Raytheon Awarded $418M for SM-2 Missile Production in FY08

Contract Overview

Contract Amount: $440,202,062 ($440.2M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2008-09-30

End Date: 2009-12-31

Contract Duration: 457 days

Daily Burn Rate: $963.2K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: TAS::17 1804::TAS SM-2 BLK IIIA/IIIB FY08 PRODUCTION. INCLUDES ALL-UP-ROUND MISSILES, AN/DKT-71A TELEMTRIC DATA TRANSMITTING SETS (TDTS'S), SECTION LEVEL SPARES, POST PRODUCTION SPARES, SHIPPING CONTAINERS, AND ASSOCIATED DATA. MOU FUNDS IN THE AMOUNT OF $22,386 WERE OBLIGATED AT AWARD AND ARE NOT INCLUDED IN ACTION OBLIGATION BOX ABOVE. TOTAL ACTION OBLIGATION AT AWARD IS $418,180,319.

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85734

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $440.2 million to RAYTHEON COMPANY for work described as: TAS::17 1804::TAS SM-2 BLK IIIA/IIIB FY08 PRODUCTION. INCLUDES ALL-UP-ROUND MISSILES, AN/DKT-71A TELEMTRIC DATA TRANSMITTING SETS (TDTS'S), SECTION LEVEL SPARES, POST PRODUCTION SPARES, SHIPPING CONTAINERS, AND ASSOCIATED DATA. MOU FUNDS IN THE AMOUNT OF $22,386 WERE OBLIGATED AT… Key points: 1. This contract covers the production of SM-2 missiles, telemetry sets, spares, and containers. 2. The primary contractor is Raytheon Company, a major defense manufacturer. 3. The contract type is Firm Fixed Price, indicating a defined cost for the government. 4. Competition was conducted under 'Full and Open Competition after Exclusion of Sources', suggesting a specific justification for source selection.

Value Assessment

Rating: good

The total action obligation is $418,180,319. Without specific unit cost data or benchmarks for similar missile systems, a precise per-unit cost assessment is difficult. However, the firm fixed-price nature provides cost certainty.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The competition method 'Full and Open Competition after Exclusion of Sources' implies that while the competition was intended to be open, specific criteria or circumstances led to the exclusion of certain potential sources. This could impact price discovery by limiting the number of bidders.

Taxpayer Impact: The firm fixed-price contract aims to control costs for taxpayers, but the limited competition may have influenced the final negotiated price.

Public Impact

Ensures continued availability of critical missile defense systems. Supports national security objectives by maintaining strategic weapon capabilities. Funds advanced manufacturing and technological development within the defense sector. Provides economic stimulus through defense spending in Arizona.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition justification requires scrutiny.
Potential for cost overruns if scope expands beyond initial estimates.
Long-term sustainment costs not detailed.

Positive Signals

Firm Fixed Price contract offers cost predictability.
Award to established prime contractor with proven capabilities.
Includes essential spares and support equipment.

Sector Analysis

This contract falls within the Guided Missile and Space Vehicle Manufacturing sector, a high-value segment of the defense industry. Spending in this area is driven by national security requirements and technological advancements, with significant investment typically seen in R&D and production of advanced weaponry.

Small Business Impact

The data indicates the prime contractor is Raytheon Company, a large business. There is no explicit mention of small business participation in this specific contract action, suggesting potential for subcontracting opportunities that would need further investigation.

Oversight & Accountability

The Defense Contract Management Agency (DCMA) is responsible for oversight. The firm fixed-price contract and defined delivery schedule provide a framework for monitoring performance and ensuring accountability.

Related Government Programs

Guided Missile and Space Vehicle Manufacturing
Department of Defense Contracting
Defense Contract Management Agency Programs

Risk Flags

Limited competition may have resulted in a higher price.
Potential for scope creep or change orders impacting final cost.
Dependence on a single prime contractor for critical defense assets.
Lack of transparency regarding specific cost drivers.
Long-term sustainment costs are not addressed.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $440.2 million to RAYTHEON COMPANY. TAS::17 1804::TAS SM-2 BLK IIIA/IIIB FY08 PRODUCTION. INCLUDES ALL-UP-ROUND MISSILES, AN/DKT-71A TELEMTRIC DATA TRANSMITTING SETS (TDTS'S), SECTION LEVEL SPARES, POST PRODUCTION SPARES, SHIPPING CONTAINERS, AND ASSOCIATED DATA. MOU FUNDS IN THE AMOUNT OF $22,386 WERE OBLIGATED AT AWARD AND ARE NOT INCLUDED IN ACTION OBLIGATION BOX ABOVE. TOTAL ACTION OBLIGATION AT AWARD IS $418,180,319.

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 $440.2 million.

What is the period of performance?

Start: 2008-09-30. End: 2009-12-31.

What was the specific justification for excluding other sources in the 'Full and Open Competition after Exclusion of Sources' process?

The justification for excluding other sources typically relates to factors such as unique technical capabilities, proprietary technology, or urgent national security needs that only a specific contractor can meet. A detailed review of the contract award documentation would be required to ascertain the precise reasons cited by the Department of Defense for this particular procurement.

How does the per-unit cost of these SM-2 missiles compare to similar systems procured by other allied nations or through different contract vehicles?

Benchmarking the per-unit cost of these SM-2 missiles against similar systems is challenging without access to detailed cost breakdowns and comparative procurement data from other nations or contract types. Factors like technological sophistication, production volume, and specific contract terms significantly influence unit pricing, making direct comparisons difficult without specialized analysis.

What is the projected long-term cost to the government for the sustainment and modernization of the SM-2 missile fleet beyond this production contract?

The long-term sustainment and modernization costs for the SM-2 missile fleet are not detailed within this specific contract award. These costs typically involve ongoing maintenance, upgrades, spare parts procurement, and potential future technology insertions, which are usually addressed through separate, long-term support contracts or sustainment programs.

Industry Classification

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

Product/Service Code: GUIDED MISSLES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: N0002407R5365

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

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

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $440,261,582

Exercised Options: $440,224,448

Current Obligation: $440,202,062

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline