DoD Awards $274M for Rolling Airframe Missile Production to Raytheon, Lacking Competition

Contract Overview

Contract Amount: $273,930,536 ($273.9M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2008-06-11

End Date: 2014-12-31

Contract Duration: 2,394 days

Daily Burn Rate: $114.4K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: ROLLING AIRFRAME MISSILE (RAM) GMRP PRODUCTION

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $273.9 million to RAYTHEON COMPANY for work described as: ROLLING AIRFRAME MISSILE (RAM) GMRP PRODUCTION Key points: 1. Significant contract value of $273.9 million for missile production. 2. Sole-source award to Raytheon Company indicates a lack of competitive bidding. 3. Potential risk associated with single-source procurement and limited price discovery. 4. Defense sector spending on advanced weaponry.

Value Assessment

Rating: questionable

Contract value is substantial, but without competitive data, assessing value for money is difficult. The firm fixed-price structure provides some cost certainty, but the lack of competition raises concerns about potential overpricing.

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 significantly limits price discovery and competition, potentially leading to higher costs for taxpayers.

Taxpayer Impact: The absence of competition in this sole-source award may result in higher costs for taxpayers compared to a competitively bid contract.

Public Impact

Taxpayers may be paying a premium due to the lack of competitive bidding. The Department of Defense relies on Raytheon for critical missile defense systems. This contract supports advanced defense manufacturing capabilities within the US.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award
Lack of competition
Limited price discovery

Positive Signals

Firm fixed-price contract
Long-term production run

Sector Analysis

This contract falls within the defense sector, specifically guided missile manufacturing. Spending in this area is critical for national security, but often involves high costs and specialized production capabilities, making competition challenging.

Small Business Impact

The data provided does not indicate any subcontracting opportunities for small businesses on this contract. Further investigation would be needed to determine if small businesses are involved in the supply chain.

Oversight & Accountability

The contract is managed by the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor performance and compliance. However, the sole-source nature limits the agency's ability to leverage competition for cost savings.

Related Government Programs

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

Risk Flags

Sole-source award
Lack of competitive bidding
Potential for cost overruns
Limited transparency in pricing
Dependency on a single supplier

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $273.9 million to RAYTHEON COMPANY. ROLLING AIRFRAME MISSILE (RAM) GMRP PRODUCTION

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 $273.9 million.

What is the period of performance?

Start: 2008-06-11. End: 2014-12-31.

What is the justification for the sole-source award of the Rolling Airframe Missile (RAM) GMRP Production contract?

The justification for a sole-source award typically stems from unique capabilities, proprietary technology, or urgent needs where only one contractor can fulfill the requirement. Without specific documentation, it's presumed Raytheon possesses exclusive rights or capabilities essential for the RAM system's production, making competition impractical or impossible under the circumstances.

What are the potential risks associated with the lack of competition for this missile production contract?

The primary risk is the potential for inflated costs due to the absence of competitive pressure. Raytheon may not have the same incentive to offer the most competitive pricing. Additionally, a sole-source arrangement can create dependency and limit the government's flexibility if performance issues arise or if alternative solutions become available.

How does the firm fixed-price (FFP) contract type impact the government's financial exposure given the sole-source nature?

An FFP contract provides cost certainty for the government, as the price is fixed regardless of the contractor's actual costs. However, in a sole-source scenario, this certainty comes without the benefit of competitive negotiation. While the government knows the total price, it may not be the lowest possible price achievable through competition.

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 AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0002408R5401

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: RTX Corp (UEI: 001344142)

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: $329,065,346

Exercised Options: $273,930,536

Current Obligation: $273,930,536

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline