Raytheon Company awarded $5.6M contract for guided missile manufacturing, with no competition

Contract Overview

Contract Amount: $5,603,205 ($5.6M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2024-05-15

End Date: 2027-11-15

Contract Duration: 1,279 days

Daily Burn Rate: $4.4K/day

Competition Type: NOT COMPETED

Pricing Type: COST NO FEE

Sector: Defense

Official Description: BID AND PROPOSAL

Place of Performance

Location: HUNTSVILLE, MADISON County, ALABAMA, 35805

State: Alabama Government Spending

Plain-Language Summary

Department of Defense obligated $5.6 million to RAYTHEON COMPANY for work described as: BID AND PROPOSAL Key points: 1. Contract awarded via a sole-source procurement, raising questions about price discovery and potential for overpayment. 2. The contract duration of over three years suggests a long-term need for these specialized manufacturing services. 3. Limited competition may indicate a lack of readily available alternative suppliers or a strategic decision by the agency. 4. Performance context is crucial to understand if the awarded price reflects the value delivered over the contract term. 5. The Missile Defense Agency's reliance on a single provider warrants scrutiny of cost controls and performance metrics. 6. Manufacturing of guided missiles falls within a critical defense sector, highlighting the importance of efficient and cost-effective procurement.

Value Assessment

Rating: questionable

Without competitive bidding, it is difficult to benchmark the value for money. The awarded amount of $5.6 million over approximately 3.5 years for guided missile manufacturing needs to be compared against historical spending for similar items or against industry benchmarks for specialized defense components. The 'COST NO FEE' contract type suggests that the government will reimburse Raytheon for allowable costs plus a negotiated fee, which can sometimes lead to higher overall costs if not managed tightly. Further analysis of the cost components and the fee structure is necessary to assess true value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded using a sole-source procurement method, meaning it was not competed. This typically occurs when only one responsible source is available or when there is a compelling justification for not seeking competition. The lack of bidders means there was no opportunity for price negotiation or comparison among multiple vendors, which can limit the government's ability to secure the best possible pricing.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive pressure. Without competing the requirement, the government cannot be assured it received the most cost-effective solution available in the market.

Public Impact

The primary beneficiaries are the Department of Defense and potentially allied nations relying on advanced missile defense capabilities. The contract supports the production of guided missiles, crucial for national security and strategic defense operations. The geographic impact is centered in Alabama, where Raytheon's manufacturing facilities are located, supporting local employment and the regional economy. This contract sustains jobs within the specialized defense manufacturing workforce, particularly in areas related to guided missile production.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potentially increases costs for taxpayers.
Cost-plus contract type requires rigorous oversight to control spending and ensure value.
Lack of transparency in the bidding process makes it hard to assess the fairness of the awarded price.
Long contract duration could lead to cost escalations if not managed proactively.

Positive Signals

Award to a known defense contractor (Raytheon) suggests a level of established capability and reliability.
Contract supports a critical national security requirement (missile defense).
Specific location in Alabama may indicate leveraging existing infrastructure and skilled workforce.

Sector Analysis

The guided missile and space vehicle manufacturing sector is a highly specialized and critical segment of the defense industry. It is characterized by high barriers to entry, significant research and development investment, and stringent quality control requirements. Spending in this sector is heavily influenced by geopolitical factors and national defense priorities. Comparable spending benchmarks would typically involve analyzing other contracts for similar missile systems or components awarded by the Department of Defense or other allied nations, though such data is often classified or proprietary.

Small Business Impact

This contract does not appear to involve a small business set-aside, as indicated by the 'sb' field being false. Furthermore, the 'ss' field is also false, suggesting no specific small business subcontracting goals were explicitly stated or mandated within this particular award notice. The primary contractor, Raytheon, is a large defense firm, and while they may engage small businesses as subcontractors, this award itself does not directly benefit small businesses through set-aside provisions.

Oversight & Accountability

Oversight for this contract will likely fall under the purview of the Missile Defense Agency and the Department of Defense's contract management and auditing functions. Given the 'COST NO FEE' contract type, robust financial oversight is essential to monitor allowable costs and ensure the negotiated fee is reasonable. Transparency may be limited due to the sole-source nature of the award, but contract performance reviews and audits are standard accountability measures. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected.

Related Government Programs

Missile Defense Systems
Guided Missile Manufacturing
Department of Defense Procurement
Raytheon Company Contracts
Space Vehicle Manufacturing

Risk Flags

Sole-source procurement
Cost-plus contract type
Lack of competitive benchmarking
Potential for cost overruns

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $5.6 million to RAYTHEON COMPANY. BID AND PROPOSAL

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 $5.6 million.

What is the period of performance?

Start: 2024-05-15. End: 2027-11-15.

What is Raytheon Company's track record with the Department of Defense, particularly on missile defense contracts?

Raytheon Company, now part of RTX, has a long and extensive history as a prime contractor for the Department of Defense, particularly in the realm of missile defense and advanced weapon systems. They are a major player in developing and producing a wide array of missiles, including air-to-air, surface-to-air, and strategic missiles. Their track record includes significant programs like the Patriot air defense system, Standard Missile family, and various interceptor programs for missile defense. While generally considered a capable and reliable supplier, like any large defense contractor, they have faced scrutiny over contract performance, cost overruns, and technical challenges on specific programs. However, their consistent role as a prime contractor on critical defense systems indicates a strong, albeit sometimes complex, relationship with the DoD.

How does the awarded price of $5.6 million compare to similar guided missile manufacturing contracts?

Directly comparing the $5.6 million award to 'similar' contracts is challenging without more specific details on the type and quantity of guided missiles being manufactured. The 'BID AND PROPOSAL' data indicates a total award value, but not the unit cost or the specific missile system. However, given the specialized nature of guided missile manufacturing, the complexity of the technology, and the long-term nature of defense contracts, $5.6 million over approximately 3.5 years (from May 2024 to November 2027) suggests a moderate-sized award. Larger, more complex missile systems or higher production volumes would command significantly higher contract values. This figure might represent components, specific sub-assemblies, or a limited production run of a particular missile type. Benchmarking would require access to classified or proprietary data on comparable sole-source or competed contracts for similar defense articles.

What are the primary risks associated with this sole-source contract for guided missile manufacturing?

The primary risk associated with this sole-source contract is the potential for inflated costs due to the lack of competitive bidding. Without competing the requirement, the Missile Defense Agency (MDA) cannot be certain that Raytheon's proposed costs and fee are the most economical. There's also a risk of reduced innovation or efficiency, as the contractor may face less pressure to optimize processes or develop cost-saving measures compared to a competitive environment. Furthermore, reliance on a single supplier can create supply chain vulnerabilities if Raytheon encounters production issues. The 'COST NO FEE' contract type, while common in R&D or uncertain environments, carries inherent risks of cost growth if not meticulously managed and audited by the government.

How effective is the Missile Defense Agency in overseeing cost-plus contracts with sole-source providers?

The Missile Defense Agency (MDA), like other Department of Defense agencies, employs various mechanisms to oversee cost-plus contracts, including those awarded sole-source. These typically involve dedicated contract officers, financial auditors, and technical representatives who monitor contractor expenditures, review incurred costs, and ensure compliance with contract terms. For 'COST NO FEE' contracts, the focus is on verifying the allowability, allocability, and reasonableness of costs incurred, as well as ensuring the negotiated fee is appropriate. The effectiveness hinges on the adequacy of resources allocated to oversight, the expertise of the personnel involved, and the rigor of the auditing processes. While the DoD has established procedures, the inherent nature of sole-source, cost-reimbursable contracts always presents a higher risk of cost escalation compared to fixed-price, competitively awarded contracts.

What are the historical spending patterns for guided missile manufacturing by the Department of Defense?

Historical spending patterns for guided missile manufacturing by the Department of Defense are substantial and represent a significant portion of the defense budget. The DoD consistently invests billions of dollars annually in the research, development, testing, and procurement of a wide array of missile systems, including those for air defense, strategic deterrence, and tactical engagement. Major contractors like Raytheon, Lockheed Martin, and Northrop Grumman are key recipients of this spending. Spending fluctuates based on geopolitical threats, modernization programs, and specific platform requirements. While specific figures for 'guided missile manufacturing' as a distinct category can be difficult to isolate from broader procurement or R&D accounts, it is consistently one of the largest sub-categories within the DoD's weapons systems procurement budget.

What does the 'BID AND PROPOSAL' designation signify in this contract award?

The 'BID AND PROPOSAL' (B&P) designation in this contract award notice likely refers to the specific line item or activity code under which the contract is being classified or reported, rather than the procurement method itself. In government contracting, B&P often relates to costs incurred by contractors in preparing bids and proposals for potential future contracts. However, in the context of a contract award value ('a': 5603205.48), it's more probable that 'BID AND PROPOSAL' is a misinterpretation or a specific internal code within the data source that doesn't directly describe the nature of the goods/services. Given the contract is for 'Guided Missile and Space Vehicle Manufacturing' and was 'NOT COMPETED', the value represents the total estimated cost and fee for the awarded work, not just proposal preparation costs.

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: $5,853,205

Exercised Options: $5,853,205

Current Obligation: $5,603,205

Actual Outlays: $461,029

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