DoD Awards $229M for AIM-9X-2 Missile Lot 14 to Raytheon, Undermining Competition

Contract Overview

Contract Amount: $229,151,531 ($229.2M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2014-06-26

End Date: 2024-03-20

Contract Duration: 3,555 days

Daily Burn Rate: $64.5K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIXED PRICE INCENTIVE

Sector: Defense

Official Description: AIM-9X-2 BLK II TACTICAL MISSILE LOT 14

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $229.2 million to RAYTHEON COMPANY for work described as: AIM-9X-2 BLK II TACTICAL MISSILE LOT 14 Key points: 1. Significant contract value of $229.15 million for tactical missiles. 2. Sole-source award to Raytheon Company raises concerns about price discovery. 3. Potential for taxpayer overpayment due to lack of competitive bidding. 4. Missile manufacturing falls within the defense sector, a high-priority area.

Value Assessment

Rating: questionable

The contract's fixed-price incentive structure, combined with a sole-source award, makes it difficult to assess value. Without competitive benchmarking, it's hard to determine if the $229 million price reflects fair market value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award to Raytheon Company. This lack of competition limits price discovery and potentially leads to higher costs for the government.

Taxpayer Impact: The absence of competition for this significant missile procurement could result in taxpayers paying more than necessary, as there's no market pressure to drive down prices.

Public Impact

Taxpayers may be overpaying for critical defense equipment due to a lack of competition. The Department of Defense continues to rely on sole-source contracts for essential weapon systems. This award highlights potential inefficiencies in the defense procurement process.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award
Lack of competition
Potential for overpayment

Positive Signals

Definitive contract awarded
Long-term contract duration

Sector Analysis

This contract falls under the Guided Missile and Space Vehicle Manufacturing sector within the defense industry. Spending in this area is critical for national security, but often involves high costs and limited competition due to specialized requirements.

Small Business Impact

The data indicates this contract was awarded to Raytheon Company and does not specify any subcontracting to small businesses. Further investigation would be needed to determine if small businesses were involved in the supply chain.

Oversight & Accountability

The sole-source nature of this award warrants scrutiny from oversight bodies to ensure the government is receiving fair value. Transparency in pricing and justification for the lack of competition are crucial.

Related Government Programs

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

Risk Flags

Sole-source award lacks competitive justification.
Potential for inflated pricing due to no competition.
Limited transparency on small business participation.
High contract value concentrated with one vendor.
Long contract duration may not reflect evolving needs.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $229.2 million to RAYTHEON COMPANY. AIM-9X-2 BLK II TACTICAL MISSILE LOT 14

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 $229.2 million.

What is the period of performance?

Start: 2014-06-26. End: 2024-03-20.

What is the justification for awarding this contract on a sole-source basis, and what steps were taken to ensure fair pricing without competition?

The justification for a sole-source award typically stems from unique capabilities, proprietary technology, or urgent needs where only one source can fulfill the requirement. Agencies must conduct market research and document why competition is not feasible. For pricing, they often rely on historical data, cost analysis, and negotiation techniques to achieve a fair and reasonable price, though the absence of competitive bids inherently limits the assurance of optimal value.

What are the long-term risks associated with relying on sole-source contracts for critical defense systems like the AIM-9X-2 missile?

Long-term reliance on sole-source contracts can stifle innovation, increase costs due to the lack of competitive pressure, and create vendor lock-in. It may also reduce the government's leverage in negotiations and make it harder to adapt to new technologies or changing requirements. Over time, this can lead to less capable systems at higher prices, impacting overall defense readiness and budget efficiency.

How does the fixed-price incentive (FPI) contract type mitigate or exacerbate risks in a sole-source scenario for this missile system?

In a sole-source FPI contract, the incentive is designed to motivate the contractor to control costs below a target price, sharing any savings with the government. However, without competition, the baseline target price itself might be inflated. While the FPI structure aims for cost efficiency, the lack of a competitive benchmark makes it challenging to verify if the target price is truly optimal, potentially limiting the effectiveness of the incentive.

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

Solicitation ID: N0001914R4011

Offers Received: 1

Pricing Type: FIXED PRICE INCENTIVE (L)

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: $229,151,531

Exercised Options: $229,151,531

Current Obligation: $229,151,531

Subaward Activity

Number of Subawards: 371

Total Subaward Amount: $353,939,902

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline