DoD Awards Raytheon $75M Paveway Weapons IDIQ, Lacking Competition

Contract Overview

Contract Amount: $74,969,993 ($75.0M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2018-09-26

End Date: 2020-11-30

Contract Duration: 796 days

Daily Burn Rate: $94.2K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Pricing Type: COST NO FEE

Sector: Defense

Official Description: NIW TOTAL PACKAGE APPROACH IDIQ FOR THE PAVEWAY FAMILY OF WEAPONS: SDAF GBU-49 PROCUREMENT

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $75.0 million to RAYTHEON COMPANY for work described as: NIW TOTAL PACKAGE APPROACH IDIQ FOR THE PAVEWAY FAMILY OF WEAPONS: SDAF GBU-49 PROCUREMENT Key points: 1. Significant contract value of $74.97 million for advanced munitions. 2. Sole-source award to Raytheon Company raises concerns about price discovery. 3. Potential risk of inflated costs due to lack of competitive bidding. 4. The contract falls within the IT/Defense sector, specifically targeting weapon systems.

Value Assessment

Rating: questionable

The contract type is 'COST NO FEE', which offers limited incentive for cost control. Without competitive benchmarks, assessing value for money is difficult.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning there was no competition. This significantly limits the government's ability to ensure the best possible price and terms.

Taxpayer Impact: The lack of competition may lead to taxpayers paying a premium for these weapons systems.

Public Impact

Impacts Air Force's precision-guided munitions capabilities. Ensures continued availability of GBU-49 bombs for military operations. Potential for higher costs impacts overall defense budget allocation.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

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

Positive Signals

Supports critical defense capabilities
Addresses specific weapon system needs

Sector Analysis

This contract is within the Defense sector, specifically for the manufacturing of guidance systems for aerial weapons. Spending benchmarks for similar sole-source munitions contracts are often higher due to specialized nature and limited suppliers.

Small Business Impact

The contract was not awarded to small businesses, indicating a focus on large, established defense contractors for this specific procurement.

Oversight & Accountability

The sole-source nature of this award warrants close oversight to ensure fair pricing and prevent potential cost overruns. Accountability for cost justification is crucial.

Related Government Programs

Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing
Department of Defense Contracting
Department of the Air Force Programs

Risk Flags

Sole-source award limits price competition.
Cost-plus contract type may incentivize higher spending.
Lack of small business participation.
Potential for price escalation over contract duration.
Dependency on a single supplier.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $75.0 million to RAYTHEON COMPANY. NIW TOTAL PACKAGE APPROACH IDIQ FOR THE PAVEWAY FAMILY OF WEAPONS: SDAF GBU-49 PROCUREMENT

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 $75.0 million.

What is the period of performance?

Start: 2018-09-26. End: 2020-11-30.

What was the justification for awarding this contract on a sole-source basis, and how was the price determined to be fair and reasonable?

The justification for a sole-source award typically involves unique capabilities, urgent needs, or lack of viable alternatives. The government should have conducted a thorough price analysis, comparing costs to previous similar contracts or using cost-plus-fee methodologies with established profit margins to ensure fairness. Documentation of this analysis is key to accountability.

What are the long-term risks associated with relying on a single supplier for critical munitions like the GBU-49?

Long-term risks include potential price escalation without competitive pressure, supply chain vulnerabilities if the sole supplier faces disruptions, and a lack of innovation if competition is absent. This dependency can also limit the government's negotiating power in future procurements, potentially leading to higher overall spending.

How does this contract contribute to the overall effectiveness and readiness of the Air Force's combat capabilities?

This contract directly supports the Air Force's combat readiness by ensuring a supply of GBU-49 Enhanced Paveway II bombs, a key component for precision strikes. The 'Total Package Approach' IDIQ suggests a strategic effort to streamline procurement and sustainment, aiming for improved operational effectiveness and availability of these critical munitions.

Industry Classification

NAICS: Manufacturing › Navigational, Measuring, Electromedical, and Control Instruments Manufacturing › Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing

Product/Service Code: AMMUNITION AND EXPLOSIVES

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: COST NO FEE (S)

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: $75,000,000

Exercised Options: $75,000,000

Current Obligation: $74,969,993

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA868118D0001

IDV Type: IDC

Timeline