Raytheon Company awarded $30.3M for TOMAHAWK missile components, a sole-source contract with a 4-year duration

Contract Overview

Contract Amount: $30,302,784 ($30.3M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2020-04-13

End Date: 2024-03-29

Contract Duration: 1,446 days

Daily Burn Rate: $21.0K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: TOMAHAWK MID-BODY RANGE SAFETY SUBSYSTEM (MRSS) AND FLIGHT TEST KITS

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $30.3 million to RAYTHEON COMPANY for work described as: TOMAHAWK MID-BODY RANGE SAFETY SUBSYSTEM (MRSS) AND FLIGHT TEST KITS Key points: 1. Contract awarded to a single vendor, raising questions about price competitiveness. 2. Long-term contract duration suggests a sustained need for these components. 3. Focus on missile subsystem and flight test kits indicates critical defense readiness. 4. Sole-source nature limits opportunities for new market entrants. 5. Fixed-price contract type shifts cost risk to the contractor. 6. Geographic concentration in Arizona for contract performance.

Value Assessment

Rating: fair

The contract value of $30.3 million for TOMAHAWK missile components appears to be a standard award for specialized defense systems. Without direct comparable contracts for the exact MRSS and flight test kits, a precise value-for-money assessment is challenging. However, sole-source awards often carry a premium due to the lack of competitive pressure. The firm fixed-price structure is generally favorable for the government, capping potential cost overruns.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award. This typically occurs when a specific contractor possesses unique capabilities, intellectual property, or is the sole producer of the required components. The lack of competition means the government did not solicit bids from multiple vendors, potentially impacting price discovery and the opportunity to secure the best possible pricing through a competitive process.

Taxpayer Impact: The absence of competition means taxpayers may not benefit from the cost savings that could arise from a bidding process, potentially leading to higher overall expenditure for these critical missile components.

Public Impact

The primary beneficiaries are the Department of Defense, ensuring the continued readiness and operational capability of the TOMAHAWK missile system. Services delivered include the manufacturing and supply of the Mid-Body Range Safety Subsystem (MRSS) and associated flight test kits. Geographic impact is concentrated in Arizona, where Raytheon Company's facility is located for contract performance. Workforce implications include the employment of skilled engineers, technicians, and manufacturing personnel involved in the production of advanced defense systems.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing opportunities.
Long contract duration may obscure potential for cost efficiencies over time.
Lack of transparency in the justification for sole-sourcing.

Positive Signals

Firm fixed-price contract type provides cost certainty for the government.
Award to an established defense contractor with a track record in missile systems.
Ensures continued availability of critical components for a key defense asset.

Sector Analysis

This contract falls within the defense manufacturing sector, specifically focusing on missile systems and components. The market for such specialized defense hardware is often dominated by a few large, established prime contractors due to high barriers to entry, including technological expertise, security clearances, and existing government relationships. Spending in this niche is driven by national security priorities and defense modernization efforts.

Small Business Impact

This contract does not appear to have a small business set-aside. Given the specialized nature of TOMAHAWK missile components and the sole-source award to Raytheon Company, it is unlikely that significant subcontracting opportunities for small businesses will be mandated or readily available through this specific contract vehicle. Further analysis would be needed to determine if Raytheon has existing small business subcontracting plans that might indirectly benefit smaller suppliers.

Oversight & Accountability

Oversight for this contract is likely managed by the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor performance and compliance with contract terms. The firm fixed-price nature of the award provides a degree of accountability by capping costs for the government. Transparency regarding the justification for the sole-source award and performance metrics would be key areas for further oversight.

Related Government Programs

TOMAHAWK Weapon System
Missile Manufacturing
Defense Procurement
Naval Systems
Aerospace Components

Risk Flags

Sole-source award lacks competitive justification.
Potential for uncompetitive pricing.
Limited transparency on specific component costs.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $30.3 million to RAYTHEON COMPANY. TOMAHAWK MID-BODY RANGE SAFETY SUBSYSTEM (MRSS) AND FLIGHT TEST KITS

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 $30.3 million.

What is the period of performance?

Start: 2020-04-13. End: 2024-03-29.

What is Raytheon Company's track record with TOMAHAWK missile production and related components?

Raytheon Company, now RTX, has a long and established history as the prime contractor for the TOMAHAWK Land Attack Missile (TLAM) program. They have been responsible for the design, development, manufacturing, and sustainment of the missile system for decades. This includes producing various subsystems and ensuring the missile's operational readiness. Their extensive experience with the TOMAHAWK platform suggests a deep understanding of its complexities and a proven capability to deliver the required components, such as the MRSS and flight test kits, meeting stringent defense specifications and performance requirements.

How does the $30.3 million award compare to historical spending on TOMAHAWK MRSS and flight test kits?

Direct historical spending comparisons for the specific TOMAHAWK Mid-Body Range Safety Subsystem (MRSS) and flight test kits are difficult to ascertain without access to detailed historical contract databases and specific line-item awards. The $30.3 million figure represents a single delivery order under a larger contract vehicle. However, given the specialized nature and critical function of these components within a major weapon system, this value appears consistent with the typical costs associated with advanced defense manufacturing. Without competitive bidding, it's challenging to determine if this represents optimal value compared to potential market alternatives.

What are the primary risks associated with this sole-source contract?

The primary risk associated with this sole-source contract is the potential for inflated pricing due to the lack of competitive pressure. Without competing bids, the government may not be achieving the most cost-effective solution. Another risk is vendor lock-in, where the government becomes heavily reliant on a single supplier, potentially limiting future flexibility and negotiation power. Furthermore, if Raytheon were to experience production issues or significant cost increases, the government has limited recourse to switch providers in the short term, potentially impacting program timelines and budgets.

How effective is the firm fixed-price contract type in managing costs for this specific award?

The firm fixed-price (FFP) contract type is generally considered effective in managing costs for the government, especially for well-defined requirements like the production of specific missile subsystems. Under an FFP contract, the contractor assumes the primary risk for cost overruns. This incentivizes Raytheon to manage its production costs efficiently to maintain profitability. For the government, it provides a high degree of cost certainty, as the final price is fixed. However, the initial negotiated price in a sole-source environment might be higher than in a competitive scenario, somewhat mitigating the cost-saving benefit of the FFP structure.

What are the implications of the contract's duration (1446 days) for program sustainment and future procurement?

The contract duration of approximately 1446 days (around 4 years) suggests a long-term commitment to sustaining the TOMAHAWK missile system's operational readiness. This extended period allows for stable production planning and ensures a consistent supply of critical MRSS and flight test kits. From a future procurement perspective, this duration might delay the need for a new competitive solicitation for these specific components. However, it also means that any potential technological advancements or cost-saving opportunities from new market entrants are deferred until the contract's conclusion or a subsequent re-competition.

What is the significance of the 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' NAICS code (334511)?

The NAICS code 334511, 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing,' signifies that the contract is for the production of highly specialized electronic and mechanical systems used in defense and aerospace applications. This industry segment is characterized by advanced technology, rigorous quality control, and significant research and development investment. Companies operating under this code typically produce complex instruments and systems integral to military operations, such as those found in advanced missile guidance and control systems like the TOMAHAWK's MRSS.

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: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: RTX Corp

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: $30,302,784

Exercised Options: $30,302,784

Current Obligation: $30,302,784

Actual Outlays: $3,462,457

Subaward Activity

Number of Subawards: 70

Total Subaward Amount: $52,645,679

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