Raytheon Company awarded $32.17M for TOMAHAWK TEST EQUIPMENT UPGRADES by the Department of Defense

Contract Overview

Contract Amount: $32,171,052 ($32.2M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2019-06-17

End Date: 2025-09-30

Contract Duration: 2,297 days

Daily Burn Rate: $14.0K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: TOMAHAWK TEST EQUIPMENT UPGRADES

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $32.2 million to RAYTHEON COMPANY for work described as: TOMAHAWK TEST EQUIPMENT UPGRADES Key points: 1. Contract awarded on a cost-plus-fixed-fee basis, which can lead to cost overruns if not managed carefully. 2. Sole-source award limits competitive pressure, potentially impacting price efficiency. 3. Long contract duration of 2297 days suggests a complex or ongoing need for test equipment. 4. The contract is for test equipment upgrades, indicating a need to maintain or enhance existing defense capabilities. 5. The specific product service code is not provided, making direct benchmarking difficult. 6. The contract is managed by the Defense Contract Management Agency, suggesting robust oversight.

Value Assessment

Rating: fair

The contract's cost-plus-fixed-fee structure requires careful monitoring to ensure value for money. Without a competitive bidding process, it's challenging to benchmark the pricing against market rates or similar contracts. The total award amount of $32.17 million over approximately six years suggests a significant investment in specialized test equipment. Further analysis would be needed to compare the cost per unit or the overall value proposition against industry standards for similar defense testing apparatus.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning there was no open competition. This approach is typically used when only one vendor possesses the necessary capabilities or proprietary technology. The lack of multiple bidders means that price discovery through competition was not leveraged, potentially leading to a higher price than if multiple companies had vied for the contract.

Taxpayer Impact: Taxpayers may not have received the best possible price due to the absence of a competitive bidding process. The government relied on negotiation rather than market forces to determine the contract's value.

Public Impact

The Department of Defense benefits from upgraded test equipment essential for maintaining and improving the TOMAHAWK missile system's operational readiness. This contract supports the development and sustainment of critical defense infrastructure. The primary geographic impact is likely within the United States, where the contractor operates and where the test equipment will be utilized. The contract may have implications for a specialized workforce in engineering and technical support roles within the defense industry.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing.
Cost-plus-fixed-fee contract type can incentivize higher costs if not managed stringently.
Lack of detailed product service code hinders external cost comparisons.
Long contract duration may increase exposure to cost fluctuations over time.

Positive Signals

Awarded to a known defense contractor with established capabilities.
Contract is for essential test equipment upgrades, supporting national security objectives.
Managed by the Defense Contract Management Agency, indicating a level of oversight.

Sector Analysis

The defense industry is characterized by long-term contracts, specialized technologies, and significant government investment. This contract for TOMAHAWK test equipment upgrades fits within the broader sector of defense systems manufacturing and maintenance. The market for such specialized equipment is often limited to a few key players due to high barriers to entry, including technical expertise and security clearances. Comparable spending benchmarks are difficult to establish without more specific details on the equipment's nature and function.

Small Business Impact

There is no indication that this contract included a small business set-aside. Given the sole-source nature and the specialized requirements for TOMAHAWK test equipment, it is unlikely that small businesses were primary recipients or subcontractors unless they were part of Raytheon's supply chain. Further investigation into subcontracting plans would be necessary to assess the impact on the small business ecosystem.

Oversight & Accountability

The contract is managed by the Defense Contract Management Agency (DCMA), which provides contract administration and oversight. The cost-plus-fixed-fee (CPFF) structure necessitates rigorous financial oversight to ensure costs are reasonable and allocable. Transparency regarding the specific costs incurred and the justification for the sole-source award would be beneficial for public accountability.

Related Government Programs

TOMAHAWK Missile System Procurement
Defense Test and Evaluation Equipment
Naval Weapons Systems Support
Aerospace and Defense Manufacturing

Risk Flags

Sole-source award
Cost-plus-fixed-fee contract type
Lack of detailed product service code
Long contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $32.2 million to RAYTHEON COMPANY. TOMAHAWK TEST EQUIPMENT UPGRADES

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 $32.2 million.

What is the period of performance?

Start: 2019-06-17. End: 2025-09-30.

What is the track record of Raytheon Company in delivering similar test equipment upgrades for defense systems?

Raytheon Company, now part of RTX Corporation, has a long and extensive history of developing and manufacturing complex defense systems, including missiles like the TOMAHAWK. Their track record in delivering test equipment for such sophisticated platforms is generally considered strong, given their deep expertise in aerospace and defense. However, specific performance metrics for past test equipment upgrade contracts, especially those with a cost-plus-fixed-fee structure, would require detailed review of past performance reports and contract close-outs. The company's ability to manage costs and schedules on complex, sole-source contracts is a key area for ongoing assessment by the Department of Defense.

How does the awarded amount of $32.17 million compare to historical spending on TOMAHAWK test equipment?

Direct historical spending comparisons for TOMAHAWK test equipment upgrades are challenging without access to specific historical contract data. The $32.17 million award over approximately six years represents a significant, but not necessarily anomalous, investment for maintaining and enhancing a critical weapons system's testing capabilities. Factors influencing this amount include the complexity of the upgrades, the number of test stations involved, and the technological advancements required. Without a baseline of previous upgrade costs or similar system test equipment procurements, it's difficult to definitively state whether this represents an increase or decrease in spending trends.

What are the primary risks associated with a sole-source, cost-plus-fixed-fee contract for test equipment?

The primary risks associated with a sole-source, cost-plus-fixed-fee (CPFF) contract for test equipment are related to cost control and potential inefficiencies. Sole-sourcing eliminates the competitive pressure that typically drives down prices, meaning the government may pay more than necessary. The CPFF structure, while allowing for flexibility in complex projects, can incentivize the contractor to incur higher costs, as a portion of the profit is tied to the total cost. Effective oversight by the Defense Contract Management Agency (DCMA) is crucial to mitigate these risks by scrutinizing costs, ensuring efficient performance, and verifying that the work performed aligns with the contract's objectives and the TOMAHAWK system's needs.

What is the expected impact of these test equipment upgrades on the TOMAHAWK missile system's effectiveness?

These test equipment upgrades are expected to enhance the TOMAHAWK missile system's overall effectiveness by ensuring its components and subsystems are rigorously tested and validated. Improved test equipment can lead to more accurate diagnostics, faster identification of potential failures, and the ability to test new configurations or software updates. This directly contributes to the system's reliability, readiness, and potentially its operational lifespan. By maintaining state-of-the-art testing capabilities, the Department of Defense can be more confident in the TOMAHAWK's performance in the field.

Are there any specific performance metrics or milestones tied to this contract that indicate program effectiveness?

The provided data does not detail specific performance metrics or milestones tied to this contract. However, for a cost-plus-fixed-fee contract, effectiveness is typically measured through the successful completion of defined tasks, adherence to technical specifications, and the delivery of functional test equipment that meets the TOMAHAWK program's requirements. The Defense Contract Management Agency (DCMA) would be responsible for monitoring progress against these implicit or explicit milestones and ensuring the contractor meets its obligations. A review of the contract's statement of work and any associated performance standards would be necessary to fully assess effectiveness indicators.

Industry Classification

NAICS: Manufacturing › Navigational, Measuring, Electromedical, and Control Instruments Manufacturing › Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument 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: 2000 E EL SEGUNDO BLVD, EL SEGUNDO, CA, 90245

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: $32,171,052

Exercised Options: $32,171,052

Current Obligation: $32,171,052

Actual Outlays: $13,047,946

Subaward Activity

Number of Subawards: 261

Total Subaward Amount: $28,034,090

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: N0001915G0003

IDV Type: BOA

Timeline