Raytheon Company awarded $12.2M for ESSM DLMF, a sole-source contract with a 5-year duration

Contract Overview

Contract Amount: $12,231,864 ($12.2M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2008-02-12

End Date: 2012-12-31

Contract Duration: 1,784 days

Daily Burn Rate: $6.9K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: ESSM DLMF

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $12.2 million to RAYTHEON COMPANY for work described as: ESSM DLMF Key points: 1. Contract awarded to a single vendor suggests potential lack of competitive pressure on pricing. 2. The contract's duration of nearly 5 years may indicate a long-term need for these specific ordnance accessories. 3. Limited competition raises questions about whether the government secured the best possible value. 4. The 'Other Ordnance and Accessories Manufacturing' sector is critical for defense readiness. 5. Performance context is limited without specific delivery details or success metrics. 6. The contract's value, while significant, needs to be benchmarked against similar procurements for a true value assessment.

Value Assessment

Rating: questionable

Benchmarking the value of this $12.2 million contract is challenging without more detailed cost breakdowns or comparisons to similar sole-source procurements for ESSM DLMF. The Cost Plus Fixed Fee (CPFF) contract type can sometimes lead to higher costs if not carefully managed, as the contractor is reimbursed for allowable costs plus a fixed fee. Without insight into the fixed fee and the base cost of goods and services, it's difficult to definitively assess value for money. However, the lack of competition inherently limits the government's ability to drive down prices through market forces.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, Raytheon Company, was solicited. This approach is typically used when only one responsible source is available or when there is a compelling justification for excluding other potential bidders. The lack of a competitive bidding process means that the government did not benefit from the price discovery and innovation that typically arises from multiple offers.

Taxpayer Impact: Sole-source awards can result in higher costs for taxpayers as there is no competitive pressure to ensure the lowest possible price. This limits the government's leverage in negotiating favorable terms and pricing.

Public Impact

The primary beneficiaries are the Department of the Navy, receiving critical ordnance components. The services delivered involve the manufacturing and supply of ESSM DLMF (Evolved Sea Sparrow Missile Defense Logistics Management Framework). The geographic impact is primarily within Arizona, where Raytheon Company is located, and potentially extends to naval bases where the missiles are deployed. Workforce implications include employment at Raytheon's facilities involved in this specific contract.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially increasing costs for taxpayers.
Cost Plus Fixed Fee contract type can incentivize higher spending if not rigorously overseen.
Lack of transparency in specific cost components makes independent value assessment difficult.
Long contract duration (nearly 5 years) could lock in potentially suboptimal pricing if market conditions change.

Positive Signals

Award to an established defense contractor like Raytheon suggests a level of trust in their capability to deliver.
The contract addresses a specific, likely critical, defense need (ESSM DLMF).
The fixed fee component of the CPFF contract provides some cost predictability for the government.

Sector Analysis

The defense manufacturing sector, particularly for missile systems and their logistical support, is highly specialized and dominated by a few large prime contractors. Raytheon Company is a major player in this space. The market size for such specialized ordnance components is substantial, driven by ongoing defense modernization and operational needs. This contract fits within the broader category of defense procurement for naval weapon systems, where spending is consistently high.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb: false'. There is no explicit information provided regarding subcontracting plans for small businesses. Without specific subcontracting goals or reporting, the direct impact on the small business ecosystem for this particular contract is likely minimal, though Raytheon may engage small businesses in its broader supply chain.

Oversight & Accountability

Oversight for this contract would fall under the Department of the Navy's contracting and program management offices. Inspector General jurisdiction would apply for investigations into fraud, waste, or abuse. Transparency is limited due to the sole-source nature and the proprietary information typically associated with defense manufacturing, making detailed public oversight challenging.

