Raytheon awarded $66M for GMLS MK 49 MOD 3, a sole-source missile system procurement

Contract Overview

Contract Amount: $66,073,793 ($66.1M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2010-10-29

End Date: 2018-06-30

Contract Duration: 2,801 days

Daily Burn Rate: $23.6K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: GMLS MK 49 MOD 3

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $66.1 million to RAYTHEON COMPANY for work described as: GMLS MK 49 MOD 3 Key points: 1. The contract value of $66.1 million for the GMLS MK 49 MOD 3 system represents a significant investment in defense capabilities. 2. As a sole-source award, the absence of competitive bidding raises questions about potential price efficiencies and market responsiveness. 3. The contract duration of 2801 days (over 7 years) suggests a long-term need for this specific missile system. 4. The firm-fixed-price contract type shifts cost risk to the contractor, Raytheon Company, which can provide budget certainty. 5. The procurement falls under Guided Missile and Space Vehicle Manufacturing, a specialized sector within the broader defense industry. 6. The award was managed by the Defense Contract Management Agency, indicating standard oversight for this type of procurement.

Value Assessment

Rating: fair

Benchmarking the value of this specific missile system is challenging without comparable sole-source procurements or detailed cost breakdowns. The $66.1 million award over nearly eight years suggests a substantial per-year investment. However, the lack of competition means there's no direct market comparison to assess if the price is optimal. The firm-fixed-price nature provides cost certainty but doesn't inherently guarantee value for money compared to a competitively bid contract.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning Raytheon Company was the only identified source considered capable of fulfilling the requirement. The absence of a competitive solicitation process limits the opportunity for price discovery and potentially reduces the incentive for the contractor to offer the most competitive pricing. Without multiple bidders, it's difficult to ascertain the true market value or if alternative solutions were explored.

Taxpayer Impact: Taxpayers may not be receiving the best possible price due to the lack of competition. This sole-source award bypasses the typical cost-saving mechanisms inherent in competitive bidding processes.

Public Impact

The primary beneficiaries are the Department of Defense, which receives critical missile system components for national security. The services delivered include the manufacturing and supply of the GMLS MK 49 MOD 3 missile system. The geographic impact is primarily within Arizona (st: AZ, sn: ARIZONA), where the contractor is located, and wherever the missile systems are deployed. Workforce implications include employment at Raytheon Company's facilities involved in the production of these specialized defense systems.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source nature limits price competition and potential taxpayer savings.
Long contract duration (over 7 years) may not reflect evolving technological needs or market efficiencies.
Lack of transparency in the justification for sole-sourcing could obscure potential alternatives.
Specific performance metrics and delivery schedules are not detailed in the provided data, making outcome assessment difficult.

Positive Signals

Firm-fixed-price contract type provides budget predictability for the government.
Award to a known entity (Raytheon Company) suggests reliance on established capabilities for critical defense systems.
Procurement falls under a specialized manufacturing category (Guided Missile and Space Vehicle Manufacturing), indicating a focus on specific defense needs.

Sector Analysis

The Guided Missile and Space Vehicle Manufacturing sector is a highly specialized and critical component of the defense industrial base. Companies like Raytheon Company operate in a market characterized by high barriers to entry, significant R&D investment, and long product development cycles. Government contracts, particularly sole-source awards for advanced systems, are the primary revenue driver for many firms in this niche. Comparable spending benchmarks are difficult to establish due to the proprietary nature of missile technology and the unique specifications of each system.

Small Business Impact

The data indicates this contract was not set aside for small businesses (ss: false, sb: false). As a sole-source award to a large prime contractor, Raytheon Company, there is a potential for subcontracting opportunities for small businesses. However, the extent to which small businesses will participate is not specified in this award data. Without a competitive bidding process that often includes small business subcontracting plans, the direct impact on the small business ecosystem is less certain.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor compliance with contract terms, quality standards, and delivery schedules. Accountability measures are embedded within the firm-fixed-price structure, which places cost responsibility on the contractor. Transparency is limited due to the sole-source nature; however, contract award data is publicly available through federal procurement databases.

Related Government Programs

Missile Defense Systems
Guided Missile Manufacturing
Defense Procurement
Naval Weapon Systems
Air Defense Systems

Risk Flags

Sole-source award bypasses competitive bidding.
Long contract duration may not align with rapid technological evolution.
Lack of detailed performance metrics in award data hinders outcome assessment.
Potential for reduced value for money due to non-competitive nature.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $66.1 million to RAYTHEON COMPANY. GMLS MK 49 MOD 3

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 $66.1 million.

What is the period of performance?

Start: 2010-10-29. End: 2018-06-30.

What is the specific function and operational context of the GMLS MK 49 MOD 3 system?

The GMLS MK 49 MOD 3 is part of the U.S. Navy's Guided Missile Launching System (GMLS) family, specifically designed for vertical launching of missiles. The MK 49 MOD 3 is associated with the Rolling Airframe Missile (RAM) system, a short-range, self-defense weapon system designed to protect ships from anti-ship missiles, aircraft, and other threats. It provides a last-ditch defense capability. The system typically includes a launcher module, a fire control system, and the missiles themselves. Its operational context is primarily naval surface warfare, enhancing the survivability of vessels in contested environments.

Why was this contract awarded on a sole-source basis, and what alternatives were considered?

The provided data indicates the contract was 'NOT COMPETED' and is a 'SOLE SOURCE' award. Typically, sole-source justifications are required when only one responsible source is available or capable of meeting the government's needs. This could be due to unique capabilities, proprietary technology, or the need for compatibility with existing systems where only one contractor can provide the necessary components or services. Without access to the specific justification documentation filed by the Department of Defense, the precise reasons and any alternatives considered remain undisclosed in this dataset. Such justifications often involve detailed technical assessments and market research to confirm the lack of viable competition.

How does the $66.1 million contract value compare to historical spending on similar missile systems?

Direct comparison of the $66.1 million contract value for the GMLS MK 49 MOD 3 to historical spending on 'similar' missile systems is challenging without more specific details on the system's capabilities, quantity, and the contract's scope (e.g., procurement, upgrades, sustainment). Missile systems vary widely in complexity and cost. However, $66.1 million spread over approximately 7 years (2801 days) suggests an average annual expenditure of roughly $9.4 million. This figure needs to be contextualized against the specific technological advancements, production volumes, and the unique threat environment the system is designed to counter. Broader defense spending reports might show trends in missile procurement, but precise like-for-like comparisons are often proprietary or require deep dives into specific program histories.

What are the key performance indicators (KPIs) or metrics used to evaluate Raytheon Company's performance under this contract?

The provided contract data (award notice) does not specify the Key Performance Indicators (KPIs) or detailed metrics used to evaluate Raytheon Company's performance. However, for a firm-fixed-price contract of this nature, performance evaluation typically focuses on adherence to the contract schedule (delivery dates), quality standards (meeting specifications, low defect rates), and cost control (staying within the fixed price). The Defense Contract Management Agency (DCMA) would likely monitor these aspects. Specific technical performance metrics related to the missile system's reliability, effectiveness, and operational readiness would also be crucial, though these are usually detailed in separate technical exhibits or statements of work not included in the basic award data.

What is the risk profile associated with this contract, considering it's a sole-source award for a missile system?

The primary risk associated with this sole-source contract is the potential for reduced value for money due to the lack of competitive pricing. Taxpayers may be paying a premium because there was no bidding process to drive down costs. Another risk is contractor performance; while Raytheon is an established defense contractor, any sole-source award carries inherent risks if the contractor fails to deliver on time, within budget (though fixed-price mitigates government cost overrun risk), or to the required quality standards. Dependence on a single supplier for a critical defense asset also poses a long-term strategic risk if that supplier faces financial difficulties or shifts priorities. The long duration could also mean the technology becomes outdated before the contract concludes.

How does this contract fit into the broader strategic goals of the Department of Defense regarding missile defense and naval capabilities?

This contract for the GMLS MK 49 MOD 3 system directly supports the Department of Defense's strategic goals related to enhancing naval warfare capabilities and missile defense. The RAM system, for which this is a component, is crucial for protecting high-value naval assets from asymmetric threats, particularly anti-ship missiles. By ensuring a steady supply and potentially upgrades (depending on the contract scope) of this system, the DoD maintains the combat effectiveness of its fleet. This procurement aligns with broader defense strategies emphasizing readiness, technological superiority, and the ability to project power globally, ensuring freedom of navigation and protecting national interests at sea.

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: N0002410R5429

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

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: $74,890,733

Exercised Options: $66,073,793

Current Obligation: $66,073,793

Subaward Activity

Number of Subawards: 67

Total Subaward Amount: $12,281,402

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline