DoD Awards Raytheon $20.3M for IB Product Support, Lacking Competition

Contract Overview

Contract Amount: $20,290,899 ($20.3M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2023-11-30

End Date: 2027-07-31

Contract Duration: 1,339 days

Daily Burn Rate: $15.2K/day

Competition Type: NOT COMPETED

Pricing Type: COST NO FEE

Sector: Defense

Official Description: IB PRODUCT SUPPORT B&P/ECS

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $20.3 million to RAYTHEON COMPANY for work described as: IB PRODUCT SUPPORT B&P/ECS Key points: 1. Significant contract value of $20.3 million awarded to a single large business. 2. Lack of competition raises concerns about potential overpricing and reduced innovation. 3. Missile Defense Agency contract focuses on guided missile manufacturing, a critical defense sector. 4. Long contract duration (2023-2027) suggests a need for ongoing support and potential for cost escalation.

Value Assessment

Rating: questionable

The contract type is 'COST NO FEE', which offers limited incentive for the contractor to control costs. Without competitive benchmarking, it's difficult to assess if the $20.3 million price is reasonable for the services provided.

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 may lead to higher costs for taxpayers as there is no competitive pressure to offer the best value.

Taxpayer Impact: The lack of competition for a $20.3 million contract means taxpayers may be paying a premium for these IB product support services.

Public Impact

Taxpayers may be overpaying for essential missile defense product support due to the absence of competition. The long-term nature of the contract could lock in potentially inflated costs for years. Limited transparency into the cost breakdown makes it challenging for the public to understand the value received.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award
Cost-plus contract type (implied by 'COST NO FEE' and lack of fixed price)
Long contract duration
No small business participation indicated

Positive Signals

Supports critical defense capabilities
Awarded to a known defense contractor

Sector Analysis

This contract falls within the Defense sector, specifically supporting guided missile and space vehicle manufacturing. Spending in this area is crucial for national security, but competitive procurement is vital to ensure cost-effectiveness.

Small Business Impact

There is no indication of small business participation in this contract. The award to Raytheon Company, a large business, suggests that opportunities for small businesses in this specific procurement were either not pursued or not available.

Oversight & Accountability

The sole-source nature of this award warrants scrutiny. Oversight should focus on ensuring that the 'COST NO FEE' structure is managed effectively to prevent cost overruns and that the services delivered meet all performance requirements.

Related Government Programs

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

Risk Flags

Lack of competitive bidding
Potential for cost overruns due to 'COST NO FEE' structure
No clear small business participation
Long contract duration without clear performance milestones
Limited transparency on specific services provided

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $20.3 million to RAYTHEON COMPANY. IB PRODUCT SUPPORT B&P/ECS

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 $20.3 million.

What is the period of performance?

Start: 2023-11-30. End: 2027-07-31.

What specific IB products and services are covered under this $20.3 million contract, and how were these defined to justify a sole-source award?

The contract details 'IB PRODUCT SUPPORT B&P/ECS'. While 'B&P' likely refers to 'Business and Production' or 'Boilerplate', and 'ECS' could mean 'Engineering Change Services' or 'Equipment Control System', the precise scope is not fully detailed. Justification for a sole-source award typically requires demonstrating that only one responsible source can provide the required supplies or services, often due to unique capabilities, proprietary data, or urgent needs.

Given the 'COST NO FEE' contract type and lack of competition, what mechanisms are in place to ensure Raytheon Company is not overcharging the Department of Defense?

The 'COST NO FEE' structure means the government pays the contractor's allowable costs but provides no fee or profit. Oversight is critical here, focusing on rigorous auditing of incurred costs to ensure they are reasonable, allocable, and allowable under the contract terms. The Missile Defense Agency must actively monitor expenditures and performance to prevent cost creep and ensure value.

How does this sole-source award align with the Department of Defense's stated goals for promoting competition and supporting small businesses in its contracting?

This sole-source award appears to contradict the DoD's emphasis on maximizing competition to achieve better value and innovation. Furthermore, the absence of small business participation, as indicated by the data, misses an opportunity to foster growth within the small business industrial base, which is a stated DoD objective.

Industry Classification

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

Product/Service Code: MODIFICATION OF EQUIPMENT › MODIFICATION OF EQUIPMENT

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: $20,945,855

Exercised Options: $20,945,855

Current Obligation: $20,290,899

Actual Outlays: $318,755

Subaward Activity

Number of Subawards: 4

Total Subaward Amount: $633,003

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