Related Government Programs

Evolved Sea Sparrow Missile (ESSM) Program
Naval Weapon Systems Procurement
Defense Logistics Management
Ordnance Manufacturing Contracts

Risk Flags

Sole-source award
Cost Plus Fixed Fee contract type
Lack of detailed cost transparency
Potential for non-competitive pricing

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $12.2 million to RAYTHEON COMPANY. ESSM DLMF

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 $12.2 million.

What is the period of performance?

Start: 2008-02-12. End: 2012-12-31.

What is the historical spending pattern for ESSM DLMF with Raytheon Company?

Detailed historical spending data specifically for the ESSM DLMF contract with Raytheon Company is not publicly available in the provided data snippet. The current award of $12.2 million covers a period from February 12, 2008, to December 31, 2012, spanning approximately 1784 days (nearly 5 years). To understand historical patterns, one would need to access contract databases like FPDS or USAspending to identify previous awards for this specific item or related services to Raytheon or other contractors. Analyzing these records would reveal trends in contract value, duration, and type over time, helping to contextualize the current award and identify any significant increases or decreases in spending.

How does the Cost Plus Fixed Fee (CPFF) structure impact the value for money in this contract?

The Cost Plus Fixed Fee (CPFF) contract structure means Raytheon is reimbursed for all allowable costs incurred in performing the contract, plus a predetermined fixed fee representing profit. While the fixed fee provides some cost certainty for the government regarding profit margins, the overall cost is variable based on actual expenses. This structure can incentivize contractors to incur costs, as they are reimbursed for them. For value for money, rigorous oversight is crucial to ensure that costs are reasonable and allowable. Without detailed cost audits and comparisons to industry benchmarks for similar work, it's difficult to ascertain if the government received optimal value, especially in a sole-source scenario where competitive pressure is absent.

What are the specific risks associated with a sole-source award for defense components like ESSM DLMF?

The primary risk associated with a sole-source award for critical defense components like ESSM DLMF is the lack of competitive pricing. This can lead to the government paying a premium compared to what might be achieved in a competitive environment. Another risk is potential complacency from the contractor, as there is no immediate threat of losing future business to competitors. This could potentially impact innovation or responsiveness. Furthermore, sole-source awards can create dependency on a single supplier, posing supply chain risks if that supplier faces production issues or business disruptions. Ensuring fair and reasonable pricing requires robust negotiation and justification processes by the procuring agency.

What is Raytheon Company's track record in fulfilling defense contracts of similar scope and value?

Raytheon Company (now RTX) has an extensive and long-standing track record of fulfilling defense contracts for the U.S. Department of Defense and allied nations. They are a major prime contractor across numerous platforms, including missiles, radar, and command and control systems. While specific performance metrics for this particular ESSM DLMF contract are not detailed here, Raytheon's general performance across its vast portfolio is typically characterized by its technical capabilities and ability to deliver complex systems. However, like any large defense contractor, they have also faced scrutiny regarding cost overruns, schedule delays, and performance issues on specific programs, underscoring the importance of diligent contract management and oversight regardless of the contractor's reputation.

How does the 'Other Ordnance and Accessories Manufacturing' classification influence the analysis of this contract?

The 'Other Ordnance and Accessories Manufacturing' (NAICS code 332995) classification indicates that this contract pertains to the production of a diverse range of ordnance items and related accessories not specifically covered by more specialized manufacturing codes. This broad classification suggests the ESSM DLMF could involve components or systems that are critical but perhaps not as high-profile or standardized as major weapon platforms. Analyzing contracts within this NAICS code can be challenging due to its heterogeneity. It implies a need to look closely at the specific nature of the 'accessories' and 'ordnance' to understand their criticality, technological sophistication, and the competitive landscape within this segment of the defense industrial base.

Industry Classification

NAICS: Manufacturing › Other Fabricated Metal Product Manufacturing › Other Ordnance and Accessories Manufacturing

Product/Service Code: AMMUNITION AND EXPLOSIVES

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0002405R5493

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

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

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $15,606,613

Exercised Options: $13,325,210

Current Obligation: $12,231,864

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline