DoD's $91.3M Enhanced Pagway II Contract with Raytheon Faces Limited Competition

Contract Overview

Contract Amount: $91,364,644 ($91.4M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2012-10-31

End Date: 2025-07-01

Contract Duration: 4,626 days

Daily Burn Rate: $19.8K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Defense

Official Description: ENHANCED PAVEWAY II (SAUDI ARABIA)

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $91.4 million to RAYTHEON COMPANY for work described as: ENHANCED PAVEWAY II (SAUDI ARABIA) Key points: 1. Significant contract value of $91.3M for guided missile manufacturing. 2. Sole-source award to Raytheon Company raises concerns about competition. 3. Long contract duration (2012-2025) may impact price competitiveness. 4. Focus on missile manufacturing places it within the defense sector.

Value Assessment

Rating: questionable

The contract type is Cost Plus Incentive Fee, which can lead to cost overruns if not managed tightly. Without competitive benchmarks, assessing the pricing's fairness is difficult.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract is not available for competition, indicating a sole-source or limited competition award. This significantly restricts price discovery and potentially leads to higher costs for taxpayers.

Taxpayer Impact: Limited competition may result in taxpayers paying more than necessary for these guided missiles.

Public Impact

Taxpayers may be overpaying due to lack of competitive bidding. The long duration of the contract could mean outdated technology or inflated costs. Dependence on a single contractor for critical defense components.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition
Cost-plus contract type
Long contract duration
Sole-source award

Positive Signals

Essential defense procurement

Sector Analysis

This contract falls under the Guided Missile and Space Vehicle Manufacturing sector, a critical component of national defense. Spending in this area is often subject to national security considerations, but competitive pricing remains important.

Small Business Impact

The data indicates that small businesses were not involved in this specific contract, as the award went to Raytheon Company and the 'sb' field is false.

Oversight & Accountability

The 'aw' field indicates a definitive contract, suggesting a formal agreement. However, the lack of competition and cost-plus nature warrant close oversight to ensure fiscal responsibility.

Related Government Programs

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

Risk Flags

Sole-source award
Cost-plus contract type
Long contract duration
Lack of competitive bidding
Potential for cost overruns

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $91.4 million to RAYTHEON COMPANY. ENHANCED PAVEWAY II (SAUDI ARABIA)

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 $91.4 million.

What is the period of performance?

Start: 2012-10-31. End: 2025-07-01.

What is the justification for awarding this contract on a limited/sole-source basis, and what steps are being taken to ensure fair pricing?

The justification for limited or sole-source awards typically stems from unique capabilities, national security requirements, or lack of viable alternatives. To ensure fair pricing, the agency should conduct thorough cost analyses, benchmark against similar systems, and negotiate incentive structures that strongly reward cost savings and performance.

How is the cost-plus incentive fee structure being monitored to prevent cost overruns and ensure value for taxpayer money?

Monitoring a Cost Plus Incentive Fee (CPIF) contract involves rigorous oversight of incurred costs, performance metrics, and achievement of target objectives. The government should establish clear incentive targets tied to cost, schedule, and performance, and regularly audit contractor expenditures to validate costs and ensure the incentive structure effectively drives desired outcomes.

Given the long contract duration, what mechanisms are in place to ensure the technology remains relevant and cost-effective throughout its lifecycle?

To ensure technology relevance and cost-effectiveness over a long duration, contracts should include provisions for periodic reviews, technology refresh cycles, and performance-based incentives for modernization. The government should also actively monitor market developments and competitor advancements to identify opportunities for upgrades or alternative solutions.

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 AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE (V)

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: $91,364,644

Exercised Options: $91,364,644

Current Obligation: $91,364,644

Subaward Activity

Number of Subawards: 303

Total Subaward Amount: $41,613,391

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline