Raytheon Company awarded $223.9M for MALD-J Lot 7 and Lot 8 Options by the Department of Defense

Contract Overview

Contract Amount: $223,933,309 ($223.9M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2014-06-27

End Date: 2021-03-31

Contract Duration: 2,469 days

Daily Burn Rate: $90.7K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: MALD-J LOT 7 AND LOT 8 OPTIONS

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $223.9 million to RAYTHEON COMPANY for work described as: MALD-J LOT 7 AND LOT 8 OPTIONS 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 contract duration of 2469 days suggests a significant, ongoing need for these missile systems. 4. The contract falls under Guided Missile and Space Vehicle Manufacturing, a critical defense sector. 5. Awarded to a single contractor, Raytheon Company, limiting competitive pressure on pricing. 6. The contract's value is substantial, representing a significant investment in defense capabilities.

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 competitive bids, it's difficult to benchmark pricing against market rates or similar contracts. The total award of $223.9 million over its duration suggests a significant investment, but the absence of competitive data prevents a definitive assessment of whether this represents a fair 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 competed. This approach is typically used when only one contractor can provide the required goods or services, or in situations deemed urgent. The lack of competition means there were no multiple bidders to drive down prices through a bidding process, potentially leading to higher costs for the government.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive bidding. Without alternative offers, the government lacks leverage to negotiate the lowest possible price, potentially resulting in less efficient use of public funds.

Public Impact

The primary beneficiaries are the U.S. Department of Defense, which receives advanced missile decoy systems. The contract delivers critical components for the MALD-J (Miniature Air-Launched Decoy Jammer) system, enhancing electronic warfare capabilities. The contract's geographic impact is primarily within Arizona, where Raytheon Company's operations are located. Workforce implications include employment for engineers, technicians, and manufacturing personnel involved in the production of these advanced systems.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition.
Cost-plus-fixed-fee contract type can incentivize higher costs.
Long contract duration may obscure current market value.
Lack of transparency in sole-source justification.
Potential for scope creep in cost-plus contracts.

Positive Signals

Award to a known, established defense contractor with relevant expertise.
Contract supports critical defense capabilities (electronic warfare).
Fixed fee component provides some cost certainty.
Long duration indicates sustained need and potential for stable production.

Sector Analysis

The contract falls within the Guided Missile and Space Vehicle Manufacturing sector, a specialized segment of the aerospace and defense industry. This sector is characterized by high R&D investment, stringent quality requirements, and significant government procurement. The MALD-J system is a sophisticated electronic warfare asset, placing this contract within a niche but critical area of defense technology. Comparable spending benchmarks are difficult to establish due to the specialized nature of the product and the sole-source award.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Furthermore, the 'ss': false flag suggests it is not a small business set-aside. Therefore, the primary contractor, Raytheon Company, is likely to perform the majority of the work. While large defense contracts can sometimes include subcontracting opportunities for small businesses, the sole-source nature of this award and the lack of specific set-aside information make it difficult to assess the direct impact on the small business ecosystem without further details on subcontracting plans.

Oversight & Accountability

Oversight for this contract is likely managed by the Defense Contract Management Agency (DCMA), as indicated by 'sa': 'Defense Contract Management Agency'. Accountability measures would typically involve performance reviews, milestone tracking, and financial audits, especially given the cost-plus-fixed-fee structure. Transparency is limited due to the sole-source nature of the award, with public information primarily revolving around the contract award itself rather than detailed justifications or performance metrics. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Guided Missile and Space Vehicle Manufacturing
Electronic Warfare Systems
Defense Procurement
Aerospace and Defense Industry
Cost-Plus Contracts

Risk Flags

Sole-source award
Cost-plus contract type
Long contract duration
Lack of competitive bidding

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $223.9 million to RAYTHEON COMPANY. MALD-J LOT 7 AND LOT 8 OPTIONS

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 $223.9 million.

What is the period of performance?

Start: 2014-06-27. End: 2021-03-31.

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

The provided data does not include the specific justification for the sole-source award of MALD-J Lot 7 and Lot 8 Options to Raytheon Company. Typically, sole-source contracts are justified when a product or service is available only from a single responsible source, or when there is a compelling urgency. For advanced defense systems like the MALD-J, justifications often relate to proprietary technology, unique manufacturing capabilities, or the need to maintain interoperability with existing systems. Without access to the official justification documentation, it is impossible to definitively state the reasons behind this non-competitive award. This lack of transparency is a common concern with sole-source procurements.

How does the cost-plus-fixed-fee (CPFF) structure impact the overall cost and risk for the government?

The Cost-Plus-Fixed-Fee (CPFF) contract structure means that the contractor (Raytheon) is reimbursed for all allowable costs incurred, plus a predetermined fixed fee representing profit. While the fixed fee provides some incentive for the contractor to control costs (as their profit is capped), the government bears the risk of cost overruns if actual costs exceed estimates. This structure is often used for research and development or complex projects where the final costs are difficult to estimate upfront. For taxpayers, CPFF contracts can be less predictable in terms of final expenditure compared to fixed-price contracts, and require robust government oversight to ensure costs are reasonable and allowable.

What are the historical spending patterns for the MALD-J program or similar decoy systems?

The provided data focuses on a specific contract award for MALD-J Lot 7 and Lot 8 Options totaling $223.9 million. To understand historical spending patterns, one would need to examine previous contracts for the MALD-J system, including its development, initial production, and any prior option exercises. Additionally, comparing spending on MALD-J to other decoy or electronic warfare systems procured by the Department of Defense would provide broader context. Without access to historical contract databases or program-specific budget information, it's challenging to detail these patterns. However, the significant value of this single award suggests a substantial and ongoing investment in this capability.

What is Raytheon Company's track record with similar defense contracts, particularly in electronic warfare?

Raytheon Company, now part of RTX Corporation, has a long and extensive track record as a major defense contractor, with significant experience in missile systems, electronic warfare, and aerospace technologies. They are a primary developer and manufacturer of the MALD-J system itself. Their history includes numerous large-scale contracts with the Department of Defense and other allied nations for a wide array of defense products. While specific performance metrics for all past contracts are not detailed here, Raytheon is generally considered a capable and experienced provider in this domain. However, as with any large contractor, scrutiny of performance, cost control, and delivery timelines on specific contracts is always warranted.

What are the potential risks associated with the long duration of this contract (2469 days)?

A contract duration of 2469 days (approximately 6.7 years) presents several potential risks. Firstly, technology can rapidly evolve in the defense sector; by the end of the contract, the MALD-J system's capabilities might be less advanced compared to emerging threats or newer technologies. Secondly, the extended timeline increases the possibility of unforeseen cost increases due to inflation, supply chain disruptions, or changes in raw material prices, which could impact the government if not adequately managed within the contract terms. Thirdly, maintaining consistent oversight and program management over such a long period can be challenging for the contracting agency. Finally, the long duration might also indicate a lack of readily available alternatives or a protracted development/production cycle.

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: 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: $344,157,743

Exercised Options: $226,222,903

Current Obligation: $223,933,309

Subaward Activity

Number of Subawards: 356

Total Subaward Amount: $337,151,845

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline