DoD Awards Raytheon $367M for Guided Missile Production, Lacking Competition

Contract Overview

Contract Amount: $366,810,610 ($366.8M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2009-09-04

End Date: 2018-09-30

Contract Duration: 3,313 days

Daily Burn Rate: $110.7K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIXED PRICE INCENTIVE

Sector: Defense

Official Description: SM-6 BLOCK I AUR

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $366.8 million to RAYTHEON COMPANY for work described as: SM-6 BLOCK I AUR Key points: 1. Significant contract value of $366.8M awarded to Raytheon. 2. Sole-source award raises concerns about price discovery and competition. 3. Long contract duration of 9 years suggests potential for cost overruns. 4. Guided Missile and Space Vehicle Manufacturing sector is defense-critical.

Value Assessment

Rating: questionable

The contract value is substantial, but without competitive bidding, it's difficult to assess if the pricing is optimal. Benchmarking against similar contracts for guided missile systems would be necessary for a thorough evaluation.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning there was no competition. This significantly limits price discovery and potentially leads to higher costs for taxpayers.

Taxpayer Impact: The lack of competition on this large contract likely results in a higher cost to taxpayers than if it had been competitively bid.

Public Impact

Taxpayers may be overpaying for guided missile systems due to the absence of competition. The long-term nature of the contract could lock in potentially inefficient practices. Dependence on a single contractor for critical defense components poses a strategic risk.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award
Long contract duration
Lack of small business participation indicated

Positive Signals

Award to established defense contractor
Focus on critical defense manufacturing

Sector Analysis

This contract falls within the Guided Missile and Space Vehicle Manufacturing sector, a critical component of national defense. Spending in this area is typically high and often involves complex, specialized production.

Small Business Impact

The data indicates that small business participation was not a factor in this contract award (ss: false, sb: false). This suggests an opportunity missed for engaging smaller, innovative companies in the defense supply chain.

Oversight & Accountability

The sole-source nature of this award warrants scrutiny from oversight bodies to ensure the government received fair value. A review of the justification for the sole-source award would be prudent.

Related Government Programs

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

Risk Flags

Sole-source award lacks competition
Potential for inflated pricing
Long contract duration increases risk
No indication of small business involvement
Limited transparency on justification for sole-sourcing

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $366.8 million to RAYTHEON COMPANY. SM-6 BLOCK I AUR

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 $366.8 million.

What is the period of performance?

Start: 2009-09-04. End: 2018-09-30.

What was the specific justification for awarding this contract on a sole-source basis, and were alternative competitive strategies considered?

The justification for a sole-source award typically involves factors like unique capabilities, urgent need, or lack of viable alternatives. Without further documentation, it's impossible to determine if alternative competitive strategies were explored. Agencies must provide a compelling rationale, often requiring public notice and justification, to deviate from full and open competition.

How does the awarded price compare to industry benchmarks for similar guided missile systems, considering the fixed-price incentive structure?

A direct comparison is challenging without access to detailed cost breakdowns and specific system performance metrics. However, the absence of competition inherently raises concerns about whether the price reflects the best possible value. An independent cost analysis or benchmarking against publicly available data for comparable systems would be needed to assess price reasonableness.

What are the long-term implications of this sole-source contract on innovation and cost-efficiency within the guided missile manufacturing sector?

Sole-source contracts can stifle innovation by reducing the incentive for the contractor to improve processes or offer cost-saving alternatives, as competition is absent. Over the long term, this can lead to entrenched pricing and potentially higher costs for the government. It also limits opportunities for new entrants to challenge established players and introduce novel technologies.

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: N0002409R5305

Offers Received: 1

Pricing Type: FIXED PRICE INCENTIVE (L)

Evaluated Preference: NONE

Contractor Details

Address: 1151 E HERMANS RD, TUCSON, AZ, 85756

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $379,804,723

Exercised Options: $377,333,223

Current Obligation: $366,810,610

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline