DoD awards Raytheon $101M for M-CODE EMD Phase 1, a sole-source contract with significant duration

Contract Overview

Contract Amount: $100,983,198 ($101.0M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2019-09-18

End Date: 2027-02-24

Contract Duration: 2,716 days

Daily Burn Rate: $37.2K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: M-CODE EMD PHASE 1

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $101.0 million to RAYTHEON COMPANY for work described as: M-CODE EMD PHASE 1 Key points: 1. High contract value for a single vendor. 2. Sole-source award limits competitive pricing. 3. Long contract duration may indicate complexity or evolving requirements. 4. Focus on missile and space vehicle parts suggests a critical defense sector.

Value Assessment

Rating: questionable

The contract is Cost Plus Fixed Fee, which can lead to cost overruns if not managed tightly. Benchmarking is difficult without more specific cost breakdowns, but the total value is substantial for an EMD phase.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, meaning the Department of the Navy did not solicit offers from multiple sources. This limits price discovery and potentially leads to higher costs compared to a competitive process.

Taxpayer Impact: The lack of competition for a $101M contract raises concerns about taxpayer value and whether a more cost-effective solution could have been achieved through open bidding.

Public Impact

Taxpayers may be paying a premium due to the sole-source nature of the award. The long duration (2019-2027) means taxpayer funds are committed for an extended period. Lack of transparency in the procurement process hinders public understanding of the necessity and cost-effectiveness.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award
Cost-plus contract type
Long contract duration
Lack of small business participation

Positive Signals

Awarded to a major defense contractor
Supports critical defense capabilities

Sector Analysis

This contract falls within the 'Other Guided Missile and Space Vehicle Parts' manufacturing sector, a specialized area within defense. Spending in this niche is often driven by national security requirements and can involve high R&D costs.

Small Business Impact

The contract was not awarded to a small business, and there is no indication of subcontracting goals for small businesses. This represents a missed opportunity to support smaller enterprises within the defense industrial base.

Oversight & Accountability

The sole-source nature of this award warrants close oversight to ensure costs are reasonable and that the contractor is meeting all performance requirements. Transparency regarding the justification for not competing is crucial.

Related Government Programs

Other Guided Missile and Space Vehicle Parts and Auxiliary Equipment Manufacturing
Department of Defense Contracting
Department of the Navy Programs

Risk Flags

Sole-source award limits competition and potentially increases costs.
Cost-plus contract type carries inherent risk of cost overruns.
Long contract duration (8+ years) increases exposure to changing requirements and economic factors.
No small business participation identified.
Lack of transparency regarding procurement justification.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $101.0 million to RAYTHEON COMPANY. M-CODE EMD PHASE 1

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 $101.0 million.

What is the period of performance?

Start: 2019-09-18. End: 2027-02-24.

What was the justification for awarding this contract on a sole-source basis, and were alternative competitive strategies considered?

The justification for a sole-source award typically involves unique capabilities, urgent needs, or the unavailability of other sources. Without specific documentation, it's difficult to assess if alternatives were truly explored. A thorough review would examine the market research conducted and the rationale provided by the Department of the Navy to ensure the sole-source decision was indeed the most appropriate and cost-effective path.

How will the Cost Plus Fixed Fee structure be managed to prevent cost overruns and ensure fair pricing for taxpayers?

Effective management of a Cost Plus Fixed Fee contract requires robust government oversight, including detailed cost tracking, regular audits, and performance monitoring. The fixed fee component provides some incentive for the contractor to control costs, but the government must remain vigilant. Clear performance metrics and regular reviews are essential to ensure the contractor operates efficiently and that the final cost reflects fair value.

What are the specific performance metrics and milestones for this EMD phase, and how will success be measured given the long duration?

Success measurement for an EMD phase, especially one spanning several years, relies on clearly defined technical milestones and deliverables. The Department of the Navy must have established criteria to assess the contractor's progress in developing and demonstrating the M-CODE system's capabilities. Regular technical reviews and independent verification of results are critical to ensure the program stays on track and meets its objectives within the allocated timeframe and budget.

Industry Classification

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

Product/Service Code: GUIDED MISSLES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0001918R0039

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

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: $100,983,198

Exercised Options: $100,983,198

Current Obligation: $100,983,198

Subaward Activity

Number of Subawards: 1

Total Subaward Amount: $108,000

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline