Raytheon Awarded $147.8M for RAM Block 2 System Development by Navy, Lacking Competition

Contract Overview

Contract Amount: $147,783,033 ($147.8M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2007-05-08

End Date: 2012-11-07

Contract Duration: 2,010 days

Daily Burn Rate: $73.5K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS INCENTIVE

Sector: Defense

Official Description: RAM BLOCK 2 SYSTEM DEVELOPMENT & DEMONSTRATION (SDD)

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $147.8 million to RAYTHEON COMPANY for work described as: RAM BLOCK 2 SYSTEM DEVELOPMENT & DEMONSTRATION (SDD) Key points: 1. Significant investment in guided missile technology. 2. Sole-source award raises questions about price discovery. 3. Long contract duration (2007-2012) with potential for cost overruns. 4. Focus on advanced defense systems within the aerospace sector.

Value Assessment

Rating: questionable

The contract type is Cost Plus Incentive, which can lead to higher costs than fixed-price contracts. Without competitive bidding, it's difficult to benchmark pricing effectively against similar systems.

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 potentially leads to higher costs for taxpayers as there is no market pressure to reduce bids.

Taxpayer Impact: The lack of competition on this large contract likely resulted in a higher price than could have been achieved through a competitive process, impacting taxpayer funds.

Public Impact

Enhances naval defense capabilities with advanced missile systems. Supports high-tech manufacturing jobs in Arizona. Represents a significant portion of the Navy's R&D spending in this area.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition
Cost-plus contract type
Long contract duration

Positive Signals

Critical defense system development
Awarded to a major defense contractor

Sector Analysis

This contract falls within the Guided Missile and Space Vehicle Manufacturing sector, a specialized area of the aerospace and defense industry. Spending benchmarks for similar sole-source R&D contracts are difficult to establish due to the unique nature of such programs.

Small Business Impact

The data indicates this contract was not awarded to small businesses. Further analysis would be needed to determine if small businesses were subcontracted by Raytheon.

Oversight & Accountability

The contract was awarded by the Department of the Navy. Oversight would focus on ensuring Raytheon meets development milestones and manages costs effectively under the incentive structure.

Related Government Programs

Guided Missile and Space Vehicle Manufacturing
Department of Defense Contracting
Department of the Navy Programs

Risk Flags

Lack of competitive bidding
Cost-plus contract type
Potential for cost overruns
Long contract duration
Limited transparency on pricing

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $147.8 million to RAYTHEON COMPANY. RAM BLOCK 2 SYSTEM DEVELOPMENT & DEMONSTRATION (SDD)

Who is the contractor on this award?

The obligated recipient is RAYTHEON COMPANY.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Navy).

What is the total obligated amount?

The obligated amount is $147.8 million.

What is the period of performance?

Start: 2007-05-08. End: 2012-11-07.

What was the final cost compared to the initial estimate, and how did the incentive structure influence Raytheon's performance?

Without access to the final contract performance data, it's impossible to definitively state the final cost relative to the initial estimate. However, cost-plus incentive contracts aim to motivate contractors to control costs by sharing savings or overruns. The effectiveness of this structure depends on the specific incentive targets and the contractor's ability to manage development.

What are the specific risks associated with developing the RAM Block 2 system, and how were these mitigated?

Risks in developing advanced missile systems often include technological challenges, integration issues with existing platforms, and schedule delays. Mitigation strategies typically involve rigorous testing, phased development, and close collaboration between the contractor and the government. The sole-source nature of this award means the government bore the primary risk of cost overruns if unforeseen issues arose.

How does the RAM Block 2 system contribute to the Navy's overall strategic effectiveness compared to alternative solutions?

The RAM Block 2 is designed as a close-in weapon system to counter anti-ship missiles, aircraft, and other threats. Its effectiveness lies in its rapid response capability and ability to protect naval vessels in contested environments. Its contribution to strategic effectiveness is measured by its success rate in simulations and real-world engagements, and its integration into the broader naval defense network.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Guided Missile and Space Vehicle Manufacturing

Product/Service Code: GUIDED MISSLES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0002406R5241

Offers Received: 1

Pricing Type: COST PLUS INCENTIVE (V)

Evaluated Preference: NONE

Contractor Details

Address: 1151 E HERMANS RD, TUCSON, AZ, 90

Business Categories: Category Business, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $148,137,336

Exercised Options: $148,137,336

Current Obligation: $147,783,033

Contract Characteristics

Cost or Pricing Data: YES

Timeline