Raytheon awarded $794.6M for guided missiles, with a significant portion for RIM-66 Standard Missile production

Contract Overview

Contract Amount: $252,068,683 ($252.1M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2000-05-09

End Date: 2004-10-31

Contract Duration: 1,636 days

Daily Burn Rate: $154.1K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIXED PRICE REDETERMINATION

Sector: Defense

Official Description: 200008!1700!002457!BZ005 !NAVAL SEA SYSTEMS COMMAND !N0002400C5399 !A!*!* !20000509!20051231!794598573!794598573!001339159!N!15090!RAYTHEON SYSTEMS CO (INC) !1151 E HERMANS RD !TUCSON !AZ!85706!77000!019!04!TUCSON !PIMA !ARIZONA !0001!+000072206121!N!N!000000000000!1410!GUIDED MISSILES !A2 !MISSILE AND SPACE SYSTEMS !2CMN!RIM-66 STANDARD MISSILE(MED) !3761!3!*!*!*!B!A!*!D !U!A!1!001!N!1A!A!Y!A!* !* !N!C!*!A!A!A!A!A!A!* !*!N!A!C!N!*!*!*!*!*!

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $252.1 million to RAYTHEON COMPANY for work described as: 200008!1700!002457!BZ005 !NAVAL SEA SYSTEMS COMMAND !N0002400C5399 !A!*!* !20000509!20051231!794598573!794598573!001339159!N!15090!RAYTHEON SYSTEMS CO (INC) !1151 E HERMANS RD !TUCSON !AZ!85706!77000!019!04!TUCSON !PIM… Key points: 1. Contract value of $794.6 million indicates substantial investment in missile systems. 2. Sole-source award raises questions about competition and potential price impacts. 3. Fixed Price Redetermination contract type suggests potential for cost adjustments. 4. Long contract duration of over 4 years implies a complex and ongoing need. 5. Focus on guided missiles places this contract within a critical defense sector. 6. Award to Raytheon Systems Co. highlights a key defense contractor's role.

Value Assessment

Rating: fair

The total value of $794.6 million for guided missiles, specifically RIM-66 Standard Missiles, is substantial. Without direct comparable contracts for this specific missile variant and quantity, a precise value-for-money assessment is challenging. The contract type, Fixed Price Redetermination, allows for price adjustments, which can introduce uncertainty. Benchmarking against similar missile system procurements would be necessary for a more robust evaluation of pricing efficiency.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, Raytheon Systems Co., was solicited. This approach is typically used when a unique capability or product is required, or in cases of urgency. The lack of competition means that taxpayers did not benefit from potential price reductions that could arise from a competitive bidding process.

Taxpayer Impact: Sole-source awards limit the government's ability to secure the best possible price through market competition, potentially leading to higher costs for taxpayers.

Public Impact

The primary beneficiaries are the U.S. Navy and potentially other allied forces requiring advanced guided missile capabilities. The contract delivers essential components and production for the RIM-66 Standard Missile system, crucial for naval defense. The geographic impact is primarily centered around Raytheon's facilities in Tucson, Arizona, supporting local employment and industry. This contract supports a specialized segment of the defense manufacturing workforce, requiring skilled engineers and production personnel.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially impacting cost-effectiveness.
Fixed Price Redetermination contract type introduces uncertainty regarding final costs.
Lack of detailed performance metrics in the provided data makes assessing effectiveness difficult.
Long-term nature of the contract requires ongoing monitoring for scope creep or inefficiencies.

Positive Signals

Award to a known defense contractor like Raytheon suggests a level of established capability and reliability.
Focus on a critical defense asset like guided missiles indicates alignment with national security priorities.
The contract specifies a definitive contract type, implying a clear agreement on terms and conditions.

Sector Analysis

This contract falls within the Defense sector, specifically focusing on the production of guided missiles. The market for defense systems, particularly advanced weaponry, is characterized by high barriers to entry, significant R&D investment, and a primary customer base of government entities. Spending in this area is driven by geopolitical factors and national security requirements. Comparable spending benchmarks would involve analyzing other major missile system procurements by the Department of Defense.

Small Business Impact

The provided data does not indicate any small business set-aside provisions for this contract. As a sole-source award to a large prime contractor, the primary subcontracting opportunities would likely be managed by Raytheon. The impact on the small business ecosystem depends on Raytheon's subcontracting strategy and whether small businesses are engaged for specific components or services.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor compliance with terms and conditions. Accountability measures are embedded within the contract's performance clauses and payment schedules. Transparency is facilitated through contract databases, though detailed operational performance data may be restricted due to security concerns. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Naval Sea Systems Command (NAVSEA) Contracts
Guided Missile Procurement
Standard Missile Family
Defense Weapon Systems
Raytheon Defense Contracts

Risk Flags

Sole-source award limits competition.
Fixed Price Redetermination contract type may lead to cost uncertainty.
Lack of detailed performance data hinders effectiveness assessment.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $252.1 million to RAYTHEON COMPANY. 200008!1700!002457!BZ005 !NAVAL SEA SYSTEMS COMMAND !N0002400C5399 !A!*!* !20000509!20051231!794598573!794598573!001339159!N!15090!RAYTHEON SYSTEMS CO (INC) !1151 E HERMANS RD !TUCSON !AZ!85706!77000!019!04!TUCSON !PIMA !ARIZONA !0001!+000072206121!N!N!000000000000!1410!GUIDED MISSILES !A2 !MISSILE AND SPACE SYSTEMS !2CMN!RIM-66 STANDARD MISSILE(MED) !3761!3!*!*!*!B!A!*!D !U!A!

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 $252.1 million.

What is the period of performance?

Start: 2000-05-09. End: 2004-10-31.

What is the historical spending trend for RIM-66 Standard Missiles by the U.S. Navy?

Analyzing historical spending on RIM-66 Standard Missiles requires accessing contract award data over multiple fiscal years. This specific contract, awarded in 2000 for over $794 million, represents a significant single investment. However, to understand the trend, one would need to aggregate data from all contracts related to the RIM-66, including research and development, production, sustainment, and upgrades, across different Navy programs and contracting vehicles. This would reveal whether spending has been consistent, increasing, or decreasing, and identify any major shifts in procurement strategy or system lifecycle phases. Without this broader historical context, it's difficult to determine if this $794.6 million award is an anomaly or part of a sustained procurement effort.

How does the unit cost of the RIM-66 Standard Missile under this contract compare to other similar missile systems?

Determining the unit cost requires dividing the total contract value by the number of units procured. In this case, the contract value is $794,598,573 and the number of units is 15,090, yielding a per-unit cost of approximately $52,654. Comparing this to other missile systems is complex, as missile costs vary widely based on sophistication, range, payload, and production volume. For instance, short-range air-to-air missiles are typically less expensive than long-range strategic or naval defense missiles. To make a meaningful comparison, one would need to benchmark against other medium-range naval surface-to-air missiles with similar capabilities and production scales. Data on comparable systems, often found in defense budget documents or specialized industry reports, would be necessary for a valid assessment.

What are the specific performance risks associated with the RIM-66 Standard Missile system that this contract aims to address?

The provided contract data does not detail specific performance risks of the RIM-66 Standard Missile system. However, general risks for such systems can include reliability issues, susceptibility to countermeasures, limitations in engagement envelopes (range, altitude, speed), and obsolescence of components. Contracts for missile production often aim to mitigate these risks through rigorous testing, quality control, and the incorporation of updated technologies or improved components. The Fixed Price Redetermination contract type suggests that while a baseline price is set, there's an acknowledgment of potential cost fluctuations related to production challenges or evolving technical requirements that might impact performance or cost-effectiveness.

What is Raytheon's track record in producing guided missiles, particularly the Standard Missile family?

Raytheon (and its predecessor companies) has a long and established track record in producing guided missiles, including the Standard Missile family. The RIM-66 Standard Missile itself has been a cornerstone of U.S. naval air defense for decades, undergoing numerous upgrades and variants (e.g., SM-1, SM-2, SM-6). Raytheon's extensive experience in missile design, development, and large-scale production suggests a high degree of technical expertise and manufacturing capability. Their consistent role as a prime contractor for such critical defense systems indicates a strong performance history, though specific contract performance metrics (on-time delivery, cost overruns, quality issues) would require a deeper dive into individual contract histories beyond this single award.

How has the 'not competed' status of this contract impacted the overall cost efficiency for the U.S. Navy's missile procurement?

A 'not competed' or sole-source award, by its nature, bypasses the competitive bidding process that typically drives down prices. When the government does not solicit offers from multiple vendors, it loses the opportunity to leverage market forces to achieve the lowest possible cost. While sole-source awards are sometimes justified by unique capabilities or urgent needs, they inherently carry a higher risk of inflated pricing compared to competitively awarded contracts. The overall cost efficiency for the Navy's missile procurement is therefore potentially reduced when sole-source contracts are utilized, as the government may pay a premium for the goods or services received. Quantifying this impact would require comparing the prices paid on sole-source contracts with hypothetical prices that might have been achieved through competition.

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIXED PRICE REDETERMINATION (A)

Evaluated Preference: NONE

Contractor Details

Address: 1151 E HERMANS RD, TUCSON, AZ, 85706

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $523,985,023

Current Obligation: $252,068,683

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline