DoD's $1.16B SM-3 Tech Development Contract with Raytheon: Research & Development Spending Analysis
Contract Overview
Contract Amount: $1,160,086,092 ($1.2B)
Contractor: Raytheon Company
Awarding Agency: Department of Defense
Start Date: 2007-12-31
End Date: 2020-07-30
Contract Duration: 4,595 days
Daily Burn Rate: $252.5K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: COST PLUS AWARD FEE
Sector: Defense
Official Description: SM-3 TECH DEVELOPMENT AND ENGINEERING
Place of Performance
Location: TUCSON, PIMA County, ARIZONA, 85756
State: Arizona Government Spending
Plain-Language Summary
Department of Defense obligated $1.16 billion to RAYTHEON COMPANY for work described as: SM-3 TECH DEVELOPMENT AND ENGINEERING Key points: 1. Significant R&D investment in advanced missile defense technology. 2. Sole-source award to Raytheon raises questions about price discovery. 3. Long contract duration (12+ years) may indicate evolving requirements or limited competition. 4. High value suggests critical national security importance.
Value Assessment
Rating: questionable
The contract's total value is substantial at over $1.16 billion. Without competitive bidding, it's difficult to assess if this price represents fair value for the research and development services provided.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was not competed, indicating a sole-source award. This limits price discovery and potentially leads to higher costs for taxpayers compared to a competitive environment.
Taxpayer Impact: The lack of competition on this large contract may result in taxpayers paying a premium for the SM-3 technology development.
Public Impact
Enhances U.S. and allied missile defense capabilities. Supports advanced technological development in the defense sector. Potential for job creation and economic impact in Arizona. Long-term investment in national security infrastructure.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Lack of competition
- High contract value
- Long duration
- Cost-plus contract type
Positive Signals
- Critical technology development
- Supports national security
- Potential for innovation
Sector Analysis
This contract falls under Research and Development in Physical, Engineering, and Life Sciences. Defense R&D spending is a significant portion of the federal budget, with contracts often being complex and long-term.
Small Business Impact
The data does not indicate any specific subcontracting goals or awards to small businesses for this contract. Further investigation may be needed to understand small business participation.
Oversight & Accountability
The contract was managed by the Defense Contract Management Agency. Oversight would focus on ensuring technical progress, cost control, and adherence to contract terms, especially given the sole-source and cost-plus nature.
Related Government Programs
- Research and Development in the Physical, Engineering, and Life Sciences (except Biotechnology)
- Department of Defense Contracting
- Defense Contract Management Agency Programs
Risk Flags
- Sole-source award limits competitive pricing.
- Cost-plus contract type can lead to cost overruns.
- Long contract duration may indicate scope creep or inefficiencies.
- Lack of small business participation noted.
- Potential for performance issues given R&D complexity.
Tags
research-and-development-in-the-physical, department-of-defense, az, definitive-contract, billion-dollar
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $1.16 billion to RAYTHEON COMPANY. SM-3 TECH DEVELOPMENT AND ENGINEERING
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 $1.16 billion.
What is the period of performance?
Start: 2007-12-31. End: 2020-07-30.
What was the justification for awarding this contract on a sole-source basis?
Sole-source awards are typically justified when only one responsible source can provide the required supplies or services. For advanced defense systems like the SM-3, this could be due to proprietary technology, unique capabilities, or specific program requirements that only one contractor can meet. The justification would need to be documented and approved by the contracting agency.
How does the cost-plus award fee structure impact overall cost control and taxpayer value?
Cost-plus award fee (CPAF) contracts reimburse the contractor for allowable costs plus a fee that is based on performance against objective criteria. While CPAF can incentivize performance and allow for flexibility in R&D, it also shifts some cost risk to the government. Effective oversight and clearly defined award criteria are crucial to ensure cost control and maximize taxpayer value.
What are the key performance indicators (KPIs) used to measure the success of this R&D effort?
For an R&D contract like this, KPIs would likely focus on technical milestones, successful prototype development, system integration, testing results, and adherence to program schedules. The 'award fee' component suggests that specific, measurable performance targets were established, and the agency would track progress against these to determine the contractor's fee.
Industry Classification
NAICS: Professional, Scientific, and Technical Services › Scientific Research and Development Services › Research and Development in the Physical, Engineering, and Life Sciences (except Biotechnology)
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 AWARD FEE (R)
Evaluated Preference: NONE
Contractor Details
Parent Company: RTX Corp (UEI: 001344142)
Address: 1151 E HERMANS RD, TUCSON, AZ, 85706
Business Categories: Category Business, Not Designated a Small Business
Financial Breakdown
Contract Ceiling: $1,196,733,687
Exercised Options: $1,196,733,687
Current Obligation: $1,160,086,092
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: NO
Timeline
Start Date: 2007-12-31
Current End Date: 2020-07-30
Potential End Date: 2020-07-30 00:00:00
Last Modified: 2021-06-01
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