DoD awards Raytheon $262.8M for Missile Parts, raising concerns over sole-source procurement

Contract Overview

Contract Amount: $262,769,700 ($262.8M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2003-01-31

End Date: 2009-11-14

Contract Duration: 2,479 days

Daily Burn Rate: $106.0K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS AWARD FEE

Sector: Defense

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $262.8 million to RAYTHEON COMPANY for work described as: Key points: 1. Significant contract value of $262.8 million awarded to a major defense contractor. 2. Lack of competition raises questions about price discovery and potential overspending. 3. Long contract duration of 2479 days suggests a substantial, ongoing need. 4. The sector is critical for national defense, but efficiency is paramount.

Value Assessment

Rating: questionable

The contract type is Cost Plus Award Fee, which can incentivize cost overruns. Without competitive bidding, it's difficult to benchmark pricing against similar contracts, making value assessment challenging.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award. This limits price discovery and may lead to higher costs for taxpayers as there is no market pressure to offer competitive pricing.

Taxpayer Impact: The absence of competition for a contract of this magnitude likely results in a higher cost to taxpayers than a competitively awarded contract would.

Public Impact

Taxpayers may be paying a premium due to the lack of competitive bidding. The long duration of the contract means sustained financial commitment from the government. Dependence on a single supplier for critical missile parts could pose supply chain risks. The specific parts procured are essential for national defense capabilities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source procurement
Cost Plus Award Fee contract type
Long contract duration
Lack of transparency in pricing

Positive Signals

Awarded to a reputable defense contractor
Supports critical defense needs

Sector Analysis

This contract falls within the 'Other Guided Missile and Space Vehicle Parts and Auxiliary Equipment Manufacturing' sector, a critical component of the defense industrial base. Spending in this area is substantial, and efficient procurement is vital.

Small Business Impact

The contract was awarded to Raytheon Company, a large prime contractor. There is no indication of subcontracting opportunities for small businesses within the provided data, suggesting limited direct impact.

Oversight & Accountability

The contract was managed by the Defense Contract Management Agency. However, the sole-source nature and cost-plus award fee structure warrant closer oversight to ensure cost efficiency and prevent potential waste.

Related Government Programs

Other Guided Missile and Space Vehicle Parts and Auxiliary Equipment Manufacturing
Department of Defense Contracting
Defense Contract Management Agency Programs

Risk Flags

Lack of competition
Potential for cost overruns (CPAF)
Long contract duration
Limited transparency on pricing justification
No clear small business participation

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $262.8 million to RAYTHEON COMPANY. See the official description on USAspending.

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 $262.8 million.

What is the period of performance?

Start: 2003-01-31. End: 2009-11-14.

What was the justification for awarding this contract on a sole-source basis instead of seeking competitive bids?

The justification for a sole-source award typically involves unique capabilities, urgent needs, or a lack of viable alternative sources. Without further documentation, it's impossible to determine the specific rationale. However, sole-source contracts often lack the price competition that drives efficiency and can lead to higher costs for the government.

How does the Cost Plus Award Fee structure impact the final cost and contractor performance in this specific contract?

Cost Plus Award Fee (CPAF) contracts reimburse the contractor for allowable costs and provide an additional fee based on performance against predetermined criteria. While CPAF can incentivize desired outcomes, it also carries a risk of cost escalation if not carefully managed. The award fee structure's effectiveness in controlling costs and ensuring optimal performance for this $262.8 million contract requires detailed review of performance metrics and fee payouts.

What is the estimated taxpayer impact of awarding this contract without competition over its nearly 7-year duration?

Estimating the precise taxpayer impact of a sole-source contract is challenging without a competitive baseline. However, studies consistently show that competitive bidding can yield significant savings, often in the range of 10-30% or more, compared to sole-source awards. Given the $262.8 million value and 2479-day duration, taxpayers likely bore a substantial premium due to the lack of market-driven price discovery.

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

Offers Received: 1

Pricing Type: COST PLUS AWARD FEE (R)

Evaluated Preference: NONE

Contractor Details

Address: 1151 EAST HERMANS ROAD, TUCSON, AZ, 85706

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline