Raytheon Company awarded $29.8M for Block II Study Effort, a sole-source contract for guided missile manufacturing

Contract Overview

Contract Amount: $29,791,895 ($29.8M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2009-01-05

End Date: 2012-02-29

Contract Duration: 1,150 days

Daily Burn Rate: $25.9K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: BLOCK II STUDY EFFORT

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $29.8 million to RAYTHEON COMPANY for work described as: BLOCK II STUDY EFFORT Key points: 1. Contract awarded on a cost-plus-fixed-fee basis, indicating potential for cost overruns. 2. Sole-source award limits price competition and may not represent the best value. 3. Contract duration of 1150 days suggests a significant, long-term effort. 4. The contract falls under Guided Missile and Space Vehicle Manufacturing, a critical defense sector. 5. Awarded by the Department of Defense, highlighting its strategic importance. 6. No small business set-aside, suggesting larger prime contractors are expected to perform the work.

Value Assessment

Rating: questionable

Benchmarking the value of this specific 'Block II Study Effort' is challenging without detailed technical specifications and comparable study contracts. However, the cost-plus-fixed-fee structure, combined with a sole-source award, raises concerns about potential cost inefficiencies and the absence of competitive pressure to drive down prices. The total award amount of nearly $30 million for a study effort warrants scrutiny to ensure it aligns with industry standards for research and development in advanced 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 competed among multiple vendors. This approach is typically used when a specific contractor possesses unique capabilities, proprietary technology, or is the only source capable of meeting the requirement. The lack of competition means that taxpayers did not benefit from the price discovery mechanisms inherent in a competitive bidding process, potentially leading to a higher price than if multiple firms had vied for the contract.

Taxpayer Impact: The sole-source nature of this award means taxpayers may have paid a premium, as there was no competitive pressure to ensure the lowest possible price for the study effort.

Public Impact

The primary beneficiaries are the Department of Defense, which will receive the results of the Block II study effort. The services delivered are research and development related to guided missile and space vehicle technology. The geographic impact is primarily within Arizona, where Raytheon Company's facility is located. Workforce implications include specialized engineering and technical roles within Raytheon.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus-fixed-fee contract type can incentivize cost overruns.
Sole-source award limits competitive pricing and potentially value for money.
Lack of transparency in the justification for sole-source award.
Long contract duration may indicate potential for scope creep or evolving requirements.

Positive Signals

Award to a major defense contractor with established expertise in missile systems.
Contract supports critical defense research and development efforts.
Fixed fee component provides some level of cost certainty for the contractor's profit.

Sector Analysis

The Guided Missile and Space Vehicle Manufacturing sector is a highly specialized and critical component of the defense industrial base. This contract, valued at approximately $29.8 million, falls within this domain, focusing on advanced study efforts for 'Block II' systems. The market is characterized by high barriers to entry due to technological complexity, significant R&D investment requirements, and stringent government oversight. Major defense contractors like Raytheon Company dominate this space, often holding sole-source or limited-competition contracts for specific advanced programs due to unique capabilities and intellectual property.

Small Business Impact

This contract was not set aside for small businesses, nor does it appear to have specific subcontracting requirements for small businesses mentioned in the provided data. As a sole-source award to a large prime contractor, the primary performance is likely to be conducted by the prime or its large subcontractors. This limits direct opportunities for small businesses to participate in this specific contract, though they may be involved in the broader supply chain for Raytheon's defense programs.

Oversight & Accountability

Oversight for this contract would typically fall under the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor performance and compliance. The cost-plus-fixed-fee nature of the award necessitates close monitoring of costs to prevent overruns. Transparency regarding the justification for the sole-source award and the specific deliverables of the study effort would be key accountability measures. Inspector General involvement would be triggered by any allegations of fraud, waste, or abuse.

Related Government Programs

Missile Defense Systems
Advanced Weapons Development
Guided Missile Manufacturing
Space Vehicle Technology Research
Department of Defense Research and Development Contracts

Risk Flags

Sole-source award may limit competition and value.
Cost-plus-fixed-fee contract type can incentivize cost overruns.
Lack of specific technical details for the study effort.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $29.8 million to RAYTHEON COMPANY. BLOCK II STUDY EFFORT

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 $29.8 million.

What is the period of performance?

Start: 2009-01-05. End: 2012-02-29.

What specific technical advancements or objectives does the 'Block II Study Effort' aim to achieve?

The provided data does not specify the exact technical objectives of the 'Block II Study Effort.' However, given the contractor (Raytheon Company) and the sector (Guided Missile and Space Vehicle Manufacturing), it is reasonable to infer that the study likely pertains to enhancing existing missile systems or developing new capabilities. This could involve improvements in areas such as guidance accuracy, warhead effectiveness, propulsion systems, stealth technology, or countermeasure resistance. Without access to the contract's SOW (Statement of Work) or related documentation, the precise goals remain undisclosed in this summary.

How does the $29.8 million cost compare to similar defense study contracts awarded in recent years?

Directly comparing the $29.8 million cost of this sole-source study contract to similar efforts is challenging without specific details on the scope, duration, and technical complexity of comparable contracts. Defense study contracts can vary widely in price. However, for a significant R&D effort by a major defense contractor like Raytheon, this amount is within a plausible range for advanced technology development. The lack of competition means a direct value-for-money comparison is difficult, but the cost-plus-fixed-fee structure necessitates close monitoring to ensure costs remain justified by progress.

What are the primary risks associated with a sole-source, cost-plus-fixed-fee contract for a study effort?

The primary risks associated with this contract type are twofold. Firstly, the sole-source nature eliminates competitive pressure, potentially leading to a higher price than if multiple bidders were involved. The government may not achieve the best possible value. Secondly, the cost-plus-fixed-fee (CPFF) structure, while providing some cost certainty for the contractor's profit, can incentivize cost overruns. The contractor is reimbursed for allowable costs plus a fixed fee. If not rigorously overseen, this can lead to the government bearing the brunt of increased expenses without a corresponding increase in the contractor's profit margin, potentially exceeding the initially estimated $29.8 million.

What is Raytheon Company's track record with similar Department of Defense study contracts?

Raytheon Company is a major defense contractor with extensive experience in research, development, and manufacturing of missile systems and other defense technologies for the Department of Defense (DoD). They have a long history of successfully executing complex study and development contracts across various platforms. While specific details of past study contracts are not provided here, Raytheon's established position in the industry suggests a strong capability to perform such work. However, like any large contractor, past performance reviews and specific contract outcomes would need to be examined for a comprehensive assessment.

What is the historical spending trend for Guided Missile and Space Vehicle Manufacturing by the Department of Defense?

Historical spending by the Department of Defense in the Guided Missile and Space Vehicle Manufacturing sector has consistently been substantial, reflecting the critical nature of these capabilities for national security. While specific year-over-year trends fluctuate based on geopolitical factors, technological advancements, and budget allocations, this sector generally represents a significant portion of the DoD's procurement and R&D budgets. The total annual spending can range from billions to tens of billions of dollars, depending on major program cycles and strategic priorities. This $29.8 million contract, while large for a single study, represents a small fraction of the overall DoD investment in this domain.

What oversight mechanisms are in place to ensure the effective use of funds for this sole-source study contract?

Oversight for this contract is primarily managed by the Defense Contract Management Agency (DCMA). Given the CPFF structure, DCMA would focus on auditing incurred costs to ensure they are allowable, allocable, and reasonable according to federal acquisition regulations. They would also monitor the contractor's progress against the contract's milestones and deliverables. The contracting officer at the awarding agency (likely within the DoD) is responsible for overall contract administration, including approving modifications and ensuring the contractor meets its obligations. Transparency regarding the study's progress and outcomes would be crucial for accountability.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Guided Missile and Space Vehicle Manufacturing

Product/Service Code: RESEARCH AND DEVELOPMENT › C – National Defense R&D Services

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

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

Financial Breakdown

Contract Ceiling: $35,286,475

Exercised Options: $33,039,185

Current Obligation: $29,791,895

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline