Raytheon Company awarded $55.2M contract for guided missile and space vehicle manufacturing

Contract Overview

Contract Amount: $55,212,777 ($55.2M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2010-04-21

End Date: 2012-04-30

Contract Duration: 740 days

Daily Burn Rate: $74.6K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: MALD J EMD

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $55.2 million to RAYTHEON COMPANY for work described as: MALD J EMD Key points: 1. Contract awarded on a cost-plus-fixed-fee basis, indicating potential for cost overruns. 2. The contract was not competed, raising questions about price discovery and value for money. 3. Long duration of 740 days suggests a significant, ongoing requirement. 4. Awarded to a single contractor, limiting potential for competitive pricing. 5. The contract falls under the Guided Missile and Space Vehicle Manufacturing sector, a critical defense area. 6. The contractor, Raytheon Company, is a major defense industry player.

Value Assessment

Rating: questionable

The contract's cost-plus-fixed-fee structure, combined with a lack of competition, makes a direct value-for-money assessment challenging without further data on performance and final costs. Benchmarking against similar sole-source contracts for guided missile manufacturing would be necessary to determine if the pricing is reasonable. The raw dollar amount of $55.2 million represents a significant investment, and the absence of competitive bidding means taxpayers may not have received the lowest possible price.

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 responsible source can fulfill the requirement. The lack of competition means that price discovery through market forces was not utilized, potentially leading to higher costs for the government compared to a competed procurement.

Taxpayer Impact: Sole-source awards mean taxpayers do not benefit from the cost savings that typically arise from a competitive bidding process. This can result in a higher overall expenditure for the government.

Public Impact

The primary beneficiaries are the Department of Defense, which receives critical missile and space vehicle components. Services delivered include the manufacturing of guided missiles and space vehicles, essential for national defense. The contract's geographic impact is centered in Arizona, where the contractor is located. Workforce implications include employment opportunities within Raytheon Company and its supply chain in Arizona.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated costs for taxpayers.
Cost-plus-fixed-fee contracts can incentivize contractors to incur higher costs.
Sole-source awards limit transparency and accountability in pricing.
Long contract duration could mask inefficiencies or scope creep over time.

Positive Signals

Award to a major defense contractor suggests capability and experience.
Focus on critical defense manufacturing addresses national security needs.
Contract award indicates ongoing government investment in defense capabilities.

Sector Analysis

This contract falls within the Guided Missile and Space Vehicle Manufacturing sector, a highly specialized and critical segment of the aerospace and defense industry. This sector is characterized by high barriers to entry, significant R&D investment, and a limited number of prime contractors capable of producing such advanced systems. Spending in this area is driven by national security requirements and technological advancements. Comparable spending benchmarks would typically involve other large-scale missile system development and production contracts within the Department of Defense.

Small Business Impact

There is no indication that this contract included small business set-asides. As a sole-source award to a large prime contractor, the primary subcontracting opportunities would likely be managed by Raytheon Company. The impact on the small business ecosystem is indirect, depending on Raytheon's subcontracting strategy and whether small businesses are included in their supply chain for this specific contract.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor performance and compliance. Accountability measures are inherent in the contract terms, particularly regarding cost reporting and delivery schedules. Transparency is limited due to the sole-source nature of the award, but contract awards are generally reported in federal procurement databases. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Missile Systems Production
Space Vehicle Manufacturing
Defense Procurement
Aerospace Manufacturing
Guided Missile Systems

Risk Flags

Sole-source award
Cost-plus-fixed-fee contract type
Long contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $55.2 million to RAYTHEON COMPANY. MALD J EMD

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 $55.2 million.

What is the period of performance?

Start: 2010-04-21. End: 2012-04-30.

What is Raytheon Company's track record with similar sole-source defense contracts?

Raytheon Company, now part of RTX, has a long history of securing large, often sole-source or limited-competition contracts with the Department of Defense for missile systems and aerospace components. Their track record includes numerous awards for programs like the Patriot missile defense system, Tomahawk missiles, and various space-based defense technologies. While their experience is extensive, the nature of sole-source awards means that detailed cost and performance comparisons across multiple bids are not publicly available. Government accountability reports and Inspector General findings related to specific Raytheon contracts would provide further insight into their performance and adherence to contract terms over time.

How does the $55.2 million award compare to other guided missile manufacturing contracts?

The $55.2 million award for guided missile and space vehicle manufacturing is a substantial sum, but its relative value is difficult to ascertain without knowing the specific scope, quantity, and technological complexity of the items being procured. Large-scale missile production contracts can range from tens of millions to billions of dollars. For instance, contracts for advanced missile defense systems or long-range strategic missiles often exceed this amount significantly. However, for specific components or smaller batches of specialized missiles, $55.2 million could represent a significant portion of the annual market. Benchmarking would require comparing this award to other contracts for similar types of missiles or space vehicles, considering factors like contract type (e.g., fixed-price vs. cost-plus) and duration.

What are the primary risks associated with this sole-source, cost-plus-fixed-fee contract?

The primary risks associated with this contract are twofold. Firstly, the sole-source nature means there was no competitive bidding, which inherently reduces the government's leverage to negotiate the lowest possible price. Taxpayers may be paying a premium compared to what a competitive process might yield. Secondly, the cost-plus-fixed-fee (CPFF) contract type carries the risk of cost overruns. While the contractor receives a fixed fee, the government is responsible for covering all allowable costs incurred. This structure can incentivize contractors to incur higher costs, as their fee remains constant, potentially leading to the total contract value exceeding initial estimates if not rigorously managed and overseen.

What is the historical spending pattern for guided missile and space vehicle manufacturing by the Department of Defense?

The Department of Defense consistently allocates significant funding towards guided missile and space vehicle manufacturing, reflecting its critical role in national security and military readiness. Historical spending in this category has generally trended upwards, driven by modernization efforts, the development of new threats, and the need to maintain strategic deterrence. Major programs like the development and procurement of air-to-air missiles, ground-launched missiles, ballistic missile defense systems, and components for space-based assets represent substantial annual expenditures. Fluctuations in spending can be influenced by geopolitical events, budget appropriations, and the lifecycle of major weapon systems. Overall, this sector represents a consistent and substantial portion of the defense budget.

How does the contract duration of 740 days impact oversight and risk?

A contract duration of 740 days (approximately two years) is substantial and has several implications for oversight and risk. For oversight, it necessitates continuous monitoring by agencies like the Defense Contract Management Agency (DCMA) to ensure performance, quality, and adherence to schedule and budget. Long durations increase the potential for scope creep, where the project's requirements may expand beyond the original intent, leading to increased costs. It also provides more opportunities for unforeseen technical challenges or external factors (like supply chain disruptions) to impact the contract. From a risk perspective, the extended timeline means that the government is committed to this contractor and specific requirements for a prolonged period, potentially limiting flexibility if strategic priorities shift or better technological alternatives emerge.

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

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: $164,848,254

Exercised Options: $55,236,806

Current Obligation: $55,212,777

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline