Raytheon Company awarded $55.9M for Small Diameter Bomb Increment II by the Department of the Air Force

Contract Overview

Contract Amount: $55,900,633 ($55.9M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2023-02-22

End Date: 2029-04-12

Contract Duration: 2,241 days

Daily Burn Rate: $24.9K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: SMALL DIAMETER BOMB INCREMENT II

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $55.9 million to RAYTHEON COMPANY for work described as: SMALL DIAMETER BOMB INCREMENT II Key points: 1. Contract awarded to a single source, raising questions about price competitiveness. 2. Long contract duration (2241 days) may indicate complex program requirements or potential for cost overruns. 3. Cost-plus-fixed-fee contract type offers less incentive for contractor efficiency compared to fixed-price contracts. 4. No small business set-aside or subcontracting reported, potentially limiting small business participation. 5. Contract awarded via Delivery Order, suggesting it's part of a larger indefinite-delivery/indefinite-quantity (IDIQ) contract. 6. Ammunition manufacturing sector is critical for defense readiness, but requires careful cost management.

Value Assessment

Rating: questionable

The contract's value of $55.9 million for the Small Diameter Bomb Increment II program is difficult to benchmark without more detailed cost breakdowns. As a cost-plus-fixed-fee contract awarded on a sole-source basis, there is inherent risk of less competitive pricing. The long duration of the contract (over 6 years) also suggests potential for scope creep or unforeseen cost increases. Without comparable sole-source awards for similar munitions, assessing true value-for-money is challenging.

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 a specific contractor possesses unique capabilities or when urgency dictates a rapid award. The lack of competition means that the government did not benefit from a bidding process that could have driven down prices or spurred innovation from a wider range of suppliers. The justification for this sole-source award would need to be thoroughly reviewed to ensure it was appropriate.

Taxpayer Impact: Sole-source awards limit the government's ability to secure the best possible price through competition, potentially leading to higher costs for taxpayers. It also reduces opportunities for other capable businesses to compete for and win federal contracts.

Public Impact

The primary beneficiaries are the Department of the Air Force and potentially other branches of the U.S. military, receiving advanced munitions. The contract delivers critical components and services for the Small Diameter Bomb Increment II program, enhancing air-to-ground strike capabilities. The contract is being performed in Arizona, contributing to the local economy and defense industrial base in that state. Workforce implications include employment for engineers, technicians, and manufacturing personnel at Raytheon Company and its subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and taxpayer value.
Cost-plus-fixed-fee structure may reduce contractor incentive for cost efficiency.
Long contract duration increases risk of cost overruns and schedule delays.
Lack of small business participation noted.

Positive Signals

Award supports critical defense capability (Small Diameter Bomb Increment II).
Contract awarded to a known defense contractor with established capabilities.
Performance location in Arizona supports domestic defense industrial base.

Sector Analysis

The defense sector, particularly munitions manufacturing, is a significant area of federal spending. The Small Diameter Bomb (SDB) program represents a key investment in precision-guided munitions, aimed at providing warfighters with effective, low-collateral-damage options. This contract fits within the broader landscape of defense procurement for air-delivered ordnance, where innovation and technological advancement are paramount. Comparable spending benchmarks would typically involve other large-scale munitions development and production contracts, often awarded to major defense contractors.

Small Business Impact

This contract does not appear to include a small business set-aside, nor is there an indication of mandatory small business subcontracting goals. This suggests that the primary awardee, Raytheon Company, is expected to perform the majority of the work. While large prime contractors often engage small businesses as subcontractors, the absence of explicit set-asides or goals in the contract details means that opportunities for small businesses in this specific award are not guaranteed and may be limited. This could impact the broader small business defense industrial ecosystem.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Air Force's contracting and program management offices. As a sole-source award, scrutiny may be higher to ensure fair and reasonable pricing. The cost-plus-fixed-fee nature necessitates detailed financial reporting and auditing by the contractor. The Defense Contract Audit Agency (DCAA) and the Department of Defense Inspector General (DoDIG) would likely have oversight responsibilities, particularly concerning cost allowability and performance monitoring, to ensure accountability and transparency.

