Raytheon Company awarded $72M for Enhanced Paveway II GBU-49, a sole-source ammunition contract

Contract Overview

Contract Amount: $71,995,504 ($72.0M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2017-11-13

End Date: 2019-08-31

Contract Duration: 656 days

Daily Burn Rate: $109.7K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: ENHANCED PAVEWAY II GBU-49

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $72.0 million to RAYTHEON COMPANY for work described as: ENHANCED PAVEWAY II GBU-49 Key points: 1. Contract awarded on a sole-source basis, limiting price competition. 2. The contract is for a definitive, firm-fixed-price agreement. 3. Performance period spans nearly two years, from late 2017 to mid-2019. 4. The contract is for ammunition manufacturing, specifically guided bombs. 5. The primary awardee is Raytheon Company, a major defense contractor. 6. The contract was not competed, raising questions about value for money. 7. The contract is for a specific munition type, GBU-49 Enhanced Paveway II.

Value Assessment

Rating: questionable

Benchmarking the value for money on this sole-source contract is challenging due to the lack of competitive bids. The firm-fixed-price structure provides some cost certainty, but without comparison to other offers, it's difficult to assess if the pricing is optimal. The award amount of over $71 million for guided bombs suggests a significant investment in munitions, but the absence of competition prevents a robust value assessment against market alternatives or other potential suppliers.

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 approach is typically used when only one vendor can provide the required goods or services, or in cases of urgent need. The lack of competition means there were no other bidders to compare against, potentially leading to higher prices than if the contract had been open to a bidding process. This limits the government's ability to leverage market forces for cost savings.

Taxpayer Impact: Taxpayers may have paid a premium for this munition due to the absence of competitive bidding. Without a competitive process, there is less pressure on the contractor to offer the lowest possible price, potentially resulting in less efficient use of public funds.

Public Impact

The primary beneficiaries are the Department of the Air Force and potentially other branches of the U.S. military requiring advanced guided munitions. The contract delivers GBU-49 Enhanced Paveway II bombs, a key component for precision-guided aerial warfare. The contract's geographic impact is primarily within the United States, with manufacturing likely occurring in Arizona, where the contractor has a presence. The contract supports jobs within the defense manufacturing sector, specifically at Raytheon Company.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price discovery and potential savings for taxpayers.
Lack of competition raises concerns about the efficiency and cost-effectiveness of the procurement.
Contract awarded for a specific munition, potentially limiting flexibility if alternative or superior technologies emerge.

Positive Signals

Firm-fixed-price contract provides cost certainty for the government.
Award to a known defense contractor like Raytheon suggests a reliance on established capabilities and supply chains.
The GBU-49 is a proven munition, indicating a focus on reliable operational capabilities.

Sector Analysis

This contract falls within the Defense sector, specifically the Ammunition (except Small Arms) Manufacturing sub-sector. The market for precision-guided munitions is dominated by a few large defense contractors. Spending in this area is driven by military readiness requirements and ongoing operational needs. Comparable spending benchmarks would involve analyzing other contracts for similar guided bomb units or other air-to-ground munitions awarded to Raytheon or its competitors.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb: false'. Furthermore, the prime contractor, Raytheon Company, is a large defense corporation. There is no explicit information provided regarding subcontracting plans with small businesses. This suggests that the primary contract value will flow to a large business, with potential downstream impacts on small businesses dependent on subcontracting opportunities being determined by Raytheon's internal procurement decisions.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Air Force's contracting and program management offices. Accountability measures are inherent in the firm-fixed-price contract type, which obligates the contractor to deliver the specified goods at the agreed-upon price. Transparency is limited due to the sole-source nature of the award, but contract award data is publicly available. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Guided Bomb Units (GBUs)
Precision-Guided Munitions
Air-to-Ground Munitions
Defense Ammunition Procurement
Raytheon Company Defense Contracts

Risk Flags

Sole-source award
Lack of competition
Potential for price inflation

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $72.0 million to RAYTHEON COMPANY. ENHANCED PAVEWAY II GBU-49

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 $72.0 million.

What is the period of performance?

Start: 2017-11-13. End: 2019-08-31.

What is the historical spending trend for GBU-49 Enhanced Paveway II munitions by the Department of Defense?

Analyzing historical spending for the GBU-49 Enhanced Paveway II requires a deep dive into procurement databases beyond this single award. However, the award of over $71 million in late 2017 suggests a consistent need for this munition type. Trends in defense spending on precision-guided munitions are often influenced by geopolitical events, ongoing conflicts, and military modernization programs. Without access to aggregated historical data for this specific munition, it's difficult to establish a precise trend, but the scale of this award indicates it's a significant and ongoing procurement item for the Air Force.

How does the unit cost of the GBU-49 under this contract compare to similar munitions or previous awards?

Calculating the precise unit cost requires dividing the total award amount by the number of units procured, which is not explicitly provided in the data. However, if we assume the 'br' value of 109749 represents a unit cost or a related metric, it would need to be compared against market benchmarks for similar guided bomb units. Given this is a sole-source contract, direct comparison to competitively bid alternatives is not possible. Generally, sole-source procurements can be more expensive than competitive ones. Further analysis would require knowing the exact quantity purchased and comparing it to publicly available pricing data for comparable munitions from other manufacturers or previous competitive awards.

What are the specific performance requirements and technical specifications of the GBU-49 Enhanced Paveway II?

The GBU-49 Enhanced Paveway II is a dual-mode GPS/INS and laser-guided bomb. It is designed to provide precision strike capability against a wide range of targets, including moving targets, in adverse weather conditions. Its key feature is the combination of inertial navigation system (INS) and GPS guidance with a laser seeker, allowing for both "fire-and-forget" capability and terminal guidance adjustments. This dual-mode capability enhances accuracy and effectiveness compared to single-mode guided munitions. The specific technical specifications, such as range, warhead size, and guidance system tolerances, are detailed in the contract's statement of work and are proprietary to the manufacturer, Raytheon.

What is Raytheon Company's track record with producing and delivering munitions, particularly guided bombs?

Raytheon Company, now part of RTX, has a long and extensive track record in the defense industry, including significant experience in the development, manufacturing, and delivery of munitions, particularly guided bombs. They are a primary producer of the Paveway series of bombs, including various iterations of the Enhanced Paveway. Their history includes numerous contracts with the U.S. Department of Defense and allied nations for a wide array of air-to-ground munitions. While specific performance metrics for all contracts are not publicly available, Raytheon is generally considered a leading and reliable supplier in this domain, evidenced by their continued large-scale awards for such systems.

What are the potential risks associated with a sole-source award for critical munitions like the GBU-49?

The primary risk associated with a sole-source award for critical munitions is the potential for inflated pricing due to the lack of competitive pressure. This can lead to less efficient use of taxpayer funds. Another risk is a reduced incentive for the sole-source provider to innovate or improve efficiency, as they face no direct competition for that specific contract. Furthermore, reliance on a single supplier can create supply chain vulnerabilities; if the sole provider experiences production issues, delivery delays, or goes out of business, the military's access to critical munitions could be jeopardized. This also limits the government's options if a superior or more cost-effective alternative emerges from another vendor.

Industry Classification

NAICS: Manufacturing › Other Fabricated Metal Product Manufacturing › Ammunition (except Small Arms) Manufacturing

Product/Service Code: AMMUNITION AND EXPLOSIVES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: FA868117R0008

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, 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: $71,995,504

Exercised Options: $71,995,504

Current Obligation: $71,995,504

Subaward Activity

Number of Subawards: 4

Total Subaward Amount: $7,082,415

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline