DoD's $233M Raytheon Contract for Missile Sustainment Lacks Competition, Raises Value Concerns

Contract Overview

Contract Amount: $23,305,919 ($23.3M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2008-02-01

End Date: 2011-12-15

Contract Duration: 1,413 days

Daily Burn Rate: $16.5K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: CY 2008 SUSTAINMENT/CLS

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $23.3 million to RAYTHEON COMPANY for work described as: CY 2008 SUSTAINMENT/CLS Key points: 1. Significant contract value of $233 million awarded to Raytheon. 2. Lack of competition raises questions about price discovery and potential overpayment. 3. Long contract duration (2008-2011) may not reflect current market conditions. 4. Focus on guided missile manufacturing suggests a specialized, potentially high-cost sector.

Value Assessment

Rating: questionable

The contract value of $233 million for sustainment and CLS services is substantial. Without competitive bidding, it's difficult to assess if this price represents fair market value compared to similar contracts for missile systems.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award. This significantly limits price discovery and may lead to higher costs for taxpayers as there was no market pressure to offer the best price.

Taxpayer Impact: The absence of competition likely resulted in a higher price than a competed contract, meaning taxpayers may have overpaid for these services.

Public Impact

Taxpayers may have paid a premium due to the lack of competitive bidding. The long duration of the contract could mean outdated technology or services are being procured. Dependence on a single contractor for critical missile sustainment could pose a risk.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition
Long contract duration
Potential for overpayment

Positive Signals

Awarded to a known defense contractor
Specific sector focus

Sector Analysis

This contract falls within the defense sector, specifically guided missile and space vehicle manufacturing. Spending in this area is often characterized by high R&D costs and long product lifecycles, but competition is crucial for cost control.

Small Business Impact

There is no indication that small businesses were involved in this contract, as it was awarded directly to Raytheon Company. This represents a missed opportunity for small business participation.

Oversight & Accountability

The lack of competition suggests potential weaknesses in the procurement oversight process. Further review would be needed to understand why this contract was not competed and if proper justification was documented.

Related Government Programs

Guided Missile and Space Vehicle Manufacturing
Department of Defense Contracting
Department of the Air Force Programs

Risk Flags

Lack of competition
Potential for inflated pricing
Long contract duration may not reflect current needs
Limited transparency on justification for sole-source award

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $23.3 million to RAYTHEON COMPANY. CY 2008 SUSTAINMENT/CLS

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 $23.3 million.

What is the period of performance?

Start: 2008-02-01. End: 2011-12-15.

What was the justification for not competing this significant missile sustainment contract?

The provided data indicates the contract was 'NOT COMPETED'. Without further documentation, the specific justification remains unknown. Typically, sole-source awards require extensive justification, such as a unique capability or urgent need, to ensure fair and reasonable pricing is still achieved through other means.

How does the $233 million cost compare to industry benchmarks for similar missile sustainment services?

Benchmarking this $233 million contract is challenging without detailed service descriptions and performance metrics. However, given the lack of competition, it is probable that the cost is higher than what would be achieved in a competitive environment. Industry benchmarks for sustainment often vary widely based on system complexity and service scope.

What is the long-term risk associated with awarding such a large contract without competition?

The primary long-term risk is the establishment of a precedent for non-competitive awards, potentially leading to sustained higher costs for the DoD. It can also stifle innovation from other potential providers and create vendor lock-in, making future transitions more difficult and expensive.

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

Address: 1151 E HERMANS RD, TUCSON, AZ, 90

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Federally Funded Research and Development Corp, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $23,305,919

Exercised Options: $23,305,919

Current Obligation: $23,305,919

Contract Characteristics

Cost or Pricing Data: YES

Timeline