DoD awards Raytheon $24.4M for JSOW AGM-154C Block III missiles, a sole-source contract

Contract Overview

Contract Amount: $24,426,715 ($24.4M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2014-06-06

End Date: 2018-12-31

Contract Duration: 1,669 days

Daily Burn Rate: $14.6K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: JSOW AGM- 154C BLOCK III

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $24.4 million to RAYTHEON COMPANY for work described as: JSOW AGM- 154C BLOCK III Key points: 1. The contract value is $24.4 million for guided missile manufacturing. 2. Raytheon Company is the sole awardee, indicating limited competition. 3. The contract type is Cost Plus Fixed Fee, which can pose cost control risks. 4. This falls under the Defense sector, specifically guided missile manufacturing.

Value Assessment

Rating: fair

The Cost Plus Fixed Fee contract type, while common for complex weapon systems, offers less incentive for cost savings compared to fixed-price contracts. Benchmarking against similar missile development contracts is difficult without more detailed cost breakdowns.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, likely due to the specialized nature of the JSOW AGM-154C Block III missile system. The lack of competition limits price discovery and potentially leads to higher costs for the government.

Taxpayer Impact: Taxpayer funds are used for this sole-source award, with potential for increased cost due to the absence of competitive bidding.

Public Impact

Missile procurement directly impacts national defense capabilities. The specific capabilities of the JSOW AGM-154C Block III are classified, but it is a key component of air-to-ground strike capabilities. Sole-source contracts can raise concerns about efficient use of taxpayer money.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award
Cost Plus Fixed Fee contract type
Lack of competition

Positive Signals

Award to established defense contractor
Procurement of advanced missile system

Sector Analysis

This contract is within the Defense sector, specifically the manufacturing of guided missiles. Spending in this area is critical for national security, but often involves high unit costs and limited competition due to technological complexity.

Small Business Impact

The awardee is Raytheon Company, a large defense contractor. There is no indication that small businesses were involved as subcontractors on this specific contract, which is common for major defense procurements.

Oversight & Accountability

The Department of Defense, through the Defense Contract Management Agency, is responsible for overseeing this contract. Oversight would focus on ensuring contract terms are met and costs are reasonable, though the sole-source nature presents challenges.

Related Government Programs

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

Risk Flags

Sole-source award limits competition and price discovery.
Cost Plus Fixed Fee contract type carries inherent cost overrun risk.
Lack of transparency in cost breakdown due to sole-source nature.
Potential for reduced incentive for contractor efficiency.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $24.4 million to RAYTHEON COMPANY. JSOW AGM- 154C BLOCK III

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 $24.4 million.

What is the period of performance?

Start: 2014-06-06. End: 2018-12-31.

What is the justification for the sole-source award of the JSOW AGM-154C Block III missile system?

Sole-source awards are typically justified when only one responsible source can provide the required supplies or services. For advanced weapon systems like the JSOW, this could be due to proprietary technology, unique manufacturing capabilities, or specific integration requirements with existing platforms that only the original manufacturer possesses.

How does the Cost Plus Fixed Fee (CPFF) contract structure impact the government's risk regarding cost overruns for this missile system?

The CPFF structure shifts a significant portion of the cost risk to the government. While the contractor receives a fixed fee, they are reimbursed for all allowable costs. This can incentivize contractors to incur higher costs, as their fee remains constant, potentially leading to cost overruns if not rigorously monitored and controlled by the government.

What is the long-term strategic value of procuring the JSOW AGM-154C Block III missiles under these contract terms?

The long-term strategic value lies in maintaining and enhancing the U.S. military's precision strike capabilities. The JSOW is a versatile weapon system. However, the sole-source, CPFF nature of this procurement raises questions about the long-term cost-effectiveness and whether alternative, more competitive acquisition strategies could have achieved similar strategic outcomes at a lower taxpayer expense.

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 COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Rockwell Collins Australia PTY Limited

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: $27,172,522

Exercised Options: $24,426,715

Current Obligation: $24,426,715

Subaward Activity

Number of Subawards: 5

Total Subaward Amount: $506,283

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline