Navy awards $18.7M contract for 42 precision extended range munitions to Raytheon Company

Contract Overview

Contract Amount: $18,694,831 ($18.7M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2012-08-30

End Date: 2015-07-07

Contract Duration: 1,041 days

Daily Burn Rate: $18.0K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 4

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: DEVELOPMENT AND DELIVERY OF 42 PRECISION EXTENDED RANGE MUNITION ALL UP ROUNDS, 2 EXTRACTOR TOOLS, 2 PROJECTILE INTERFACE DEVICES, TEST SUPPORT AND CDRLS.

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756, UNITED STATES OF AMERICA

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $18.7 million to RAYTHEON COMPANY for work described as: DEVELOPMENT AND DELIVERY OF 42 PRECISION EXTENDED RANGE MUNITION ALL UP ROUNDS, 2 EXTRACTOR TOOLS, 2 PROJECTILE INTERFACE DEVICES, TEST SUPPORT AND CDRLS. Key points: 1. Contract awarded via full and open competition, suggesting a competitive bidding process. 2. The contract type is Cost Plus Fixed Fee (CPFF), which can lead to cost overruns if not managed carefully. 3. The duration of the contract is 1041 days, indicating a medium-term project. 4. The contract is for ammunition manufacturing, a critical component of defense readiness. 5. The award was made by the Department of the Navy, a major defense procurement agency. 6. The contract value of $18.7 million is moderate for defense procurement, but specific to the quantity and type of munitions.

Value Assessment

Rating: fair

The contract value of $18.7 million for 42 precision extended range munitions and associated tools appears to be within a reasonable range for specialized defense equipment. However, without specific details on the technical specifications of the munitions and comparable market prices for similar advanced systems, a definitive value-for-money assessment is challenging. The Cost Plus Fixed Fee (CPFF) contract type introduces potential risks for cost escalation, as the contractor is reimbursed for allowable costs plus a fixed fee. This necessitates robust oversight to ensure costs remain controlled and the fixed fee adequately compensates the contractor for the effort.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. The presence of multiple bidders (4 were mentioned in the data) generally fosters price discovery and can lead to more competitive pricing for the government. The specific number of bids received beyond the four mentioned is not detailed, but the 'full and open' designation suggests a robust competitive environment was sought.

Taxpayer Impact: A competitive bidding process for defense articles like precision munitions helps ensure that taxpayer dollars are used efficiently by driving down prices through market forces.

Public Impact

The primary beneficiaries are the U.S. Navy, receiving advanced munitions critical for operational readiness. The services delivered include the development and delivery of 42 precision extended range munition all-up rounds, along with essential extractor tools and projectile interface devices. The geographic impact is primarily within the United States, with the contractor, Raytheon Company, operating facilities likely in Arizona (indicated by 'ST': 'AZ'). Workforce implications include employment opportunities for engineers, manufacturing personnel, and support staff involved in the production of these advanced munitions.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Fixed Fee (CPFF) contract type can incentivize higher costs if not closely monitored.
Limited public information on the specific performance metrics or testing results for these munitions.
The duration of the contract (1041 days) may indicate complex development or production challenges.
Reliance on a single contractor for a critical defense component could pose supply chain risks if not diversified.

Positive Signals

Awarded through full and open competition, suggesting a competitive market for this type of munition.
Contract includes necessary support equipment (extractor tools, interface devices) and test support, indicating a comprehensive package.
Raytheon Company is a well-established defense contractor with significant experience in munition development and production.
The contract specifies 'all up rounds,' implying a complete, ready-to-use munition system.

Sector Analysis

The defense sector, specifically the ammunition manufacturing sub-sector, is characterized by high technological requirements and significant government procurement. This contract for precision extended range munitions fits within the broader landscape of advanced weapons systems development and procurement by the Department of Defense. Comparable spending benchmarks would involve analyzing other contracts for similar types of guided or long-range munitions, which can range from tens of thousands to millions of dollars per unit depending on sophistication and quantity. The market is dominated by a few large defense contractors.

Small Business Impact

The provided data indicates that this contract was not set aside for small businesses ('SB': false, 'SS': false). Therefore, there are no direct subcontracting implications specifically mandated for small businesses through a set-aside program for this particular award. However, as a large defense contractor, Raytheon Company may engage small businesses as subcontractors for various components or services, contributing to the broader small business ecosystem within the defense industrial base.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. The Cost Plus Fixed Fee (CPFF) structure necessitates rigorous financial oversight to audit allowable costs and ensure the fixed fee is justified. Transparency is typically managed through contract reporting mechanisms and Defense Contract Audit Agency (DCAA) reviews. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse related to the contract.

Related Government Programs

Precision Guided Munitions
Air-to-Ground Munitions
Naval Aviation Support Systems
Defense Ammunition Procurement
Advanced Weapons Development

Risk Flags

Cost Plus Fixed Fee (CPFF) contract type requires diligent oversight to manage costs.
Potential for cost overruns due to the nature of CPFF contracts.
Limited public data on specific munition performance metrics.
Dependence on a single contractor for a critical defense component.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $18.7 million to RAYTHEON COMPANY. DEVELOPMENT AND DELIVERY OF 42 PRECISION EXTENDED RANGE MUNITION ALL UP ROUNDS, 2 EXTRACTOR TOOLS, 2 PROJECTILE INTERFACE DEVICES, TEST SUPPORT AND CDRLS.

Who is the contractor on this award?

The obligated recipient is RAYTHEON COMPANY.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Navy).

What is the total obligated amount?

The obligated amount is $18.7 million.

What is the period of performance?

Start: 2012-08-30. End: 2015-07-07.

What is the historical spending pattern for precision extended range munitions by the Department of the Navy?

Analyzing historical spending patterns for precision extended range munitions by the Department of the Navy requires access to comprehensive procurement databases. Generally, spending in this category fluctuates based on geopolitical needs, technological advancements, and budget allocations. Contracts for such munitions are often awarded through competitive processes, with values varying significantly based on quantity, range, payload, and guidance systems. Over the past decade, there has been a consistent trend towards acquiring more precise, longer-range munitions to minimize collateral damage and enhance standoff capabilities. Specific figures would necessitate a detailed query of federal procurement records, looking at contracts awarded by Naval Air Systems Command (NAVAIR) and other relevant Navy entities for similar munition types over the last 5-10 fiscal years.

How does the unit cost of these munitions compare to similar systems procured by other branches of the military?

A direct unit cost comparison for these 42 precision extended range munitions is challenging without knowing the exact specifications and the number of units per contract. However, advanced munitions are typically high-cost items. For context, programs like the Joint Air-to-Ground Munition (JAGM) or the Advanced Anti-Radiation Guided Missile (AARGM) have unit costs that can range from tens of thousands to over $100,000 per missile, depending on the specific variant and procurement quantity. The Navy's $18.7 million award for 42 units suggests a per-unit cost of approximately $445,000, which, if these are highly sophisticated, long-range systems, could be within the expected range for cutting-edge defense technology. Comparisons would need to account for differences in range, guidance, warhead, and target set.

What are the key performance indicators (KPIs) used to evaluate the success of this munition development and delivery contract?

Key performance indicators (KPIs) for a munition development and delivery contract typically focus on technical performance, schedule adherence, and cost control. For technical performance, KPIs would include accuracy (e.g., Circular Error Probable - CEP), range achieved, reliability rates (e.g., Mean Time Between Failures - MTBF), and effectiveness against intended targets during testing. Schedule adherence would be measured by the timely delivery of all-up rounds, extractor tools, and test support as per the contract milestones. Cost control KPIs would monitor the actual costs incurred against the estimated costs, particularly crucial for a Cost Plus Fixed Fee (CPFF) contract, ensuring the final price does not excessively exceed projections and that the fixed fee remains appropriate for the effort expended. Delivery quality, including defect rates, would also be a critical KPI.

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

Raytheon Company (now RTX) has an extensive and well-established track record in defense contracting, particularly in the development and manufacturing of munitions. They are a major producer of a wide array of missiles, guided bombs, and other ordnance for the U.S. military and allied nations. Notable programs include the Tomahawk cruise missile, Patriot missile system, Paveway series of laser-guided bombs, and the Advanced Medium-Range Air-to-Air Missile (AMRAAM). Their experience spans decades and covers various munition types, including air-to-ground, air-to-air, and surface-to-surface systems. While specific performance details on every contract are not publicly available, their consistent role as a prime contractor for critical munition programs indicates a strong capability and a generally positive performance history in delivering complex defense systems.

What are the potential risks associated with the Cost Plus Fixed Fee (CPFF) contract type for this acquisition?

The Cost Plus Fixed Fee (CPFF) contract type, while allowing for flexibility in development and ensuring the contractor is compensated for incurred costs plus a predetermined profit (the fee), carries inherent risks. The primary risk is cost escalation; since the contractor is reimbursed for allowable costs, there can be less incentive to control expenses compared to fixed-price contracts. If the government's cost accounting and oversight are not rigorous, the final contract price could significantly exceed initial estimates. Another risk is scope creep, where the project's requirements may expand, leading to increased costs and potentially impacting the fixed fee negotiation if not managed properly. For the government, effective oversight, detailed cost audits, and clear definition of allowable costs are crucial to mitigate these risks and ensure fair pricing.

How does the geographic location of contract performance (Arizona) impact delivery timelines and costs?

The contract indicates performance in Arizona ('ST': 'AZ'), which is a significant hub for aerospace and defense manufacturing. Locating production in Arizona can offer advantages such as established infrastructure, a skilled workforce experienced in defense production, and potentially favorable business operating conditions. However, it also introduces potential logistical considerations for delivery to naval bases or deployment points, which could be located elsewhere. Delivery timelines and costs are influenced by the distance to the end-user, transportation methods, and any specific security or handling requirements for munitions. While Arizona offers manufacturing benefits, the overall impact on delivery and cost would depend on the specific supply chain logistics and the final destination of the munitions.

Industry Classification

NAICS: Manufacturing › Other Fabricated Metal Product Manufacturing › Ammunition (except Small Arms) Manufacturing

Product/Service Code: AMMUNITION AND EXPLOSIVES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: M6785411R6013

Offers Received: 4

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

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: $18,694,831

Exercised Options: $18,694,831

Current Obligation: $18,694,831

Subaward Activity

Number of Subawards: 58

Total Subaward Amount: $33,410,648

Contract Characteristics

Cost or Pricing Data: NO

Timeline