Raytheon Company awarded $56.4M for LRIP II missile assets, a sole-source definitive contract

Contract Overview

Contract Amount: $56,367,937 ($56.4M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2009-05-14

End Date: 2011-06-30

Contract Duration: 777 days

Daily Burn Rate: $72.5K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: LRIP II (162 ASSETS, & 81 CONTAINERS)

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $56.4 million to RAYTHEON COMPANY for work described as: LRIP II (162 ASSETS, & 81 CONTAINERS) Key points: 1. Contract awarded on a firm-fixed-price basis, indicating clear cost expectations. 2. The contract duration of 777 days suggests a substantial production or delivery phase. 3. Awarded to Raytheon Company, a major defense contractor with significant industry experience. 4. The contract is for LRIP II, implying it's part of a larger, multi-phase program. 5. Geographic location of performance is Arizona, potentially impacting local economic activity. 6. This contract was not competed, raising questions about potential cost efficiencies.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging without comparable sole-source awards for similar missile systems. The firm-fixed-price structure provides some cost certainty, but the lack of competition prevents a direct comparison of pricing against market alternatives. The total award amount of $56.4 million for 162 assets and 81 containers suggests a significant per-unit cost, which warrants further investigation into the specific components and complexity of the missile systems.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not open to competitive bidding. This typically occurs when only one vendor possesses the necessary capabilities, technology, or security clearances. The lack of competition limits the government's ability to leverage market forces to achieve the best possible price and terms.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as there is no competitive pressure to drive down prices. This necessitates robust oversight to ensure the awarded price is fair and reasonable.

Public Impact

The primary beneficiaries are the U.S. Department of Defense, receiving advanced missile assets. Services delivered include the production and delivery of 162 missile assets and 81 containers. Geographic impact is concentrated in Arizona, where the contract performance is located. Workforce implications may include employment opportunities at Raytheon facilities in Arizona.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may result in inflated costs for taxpayers.
Sole-source nature limits transparency in pricing and value assessment.
Contract duration and value suggest a significant investment with limited public visibility on specific deliverables beyond the stated quantities.

Positive Signals

Firm-fixed-price contract provides cost certainty for the government.
Awarded to a known, experienced defense contractor (Raytheon Company).
Contract is for specific missile assets (LRIP II), indicating a defined need within a defense program.

Sector Analysis

This contract falls within the Guided Missile and Space Vehicle Manufacturing sector, a critical component of the defense industry. This sector is characterized by high R&D investment, stringent quality control, and often involves long production cycles. Spending in this area is heavily influenced by national security priorities and geopolitical factors. Comparable spending benchmarks are difficult to establish due to the specialized nature of missile systems and the prevalence of sole-source or limited competition awards.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. There is no explicit information regarding subcontracting plans for small businesses. The sole-source nature of the award further reduces the likelihood of significant subcontracting opportunities for small businesses unless mandated by the prime contractor.

Oversight & Accountability

Oversight for this contract would typically fall under the Defense Contract Management Agency (DCMA), responsible for ensuring contractor performance and compliance. As a definitive contract, it is subject to standard federal procurement regulations. Transparency is limited due to the sole-source nature, but contract award data is publicly available. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Missile Manufacturing
Defense Procurement
Low Rate Initial Production (LRIP)
Guided Missile Systems
Raytheon Company Contracts

Risk Flags

Sole-source award
Lack of competition
Potential for cost overruns
Limited transparency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $56.4 million to RAYTHEON COMPANY. LRIP II (162 ASSETS, & 81 CONTAINERS)

Who is the contractor on this award?

The obligated recipient is RAYTHEON COMPANY.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $56.4 million.

What is the period of performance?

Start: 2009-05-14. End: 2011-06-30.

What is the specific nature of the 'LRIP II' assets being procured, and how do they differ from previous or subsequent production phases?

LRIP II (Low Rate Initial Production II) signifies a specific phase in the manufacturing lifecycle of a defense system, typically following engineering and manufacturing development (EMD) and preceding full-rate production. The 'assets' likely refer to components or complete units of a particular missile system. The 'II' indicates this is the second iteration or phase of this initial production run. Differences from previous phases (LRIP I) would likely involve refinements based on testing, initial operational feedback, or manufacturing process improvements. Subsequent phases (e.g., LRIP III, full-rate production) would involve scaling up production volumes and potentially incorporating further design updates or cost-reduction initiatives. Without specific program details, the exact nature of the assets and their evolution remains proprietary to the defense program.

Given this was a sole-source award, what justification was provided by the Department of Defense for not competing this contract?

Sole-source contracts are typically awarded when a specific justification is approved, often citing the unique capabilities of a single source, urgent and compelling needs that preclude competition, or when the supplies or services are only available from a single responsible source. For defense systems like guided missiles, this often relates to proprietary technology, specialized manufacturing processes, or the need for commonality with existing fielded systems where only one contractor can provide compatible components or upgrades. The specific justification document, often a Justification and Approval (J&A) for Other Than Full and Open Competition, would detail the rationale. This document is usually made public, though sometimes with redactions for sensitive information, allowing for scrutiny of the necessity for a sole-source award.

How does the per-unit cost of these missile assets compare to industry benchmarks or similar government procurements, considering the sole-source nature?

Determining a precise per-unit cost requires dividing the total contract value ($56,367,937.46) by the number of assets (162), yielding approximately $347,950 per asset. However, this calculation is simplified as it doesn't account for the 81 containers or potential variations in asset types. Benchmarking this figure is challenging due to the sole-source award and the specialized nature of guided missile systems. Industry benchmarks for such advanced defense hardware are often not publicly available and vary significantly based on system complexity, technology, and production volume. Without competitive bids, it's difficult to ascertain if this price reflects fair market value. Government reports or audits might provide internal cost analyses, but these are rarely public. The lack of competition inherently limits the ability to establish a definitive value comparison.

What are the potential risks associated with a sole-source contract of this magnitude for advanced missile systems?

Sole-source contracts for high-value defense systems like missile assets carry several risks. Primarily, the absence of competition can lead to higher prices than might be achieved through a competitive bidding process, potentially resulting in inefficient use of taxpayer funds. There's also a risk of complacency from the sole provider, potentially impacting innovation or responsiveness if they perceive no threat from competitors. Furthermore, reliance on a single source can create supply chain vulnerabilities; if the contractor experiences production issues, delays, or financial instability, the entire program could be jeopardized. Ensuring robust oversight and negotiation is critical to mitigate these risks, focusing on verifying cost reasonableness and performance metrics.

What is Raytheon Company's track record with similar sole-source contracts for missile systems within the Department of Defense?

Raytheon Company (now RTX) has a long and extensive history of contracting with the Department of Defense for various missile systems, many of which have involved sole-source or limited-competition awards. As a primary defense contractor, they are often the sole developer or manufacturer of specific proprietary technologies or systems. Analyzing their broader contract portfolio reveals numerous awards for programs like the Patriot missile system, Tomahawk missiles, and various air-to-air and air-to-ground munitions. While specific sole-source justifications vary, Raytheon's consistent role as a key supplier in these critical areas suggests a pattern of being selected for unique capabilities or established program integration. Publicly available contract databases often show a significant portion of their awards being non-competitively sourced due to the specialized nature of their defense products.

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

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: $56,367,949

Exercised Options: $56,367,949

Current Obligation: $56,367,937

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline