Navy awards $1.34B for DDG 1000 class shipbuilding, training, and engineering services to Raytheon Company

Contract Overview

Contract Amount: $1,341,505,621 ($1.3B)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2010-03-10

End Date: 2022-07-01

Contract Duration: 4,496 days

Daily Burn Rate: $298.4K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: DDG 1002 DIMINISHING MANUFACTURING SOURCES (DMS) MATERIALS AND LONG-LEAD/ADVANCED PROCUREMENT ITEMS, DDG 1000 CLASS TRAINING EQUIPMENT AND CURRICULUM, AND ASSOCIATED DDG 1000 CLASS ENGINEERING SERVICES

Place of Performance

Location: TEWKSBURY, MIDDLESEX County, MASSACHUSETTS, 01876

State: Massachusetts Government Spending

Plain-Language Summary

Department of Defense obligated $1.34 billion to RAYTHEON COMPANY for work described as: DDG 1002 DIMINISHING MANUFACTURING SOURCES (DMS) MATERIALS AND LONG-LEAD/ADVANCED PROCUREMENT ITEMS, DDG 1000 CLASS TRAINING EQUIPMENT AND CURRICULUM, AND ASSOCIATED DDG 1000 CLASS ENGINEERING SERVICES Key points: 1. Significant investment in advanced naval capabilities and training infrastructure. 2. Sole-source award to Raytheon Company raises questions about competition and price discovery. 3. Long-term contract duration (4496 days) suggests complex, ongoing program needs. 4. Focus on DMS materials and long-lead items indicates potential supply chain challenges.

Value Assessment

Rating: questionable

The contract value of $1.34 billion is substantial. Without competitive bidding, it's difficult to assess if this price represents fair market value compared to similar naval shipbuilding and training contracts.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award to Raytheon Company. This lack of competition limits price discovery and may result in higher costs for the government.

Taxpayer Impact: The absence of competition for a contract of this magnitude could lead to taxpayers potentially overpaying for the required goods and services.

Public Impact

Enhances U.S. Navy's technological superiority with advanced destroyer class. Supports critical training and curriculum development for sailors. Ensures availability of specialized components and engineering expertise. Potential for long-term reliance on a single contractor for future upgrades.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition
Sole-source award
Long contract duration
Potential for cost overruns

Positive Signals

Addresses critical defense needs
Ensures advanced naval capabilities
Supports specialized training

Sector Analysis

This contract falls within the Defense sector, specifically related to shipbuilding and associated systems. Spending benchmarks for similar sole-source contracts for advanced naval platforms are often high due to complexity and specialized requirements.

Small Business Impact

The data indicates this is a large prime contract awarded to Raytheon Company. There is no information provided on subcontracting opportunities for small businesses within this award.

Oversight & Accountability

The sole-source nature of this award warrants close oversight to ensure cost reasonableness and performance. Accountability for meeting program milestones and managing expenditures will be crucial.

Related Government Programs

Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing
Department of Defense Contracting
Department of the Navy Programs

Risk Flags

Lack of competitive bidding
Potential for inflated costs
Risk of contractor dependency
Limited transparency in pricing
Long-term commitment without demonstrated value

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $1.34 billion to RAYTHEON COMPANY. DDG 1002 DIMINISHING MANUFACTURING SOURCES (DMS) MATERIALS AND LONG-LEAD/ADVANCED PROCUREMENT ITEMS, DDG 1000 CLASS TRAINING EQUIPMENT AND CURRICULUM, AND ASSOCIATED DDG 1000 CLASS ENGINEERING SERVICES

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 $1.34 billion.

What is the period of performance?

Start: 2010-03-10. End: 2022-07-01.

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

The provided data states the contract was 'NOT COMPETED'. Typically, sole-source justifications are based on factors like unique capabilities, urgent needs, or lack of viable alternatives. A thorough review of the justification documentation is necessary to understand the rationale and assess if competitive options were genuinely unavailable or if the procurement process favored a single source.

How will the government ensure cost control and value for money given the absence of a competitive bidding process for this substantial contract?

With a sole-source award, robust cost analysis, including should-cost and will-cost estimates, is essential. The government should implement stringent performance monitoring, milestone-based payments, and potentially incorporate incentive clauses to drive efficiency. Regular audits and benchmarking against similar, albeit potentially different, programs can help identify potential cost savings.

What are the long-term implications of this sole-source award on future procurement strategies for the DDG 1000 class and related systems?

A long-term sole-source contract can create vendor lock-in, potentially limiting future competition and innovation. It may also set a precedent for subsequent procurements related to this class. The Navy should proactively plan for future competition, perhaps by breaking down future requirements into smaller, more contestable packages or by fostering alternative sources for critical components.

Industry Classification

NAICS: Manufacturing › Navigational, Measuring, Electromedical, and Control Instruments Manufacturing › Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing

Product/Service Code: FIRE CONTROL EQPT.

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0002410R5126

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Rockwell Collins Australia PTY Limited

Address: 50 APPLE HILL DR, TEWKSBURY, MA, 01876

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: $1,404,224,758

Exercised Options: $1,344,166,691

Current Obligation: $1,341,505,621

Actual Outlays: $13,005,126

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline