Navy Awards Raytheon $60.9M for Expeditionary Ship Interdiction System LRIP, Facing Limited Competition

Contract Overview

Contract Amount: $60,931,956 ($60.9M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2024-01-08

End Date: 2027-01-27

Contract Duration: 1,115 days

Daily Burn Rate: $54.6K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Pricing Type: COST NO FEE

Sector: Defense

Official Description: NAVY MARINE EXPEDITIONARY SHIP INTERDICTION SYSTEM LAUNCHER - LOW RATE INITIAL PRODUCTION

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $60.9 million to RAYTHEON COMPANY for work described as: NAVY MARINE EXPEDITIONARY SHIP INTERDICTION SYSTEM LAUNCHER - LOW RATE INITIAL PRODUCTION Key points: 1. Significant investment in advanced missile technology for naval defense. 2. Raytheon Company is the sole provider, raising concerns about price discovery. 3. Potential for cost overruns due to lack of competitive bidding. 4. The contract falls within the Guided Missile and Space Vehicle Manufacturing sector.

Value Assessment

Rating: questionable

The contract is a delivery order with a total value of $60.9M. Without competitive pricing data or a clear benchmark, assessing the value for money is difficult. The 'COST NO FEE' pricing type suggests costs will be reimbursed, but the absence of competition makes it hard to gauge if this is an efficient reimbursement.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

This contract was awarded under a limited competition scenario, with Raytheon Company identified as the sole source. This lack of robust competition limits the government's ability to secure the best possible price through market forces, potentially leading to higher costs.

Taxpayer Impact: Taxpayer funds are being used for this procurement. The limited competition raises concerns about whether the government is achieving optimal value, potentially resulting in less efficient use of taxpayer money.

Public Impact

Enhances naval capabilities for ship interdiction. Supports advanced defense technology development and manufacturing. Potential impact on future defense spending trends in missile systems. Job creation in Arizona's defense manufacturing sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition
Sole-source provider
Cost-reimbursement pricing structure

Positive Signals

Acquisition of critical defense technology
Supports established defense contractor

Sector Analysis

This contract is within the Guided Missile and Space Vehicle Manufacturing sector, a critical area for national defense. Spending in this sector is often characterized by high R&D costs and specialized manufacturing capabilities, where competition can be inherently limited.

Small Business Impact

The data indicates that small businesses were not involved in this specific contract award. Further analysis would be needed to determine if subcontracting opportunities exist or if small businesses are being excluded from this particular defense supply chain.

Oversight & Accountability

The contract is a delivery order under an existing framework, suggesting some level of prior oversight. However, the limited competition aspect warrants close monitoring to ensure fair pricing and prevent potential cost creep throughout the contract duration.

Related Government Programs

Guided Missile and Space Vehicle Manufacturing
Department of Defense Contracting
Department of the Navy Programs

Risk Flags

Lack of competitive bidding
Sole-source provider
Potential for price gouging
Limited transparency in cost structure
Dependency on a single supplier

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $60.9 million to RAYTHEON COMPANY. NAVY MARINE EXPEDITIONARY SHIP INTERDICTION SYSTEM LAUNCHER - LOW RATE INITIAL PRODUCTION

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 $60.9 million.

What is the period of performance?

Start: 2024-01-08. End: 2027-01-27.

What is the projected cost-effectiveness of this system compared to alternative interdiction methods?

Assessing the cost-effectiveness requires a comparative analysis against alternative ship interdiction methods, considering not only acquisition costs but also operational expenses, reliability, and mission success rates. Without this comparative data, it's difficult to determine if this specific system represents the most efficient use of resources for the Navy's objectives.

What are the specific risks associated with relying on a sole-source provider for this critical defense system?

Relying on a sole-source provider like Raytheon for the Expeditionary Ship Interdiction System introduces risks such as price escalation due to lack of competition, potential supply chain vulnerabilities if Raytheon faces production issues, and limited leverage for the government in negotiating terms. This dependence can also stifle innovation from potential competitors.

How will the effectiveness of this LRIP phase inform future, potentially competitive, procurements?

The Low Rate Initial Production (LRIP) phase is crucial for validating the system's design, manufacturing processes, and initial performance. Data gathered during LRIP, including production costs and operational feedback, should be rigorously analyzed. This analysis will inform decisions on whether to proceed with full-rate production, potentially under a more competitive contract structure, or to seek modifications and alternative solutions.

Industry Classification

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

Product/Service Code: GUIDED MISSLES

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: M6785422R1000

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: $63,931,956

Exercised Options: $60,931,956

Current Obligation: $60,931,956

Subaward Activity

Number of Subawards: 4

Total Subaward Amount: $541,572

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: M6785422D1000

IDV Type: IDC

Timeline