DoD's $460M Raytheon Contract for Missile Manufacturing Faces Scrutiny Over Lack of Competition
Contract Overview
Contract Amount: $459,861,991 ($459.9M)
Contractor: Raytheon Company
Awarding Agency: Department of Defense
Start Date: 2007-01-31
End Date: 2031-12-09
Contract Duration: 9,078 days
Daily Burn Rate: $50.7K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: FIRM FIXED PRICE
Sector: Defense
Official Description: COST REDUCTION INITIATIVE
Place of Performance
Location: TUCSON, PIMA County, ARIZONA, 85756
State: Arizona Government Spending
Plain-Language Summary
Department of Defense obligated $459.9 million to RAYTHEON COMPANY for work described as: COST REDUCTION INITIATIVE Key points: 1. Significant contract value of $459.9 million awarded to Raytheon Company. 2. Lack of competition raises concerns about potential overspending and value for taxpayer money. 3. The contract spans a long duration (2007-2031), increasing long-term risk. 4. The sector is Guided Missile and Space Vehicle Manufacturing, a critical defense area.
Value Assessment
Rating: questionable
The contract's value of $459.9 million is substantial. Without competitive bidding, it's difficult to assess if this price is optimal compared to potential market rates for similar guided missile manufacturing services.
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 the government as there is no market pressure to offer competitive pricing.
Taxpayer Impact: The lack of competition means taxpayers may be paying a premium for these guided missile and space vehicle manufacturing services, as the government did not leverage market forces to secure the best possible price.
Public Impact
Taxpayers may be overpaying due to the absence of competitive bidding. Long-term commitment to a single provider could stifle innovation in defense manufacturing. Dependence on one contractor for critical missile components poses a strategic risk.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Lack of competition
- Long contract duration
- No small business participation indicated
Positive Signals
- Firm Fixed Price contract type
- Awarded by Department of Defense
Sector Analysis
This contract falls within the Guided Missile and Space Vehicle Manufacturing sector, a specialized and high-value area within defense. Spending benchmarks are difficult to establish without comparable competed contracts in this niche.
Small Business Impact
The data indicates no small business participation in this contract. This is a missed opportunity to support small businesses and could indicate a lack of effort to broaden the supplier base.
Oversight & Accountability
The 'NOT COMPETED' status suggests potential oversight gaps in ensuring competitive procurement practices. Further review is needed to understand the justification for the sole-source award and ensure accountability.
Related Government Programs
- Guided Missile and Space Vehicle Manufacturing
- Department of Defense Contracting
- Defense Contract Management Agency Programs
Risk Flags
- Lack of competition
- Potential for inflated pricing
- Long contract duration increases risk
- No small business participation
- Limited transparency on justification for sole-source award
Tags
guided-missile-and-space-vehicle-manufac, department-of-defense, az, definitive-contract, 100m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $459.9 million to RAYTHEON COMPANY. COST REDUCTION INITIATIVE
Who is the contractor on this award?
The obligated recipient is RAYTHEON COMPANY.
Which agency awarded this contract?
Awarding agency: Department of Defense (Defense Contract Management Agency).
What is the total obligated amount?
The obligated amount is $459.9 million.
What is the period of performance?
Start: 2007-01-31. End: 2031-12-09.
What was the specific justification for awarding this contract on a sole-source basis, and were alternative competitive strategies considered?
The justification for a sole-source award is critical for understanding the value proposition. Without competition, the government relies heavily on the contractor's proposed pricing and the agency's negotiation skills. A thorough review of the sole-source justification documentation is necessary to ensure it aligns with federal procurement regulations and that all avenues for competition were explored.
How does the per-unit cost of the guided missiles manufactured under this contract compare to industry benchmarks or historical data for similar systems?
Benchmarking the per-unit cost is essential for assessing value. Given the sole-source nature, direct comparison is challenging. However, analyzing historical pricing trends for Raytheon or similar defense contractors, and comparing the cost components (labor, materials, overhead) against industry averages can provide insights into whether the government is receiving a fair and reasonable price.
What are the long-term risks associated with a sole-source contract of this magnitude and duration for critical defense components?
Long-term sole-source contracts for critical components carry significant risks, including potential price escalation, reduced innovation, and contractor lock-in. The government's reliance on a single supplier can weaken its negotiating position over time and make it vulnerable to supply chain disruptions or changes in contractor priorities. Contingency planning and regular performance reviews are crucial.
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
Offers Received: 1
Pricing Type: FIRM FIXED PRICE (J)
Evaluated Preference: NONE
Contractor Details
Address: 1151 E HERMANS RD, TUCSON, AZ, 85706
Business Categories: Category Business, Not Designated a Small Business
Financial Breakdown
Contract Ceiling: $461,139,253
Exercised Options: $461,139,253
Current Obligation: $459,861,991
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: NO
Timeline
Start Date: 2007-01-31
Current End Date: 2031-12-09
Potential End Date: 2031-12-09 00:00:00
Last Modified: 2019-06-12
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