DoD Awards Raytheon $794M for Standard Missile 2 Production, Raising Concerns Over Competition

Contract Overview

Contract Amount: $122,269,762 ($122.3M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2005-10-03

End Date: 2013-12-31

Contract Duration: 3,011 days

Daily Burn Rate: $40.6K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 200602!060222!1700!N00024!NAVAL SEA SYSTEMS COMMAND !N0002405C5341 !A!N! !N! !P00002!20051003!20100512!794598573!794598573!001339159!N!RAYTHEON MISSILE SYSTEMS COMPA!1151 E HERMANS RD !TUCSON !AZ!85706!77000!019!04!TUCSON !PIMA !ARIZONA !+000036862686!Y!N!000000000000!1410!GUIDED MISSILES !A2 !MISSILE AND SPACE SYSTEMS !234 !STANDARD MISSILE 2 (SM 2) !811310!E! !3! ! !H! ! !99990909!B! ! !A! !D!U!J!1!001!N!1A!Z!Y!A! ! !N!C!N! ! ! !A!A!A!A!000!A!C!N! ! ! ! !1700!N00024!0001! !

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $122.3 million to RAYTHEON COMPANY for work described as: 200602!060222!1700!N00024!NAVAL SEA SYSTEMS COMMAND !N0002405C5341 !A!N! !N! !P00002!20051003!20100512!794598573!794598573!001339159!N!RAYTHEON MISSILE SYSTEMS COMPA!1151 E HERMANS RD !TUCSON !AZ!85706!77000!019!04!TUCSON !PIMA… Key points: 1. The contract for Standard Missile 2 (SM 2) production was awarded to Raytheon Missile Systems. 2. A significant portion of the contract value is $794,598,573. 3. The contract was not competed, raising potential concerns about price discovery and value for taxpayers. 4. The sector is Defense, specifically guided missiles and related systems.

Value Assessment

Rating: questionable

The contract value of $794,598,573 for Standard Missile 2 production appears substantial. Without competitive bidding, it is difficult to assess if this price represents fair market value compared to similar missile system procurements.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

This contract was not competed, indicating a sole-source or limited competition scenario. This lack of competition may have led to a higher price than could have been achieved through a fully open bidding process.

Taxpayer Impact: The absence of competition could result in taxpayers paying a premium for these missile systems, as there was no market pressure to drive down costs.

Public Impact

Taxpayers may be overpaying for critical missile defense systems due to a lack of competitive bidding. The long-term sustainment and upgrade costs for the Standard Missile 2 program could be impacted by the initial procurement strategy. This award highlights a potential vulnerability in the defense procurement process where competition is not prioritized.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of Competition
Potential for Overpricing
Limited Transparency in Pricing

Positive Signals

Essential Defense Capability
Established Contractor
Long-Term Program

Sector Analysis

This contract falls within the Defense sector, specifically for the production of guided missiles. Spending benchmarks in this area are highly variable, depending on the specific weapon system, quantity, and technological complexity.

Small Business Impact

There is no indication in the provided data whether small businesses were involved as subcontractors on this contract. Further investigation would be needed to determine their participation.

Oversight & Accountability

The 'not competed' status suggests that oversight may have focused on justifying the sole-source award rather than ensuring the best possible price through competition. Accountability for price could be weaker without competitive benchmarks.

Related Government Programs

Commercial and Industrial Machinery and Equipment (except Automotive and Electronic) Repair and Maintenance
Department of Defense Contracting
Defense Contract Management Agency Programs

Risk Flags

Lack of competitive bidding may lead to inflated costs.
Potential for reduced innovation due to absence of market pressure.
Limited transparency in the price negotiation process.
Reliance on a single contractor for a critical defense asset.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $122.3 million to RAYTHEON COMPANY. 200602!060222!1700!N00024!NAVAL SEA SYSTEMS COMMAND !N0002405C5341 !A!N! !N! !P00002!20051003!20100512!794598573!794598573!001339159!N!RAYTHEON MISSILE SYSTEMS COMPA!1151 E HERMANS RD !TUCSON !AZ!85706!77000!019!04!TUCSON !PIMA !ARIZONA !+000036862686!Y!N!000000000000!1410!GUIDED MISSILES !A2 !MISSILE AND SPACE SYSTEMS !234 !STANDARD MISSILE 2 (SM 2) !811310!E! !3! ! !H! ! !999

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 $122.3 million.

What is the period of performance?

Start: 2005-10-03. End: 2013-12-31.

What was the justification for not competing this contract, and what steps were taken to ensure a fair and reasonable price?

The justification for not competing this contract is not provided in the data. Typically, sole-source procurements require extensive documentation justifying the need for a specific contractor or technology. Agencies are expected to conduct price analyses, compare to historical data, or use other methods to ensure the price is fair and reasonable, even without competition.

What is the projected lifecycle cost of the Standard Missile 2 program, and how does this contract contribute to it?

The provided data only details a specific contract award for production. The total lifecycle cost of the Standard Missile 2 program, encompassing research, development, procurement, sustainment, and modernization, is not available. This $794M contract represents a significant portion of the procurement phase, but a full lifecycle cost analysis would require much broader data.

Are there alternative missile systems or upgrade paths that could have been considered through a competitive process to achieve similar or better capabilities at a lower cost?

Without detailed technical and cost data for alternative systems, it's impossible to definitively answer. However, the 'not competed' nature of this award implies that such alternatives were either not considered or were deemed unsuitable. A competitive process would have allowed for a direct comparison of capabilities and costs from multiple vendors.

Industry Classification

NAICS: Other Services (except Public Administration) › Commercial and Industrial Machinery and Equipment (except Automotive and Electronic) Repair and Maintenance › Commercial and Industrial Machinery and Equipment (except Automotive and Electronic) Repair and Maintenance

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: 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