare. The geographic impact is primarily within Arizona, where Raytheon Company is located, potentially supporting local jobs and the defense industrial base. This contract contributes to the advancement of defense technology and the readiness of U.S. military forces.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potentially increases costs for taxpayers.
Cost-plus-fixed-fee contract type can lead to cost overruns if not closely managed.
Lack of transparency in the sole-source justification process could obscure potential alternatives.
Long contract duration may indicate complexity or potential for scope creep.

Positive Signals

Award to a reputable contractor (Raytheon Company) with extensive experience in defense systems.
Focus on risk reduction for a critical missile system enhances national security capabilities.
Contract awarded by the Department of the Air Force, indicating alignment with strategic defense priorities.

Sector Analysis

This contract falls within the Guided Missile and Space Vehicle Manufacturing sector, a highly specialized and critical segment of the defense industry. This sector is characterized by high R&D investment, long product development cycles, and significant government procurement. Spending in this area is driven by national security imperatives and technological advancements. Comparable spending benchmarks are difficult to establish due to the unique nature of missile systems, but overall defense spending on strategic weapons systems is substantial.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Given the specialized nature of guided missile development, it is unlikely that significant subcontracting opportunities for small businesses would be mandated within this specific contract. However, Raytheon, as a large prime contractor, may engage small businesses in its broader supply chain for components or services not directly related to the core missile technology.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Air Force's contracting and program management offices. The cost-plus-fixed-fee structure necessitates rigorous financial oversight to ensure costs are reasonable and allocable. Transparency is limited due to the sole-source nature, but contract performance reviews and milestone tracking would be standard accountability measures. The Inspector General of the Department of Defense may also conduct audits or investigations if specific concerns arise regarding fraud, waste, or abuse.

Related Government Programs

Advanced Conventional Ammunition
Missile Defense Systems
Air-to-Ground Munitions
Strategic Weapons Development
Defense Research and Development

Risk Flags

Sole-source award
Cost-plus-fixed-fee contract type
Potential for cost overruns
Limited competition impacts price discovery

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $80.1 million to RAYTHEON COMPANY. MALD J RISK REDUCTION PHASE 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 $80.1 million.

What is the period of performance?

Start: 2008-03-31. End: 2010-08-31.

What is the track record of Raytheon Company in delivering similar missile risk reduction programs?

Raytheon Company has a long and extensive track record in developing and producing advanced missile systems for the U.S. military and international allies. They have been involved in numerous programs related to air-to-air, air-to-ground, and strategic defense missiles. Their experience includes various phases of development, from initial concept and design through risk reduction, testing, and full-rate production. For instance, Raytheon has been a key player in programs like the Tomahawk cruise missile, Patriot air defense system, and various advanced air-launched munitions. Their history suggests a strong capability in managing complex technical challenges and delivering sophisticated defense hardware, which would be directly applicable to the MALD J missile risk reduction effort.

How does the awarded amount of $80 million compare to similar missile risk reduction contracts?

Directly comparing the $80 million award for the MALD J missile risk reduction phase II to similar contracts is challenging due to the proprietary nature of defense contracting and the unique specifications of each program. However, risk reduction phases for complex weapon systems often involve significant investment, ranging from tens to hundreds of millions of dollars, depending on the technology's maturity, the scope of testing required, and the number of technical challenges to be addressed. Given that the MALD J is a sophisticated air-launched decoy missile, an $80 million allocation for a risk reduction phase appears within the expected range for such advanced defense technology development. The sole-source nature, however, prevents a direct cost-per-unit or cost-per-capability comparison with competitively bid programs.

What are the primary risks associated with this MALD J missile risk reduction contract?

The primary risks associated with this contract stem from its sole-source nature and the cost-plus-fixed-fee (CPFF) contract type. The lack of competition means the government may not be achieving the best possible price or exploring the most innovative solutions available in the market. The CPFF structure, while providing flexibility, carries the inherent risk of cost overruns if the contractor's actual costs exceed initial estimates, even though the fee is fixed. Technical risks are also present, as this is a risk reduction phase; unforeseen technical challenges in developing or integrating the MALD J system could lead to schedule delays or increased development costs. Finally, program execution risk exists, related to the contractor's ability to manage the project effectively within the defined scope and timeline.

What is the expected effectiveness of the MALD J missile system based on this risk reduction phase?

This contract specifically focuses on the 'risk reduction' phase for the MALD J (Miniature Air-Launched Decoy Jammer) missile. The objective of this phase is to identify and mitigate potential technical and programmatic risks before proceeding to full-scale development and production. Therefore, the effectiveness of the MALD J system itself cannot be fully assessed until after this phase is successfully completed and subsequent development and testing occur. However, the successful completion of this risk reduction phase is expected to significantly increase the probability that the MALD J system will ultimately meet its performance requirements, which include providing electronic warfare capabilities and decoys to confuse enemy air defenses, thereby enhancing the survivability of strike aircraft.

How has federal spending on guided missile and space vehicle manufacturing evolved, and where does this contract fit?

Federal spending on guided missile and space vehicle manufacturing has historically been a significant component of the Department of Defense budget, driven by the need for advanced offensive and defensive capabilities. This spending fluctuates based on geopolitical threats, technological advancements, and strategic priorities. Over the past decade, there has been a consistent allocation of billions of dollars annually to this sector, encompassing research, development, testing, and procurement of various missile systems, including strategic, tactical, and defensive interceptors. This $80 million contract for the MALD J risk reduction phase represents a specific investment within this broader category, focusing on a particular niche capability – electronic warfare decoys – which is increasingly important in modern, contested airspace environments. It fits within the R&D and early-stage development segment of the sector's spending.

Industry Classification

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

Product/Service Code: RESEARCH AND DEVELOPMENT › C – National Defense R&D Services

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

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

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $82,635,078

Exercised Options: $82,635,078

Current Obligation: $80,077,545

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline