Raytheon Systems Co. awarded $794.6M for Guided Missiles, with R&D spending reaching $227M

Contract Overview

Contract Amount: $227,080,123 ($227.1M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2001-12-21

End Date: 2006-03-31

Contract Duration: 1,561 days

Daily Burn Rate: $145.5K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS AWARD FEE

Sector: Defense

Official Description: 200203!020243!1700!BZ005 !NAVAL SEA SYSTEMS COMMAND !N0002402C5319 !A!N! !N! !20011221!20040930!794598573!794598573!001339159!N!RAYTHEON SYSTEMS CO !1151 E HERMANS RD !TUCSON !AZ!85706!77000!019!04!TUCSON !PIMA !ARIZONA !+000000911111!N!N!000258674573!1410!GUIDED MISSILES !A2 !MISSILE AND SPACE SYSTEMS !2CMP!RIM-67 STANDARD MISSILE(EXT) !541710!E! !3! ! ! ! ! !99990909!B! ! !A! !D!N!R!1!001!N!1G!Z!Y!Z! ! !N!C!N! ! ! !A!A!A!A!000!A!C!N! ! ! ! ! ! !0001!

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $227.1 million to RAYTHEON COMPANY for work described as: 200203!020243!1700!BZ005 !NAVAL SEA SYSTEMS COMMAND !N0002402C5319 !A!N! !N! !20011221!20040930!794598573!794598573!001339159!N!RAYTHEON SYSTEMS CO !1151 E HERMANS RD !TUCSON !AZ!85706!77000!019!04!TUCSON !PIMA … Key points: 1. Significant investment in missile systems development, indicating a focus on advanced defense capabilities. 2. Contract awarded to a single vendor, raising questions about competitive pricing and potential cost efficiencies. 3. Long contract duration of over 4 years suggests a complex and ongoing project requirement. 4. The contract falls under Research and Development, highlighting innovation in defense technology. 5. Geographic concentration in Arizona for the contractor's primary location. 6. The contract's value is substantial, representing a significant portion of the agency's spending in this category.

Value Assessment

Rating: questionable

The total award amount of $794.6 million for guided missiles is substantial. However, without comparable contracts for similar missile systems or detailed cost breakdowns, it is difficult to definitively assess value for money. The research and development component, totaling $227 million, suggests significant upfront investment. The lack of competition further complicates a direct value assessment, as there is no market benchmark to compare against.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. This approach is typically used when only one vendor possesses the necessary capabilities, technology, or security clearances. The lack of competition means that taxpayers did not benefit from the price discovery that typically occurs in a competitive bidding process.

Taxpayer Impact: Sole-source awards can lead to higher prices for taxpayers as there is no competitive pressure to drive down costs. This necessitates robust oversight to ensure fair pricing.

Public Impact

The primary beneficiary is the Department of Defense, which receives advanced guided missile technology. Services delivered include research, development, and potentially production of missile systems. Geographic impact is primarily within the United States, with the contractor based in Arizona. Workforce implications include specialized engineering and manufacturing jobs within Raytheon and its supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may result in inflated costs for taxpayers.
Sole-source nature requires stringent oversight to ensure fair pricing and performance.
Long contract duration could lead to cost overruns if not managed effectively.

Positive Signals

Award to a known defense contractor suggests a high likelihood of technical capability.
Focus on R&D indicates investment in future defense capabilities.
Significant contract value may imply a critical national security need.

Sector Analysis

This contract falls within the Defense sector, specifically focusing on missile and space systems. The market for guided missiles is highly specialized, dominated by a few large defense contractors. Spending in this area is driven by national security requirements and technological advancements. Comparable spending benchmarks would typically involve other large-scale missile development programs within the DoD.

Small Business Impact

There is no indication of small business set-asides or subcontracting plans within the provided data. As a sole-source award to a large prime contractor, the direct impact on small businesses is likely limited unless Raytheon actively engages them in its supply chain.

Oversight & Accountability

Oversight for this contract would typically fall under the Naval Sea Systems Command (NAVSEA) and the Defense Contract Management Agency (DCMA). Given the sole-source nature and significant value, robust oversight is crucial to monitor cost, schedule, and performance. Transparency may be limited due to the non-competitive award, but contract modifications and performance reports should be available through federal procurement databases.

Related Government Programs

Guided Missile Systems
Research and Development Contracts
Naval Weapon Systems
Defense Procurement
Aerospace and Defense Industry

Risk Flags

Sole-source award lacks competitive pricing.
Potential for cost overruns due to R&D nature and long duration.
Limited transparency inherent in non-competitive contracts.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $227.1 million to RAYTHEON COMPANY. 200203!020243!1700!BZ005 !NAVAL SEA SYSTEMS COMMAND !N0002402C5319 !A!N! !N! !20011221!20040930!794598573!794598573!001339159!N!RAYTHEON SYSTEMS CO !1151 E HERMANS RD !TUCSON !AZ!85706!77000!019!04!TUCSON !PIMA !ARIZONA !+000000911111!N!N!000258674573!1410!GUIDED MISSILES !A2 !MISSILE AND SPACE SYSTEMS !2CMP!RIM-67 STANDARD MISSILE(EXT) !541710!E! !3! ! ! ! ! !99990909!B

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 $227.1 million.

What is the period of performance?

Start: 2001-12-21. End: 2006-03-31.

What is the historical spending trend for guided missile systems by the Naval Sea Systems Command?

Analyzing historical spending trends for guided missile systems by the Naval Sea Systems Command (NAVSEA) is crucial for contextualizing the $794.6 million award to Raytheon Systems Co. While the provided data focuses on a single contract, a broader analysis would involve examining NAVSEA's budget allocations and contract awards for similar weapon systems over the past decade. This would reveal whether this award represents an increase, decrease, or stable level of investment in guided missile technology. Factors such as geopolitical shifts, technological obsolescence of existing systems, and the development of new threats all influence spending patterns. Understanding these trends helps assess if the current investment aligns with strategic priorities and if the allocated funds are consistent with previous procurement cycles or represent a new surge in development.

How does the cost per unit for the RIM-67 Standard Missile (EXT) compare to similar missile systems procured by the DoD?

Benchmarking the cost per unit for the RIM-67 Standard Missile (EXT) against similar systems is essential for evaluating value for money. However, the provided data does not include unit counts or specific per-unit costs, making a direct comparison impossible. To perform this analysis, one would need to identify comparable missile systems (e.g., other surface-to-air missiles, anti-ship missiles) procured by the Department of Defense (DoD) around the same period (2001-2006). Data on their contract values, quantities procured, and unit costs would be required. Factors influencing unit cost include technological sophistication, production volume, material costs, and R&D amortization. A higher unit cost for the RIM-67, without clear justification based on superior performance or unique capabilities, could indicate potential inefficiencies or a lack of competitive pressure in its procurement.

What are the specific performance metrics and Key Performance Parameters (KPPs) associated with this contract?

The provided data does not detail the specific performance metrics or Key Performance Parameters (KPPs) for the RIM-67 Standard Missile (EXT) development under this contract. These metrics are critical for assessing the contractor's success and the program's effectiveness. KPPs typically define the essential capabilities required for a system's success, such as range, accuracy, warhead effectiveness, guidance precision, and reliability under various operational conditions. Without access to the contract's statement of work (SOW) or technical requirements documents, it's impossible to determine if Raytheon Systems Co. met or exceeded these critical performance standards. Evaluating the program's effectiveness hinges on comparing actual performance against these predefined benchmarks.

What is Raytheon Systems Co.'s track record with similar sole-source R&D contracts for missile systems?

Assessing Raytheon Systems Co.'s track record with similar sole-source Research and Development (R&D) contracts for missile systems is vital for understanding potential risks and performance likelihoods. While this specific contract awarded $794.6 million, a deeper dive would involve examining Raytheon's history with other non-competed R&D awards in the defense sector, particularly for missile technologies. Key aspects to review include their past performance on cost, schedule adherence, and technical achievement in similar R&D endeavors. A history of successful, on-time, and within-budget delivery of complex R&D projects would be a positive indicator. Conversely, a pattern of cost overruns, delays, or technical shortcomings on comparable sole-source contracts might raise concerns about the current program's outlook and the justification for the non-competitive award.

What is the projected lifecycle cost of the RIM-67 Standard Missile (EXT) program, including sustainment and upgrades?

The provided data focuses solely on the initial award value ($794.6 million) and R&D spending ($227 million) for the RIM-67 Standard Missile (EXT) and does not offer insights into its projected lifecycle costs. Lifecycle cost encompasses not only the initial development and procurement but also sustainment, maintenance, upgrades, training, and eventual disposal. Estimating the full lifecycle cost is crucial for comprehensive budget planning and assessing the long-term affordability of the system. This would require access to separate sustainment contracts, projected upgrade roadmaps, and operational support plans. Without this information, the total financial commitment to the RIM-67 program remains significantly underestimated, making it difficult to gauge its true economic impact.

How has the classification of this contract as 'Research and Development' impacted its oversight and reporting requirements compared to a procurement contract?

Classifying this contract as 'Research and Development' (R&D) significantly influences its oversight and reporting requirements compared to a standard procurement contract. R&D contracts often involve greater uncertainty and evolving requirements, leading to oversight focused on technical progress, milestone achievement, and adaptability rather than strict adherence to predefined specifications. Reporting typically emphasizes technical reports, prototype evaluations, and feasibility studies. Oversight mechanisms may involve technical reviews and program management reviews more frequently. Procurement contracts, conversely, focus on delivering a defined end-product, with oversight emphasizing quality control, delivery schedules, and adherence to specifications. The 'cost plus award fee' (CPAF) contract type suggests incentives tied to performance, common in R&D where outcomes can be less predictable.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Scientific Research and Development Services › Research and Development in the Physical, Engineering, and Life Sciences

Product/Service Code: GUIDED MISSLES

Competition & Pricing

Extent Competed: NOT COMPETED

Offers Received: 1

Pricing Type: COST PLUS AWARD FEE (R)

Contractor Details

Parent Company: Rockwell Collins Australia PTY Limited

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

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline