DoD Awards Raytheon $33.5M for Missile Defense Operational Sustainment, No Competition

Contract Overview

Contract Amount: $33,568,903 ($33.6M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2022-12-01

End Date: 2027-11-30

Contract Duration: 1,825 days

Daily Burn Rate: $18.4K/day

Competition Type: NOT COMPETED

Pricing Type: COST NO FEE

Sector: Defense

Official Description: IB - OPERATIONAL SUSTAINMENT B&P

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $33.6 million to RAYTHEON COMPANY for work described as: IB - OPERATIONAL SUSTAINMENT B&P Key points: 1. Significant contract value for sustainment services. 2. Sole-source award limits competitive pricing. 3. Long duration (5 years) raises concerns about flexibility and future cost. 4. Missile defense sector is critical but often lacks robust competition.

Value Assessment

Rating: questionable

The contract type is Cost No Fee, which offers limited incentive for cost control. Without competition, it's difficult to benchmark pricing effectively against similar sustainment contracts.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award. This significantly limits price discovery and potentially leads to higher costs for taxpayers as there is no competitive pressure.

Taxpayer Impact: The lack of competition on this $33.5M contract means taxpayers may be overpaying for sustainment services without a clear benchmark.

Public Impact

Ensures continued operational readiness of critical missile defense systems. Potential for increased costs due to lack of competitive bidding. Long-term commitment may not reflect evolving technological needs or market prices. Supports a major defense contractor's operations in Arizona.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award
Cost No Fee contract type
Long contract duration

Positive Signals

Ensures sustainment of critical defense assets
Supports national security objectives

Sector Analysis

This contract falls within the defense sector, specifically focusing on the sustainment of missile defense systems. Spending in this area is substantial, driven by national security priorities, but often characterized by limited competition due to specialized requirements.

Small Business Impact

This award went to Raytheon Company, a large prime contractor. There is no indication of small business participation in this specific contract action, suggesting limited opportunities for small businesses.

Oversight & Accountability

The sole-source nature of this award warrants scrutiny to ensure the government obtained fair and reasonable pricing. Future procurements should explore competitive options to enhance oversight.

Related Government Programs

Guided Missile and Space Vehicle Manufacturing
Department of Defense Contracting
Missile Defense Agency Programs

Risk Flags

Lack of competition may lead to inflated costs.
Cost No Fee structure reduces contractor incentive for cost efficiency.
Long contract duration (5 years) may not adapt to changing needs or prices.
Potential for vendor lock-in with specialized sustainment services.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $33.6 million to RAYTHEON COMPANY. IB - OPERATIONAL SUSTAINMENT B&P

Who is the contractor on this award?

The obligated recipient is RAYTHEON COMPANY.

Which agency awarded this contract?

Awarding agency: Department of Defense (Missile Defense Agency).

What is the total obligated amount?

The obligated amount is $33.6 million.

What is the period of performance?

Start: 2022-12-01. End: 2027-11-30.

What is the justification for the sole-source award, and what steps were taken to ensure fair and reasonable pricing?

The justification for a sole-source award typically involves unique capabilities or lack of alternatives. For this contract, the specific reason for not competing it needs to be documented. Agencies must still perform price analysis, comparing proposed costs to historical data or independent government estimates, to ensure fair and reasonable pricing even without competition.

How does the Cost No Fee structure impact cost control and contractor performance incentives?

A Cost No Fee (CNF) contract reimburses the contractor for allowable costs but provides no fee or profit. While it can be used when the scope is uncertain or for essential services, it offers minimal incentive for the contractor to control costs aggressively. Performance is typically driven by contract requirements rather than profit motive, which can be a risk if not closely monitored.

What is the long-term strategy for missile defense sustainment, and how does this contract align with it?

This contract covers operational sustainment for a five-year period. The long-term strategy should involve assessing the evolving threat landscape, technological advancements, and potential for more competitive sustainment models. This contract's duration suggests a need for ongoing, specialized support, but future planning should consider opportunities for competition or performance-based contracts.

Industry Classification

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

Product/Service Code: TECHNICAL REPRESENTATIVE SVCS. › TECHNICAL REPRESENTATIVE SERVICES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: HQ027619R0001

Pricing Type: COST NO FEE (S)

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: $33,568,903

Exercised Options: $33,568,903

Current Obligation: $33,568,903

Actual Outlays: $899,267

Subaward Activity

Number of Subawards: 1

Total Subaward Amount: $145,500

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: HQ085121D0001

IDV Type: IDC

Timeline