Related Government Programs

Small Diameter Bomb Increment I
Advanced Medium-Range Air-to-Air Missile (AMRAAM)
Joint Direct Attack Munition (JDAM)
Missile Defense Programs
Air Force Munitions Procurement

Risk Flags

Sole-source award
Cost-plus-fixed-fee contract type
Long contract duration
Lack of small business participation noted

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $55.9 million to RAYTHEON COMPANY. SMALL DIAMETER BOMB INCREMENT 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 $55.9 million.

What is the period of performance?

Start: 2023-02-22. End: 2029-04-12.

What is the specific justification for awarding this contract on a sole-source basis to Raytheon Company?

The provided data indicates the contract was awarded as 'NOT COMPETED,' which is synonymous with a sole-source award. The specific justification for this sole-source designation is not detailed in the provided data snippet. Typically, sole-source awards are justified under circumstances such as: only one responsible source exists capable of making the supply; urgent and compelling need where delays associated with competitive acquisition would result in unacceptable delays; or when a specific national defense interest requires it. For a complex munitions program like the Small Diameter Bomb Increment II, the justification might relate to unique intellectual property, specialized manufacturing capabilities, or integration requirements that only Raytheon possesses. A thorough review of the official Justification and Approval (J&A) document would be necessary to understand the precise rationale.

How does the cost-plus-fixed-fee (CPFF) contract type compare to other contract types in terms of risk and incentive for efficiency?

The Cost-Plus-Fixed-Fee (CPFF) contract type is characterized by the government reimbursing the contractor for all allowable costs incurred, plus a predetermined fixed fee representing profit. This structure places the majority of the cost risk on the government. Compared to fixed-price contracts (like Firm-Fixed-Price or Fixed-Price Incentive), CPFF offers less incentive for the contractor to control costs rigorously, as their profit is fixed regardless of the final project cost. While it can be beneficial for research and development or complex projects where cost estimation is difficult, it requires robust government oversight to manage costs effectively. Fixed-price contracts, conversely, shift more cost risk to the contractor and provide a stronger incentive for efficiency and cost control, as any savings below the target price benefit the contractor.

What are the potential implications of the long contract duration (2241 days) for program management and cost?

A contract duration of 2241 days, approximately 6.1 years, for the Small Diameter Bomb Increment II program suggests a long-term commitment to development, production, or sustainment. Such extended periods increase the risk of cost escalation due to inflation, changes in material costs, and evolving technological requirements. Program management becomes more complex, requiring sustained oversight and adaptation to potential shifts in strategic priorities or threat landscapes. There's also a higher likelihood of scope creep if requirements are not tightly managed. From a cost perspective, longer durations can sometimes lead to economies of scale if production volumes are high, but they also amplify the potential for unforeseen cost increases and require more diligent financial tracking and forecasting by the government.

Are there any publicly available performance metrics or historical data for the Small Diameter Bomb Increment II program that can be used to assess its effectiveness?

Publicly available performance metrics for specific, ongoing defense programs like the Small Diameter Bomb Increment II are often limited due to security classifications and the proprietary nature of defense contracting. While the Department of Defense publishes annual reports and conducts program reviews, detailed operational effectiveness data, kill rates, or specific mission success statistics are typically not disclosed to the public. Information might be found in unclassified program executive summaries, congressional budget justifications, or Government Accountability Office (GAO) reports that review program progress and spending. However, these sources usually provide a high-level overview rather than granular performance data. Assessing effectiveness often relies on broader statements of capability enhancement and successful integration into operational platforms.

How does this contract fit into the overall spending trends for air-launched munitions within the Department of the Air Force?

This contract for the Small Diameter Bomb Increment II represents a significant investment within the broader category of air-launched munitions for the Department of the Air Force. Spending trends in this area are generally driven by evolving military strategies, the need for precision strike capabilities, and the desire to replace older, less capable munitions. The SDB program, in particular, focuses on providing a smaller, lighter, and more affordable precision weapon compared to larger munitions, allowing aircraft to carry more ordnance per sortie. Overall Air Force spending on munitions fluctuates based on operational tempo, modernization priorities, and congressional appropriations. Contracts like this one reflect a continued emphasis on advanced, networked, and precision-guided munitions to maintain air superiority and support ground forces.

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

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: RTX Corp

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: $56,507,197

Exercised Options: $55,929,667

Current Obligation: $55,900,633

Subaward Activity

Number of Subawards: 3

Total Subaward Amount: $491,462

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: FA867219D0001

IDV Type: IDC

Timeline