Raytheon Company awarded $101M for missile manufacturing, a sole-source definitive contract

Contract Overview

Contract Amount: $101,053,710 ($101.1M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2012-07-30

End Date: 2016-02-29

Contract Duration: 1,309 days

Daily Burn Rate: $77.2K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: BLOCK 2 RAM GMRP

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $101.1 million to RAYTHEON COMPANY for work described as: BLOCK 2 RAM GMRP Key points: 1. Contract awarded on a sole-source basis, limiting price competition. 2. The contract value of $101M for missile manufacturing falls within a typical range for defense procurement. 3. Fixed-price contract type suggests cost risks are primarily borne by the contractor. 4. The duration of 1309 days indicates a significant, long-term requirement. 5. No small business set-aside was applied, potentially limiting opportunities for smaller firms. 6. The contract is for guided missile and space vehicle manufacturing, a critical defense capability.

Value Assessment

Rating: fair

Benchmarking the value of this $101M contract is challenging without specific details on the missiles procured and their technical specifications. However, the fixed-price nature of the contract suggests that the contractor assumes the primary cost risk. Comparing this to similar sole-source procurements for advanced missile systems would be necessary for a more precise value assessment. Given the lack of competition, there's a higher risk of the price not reflecting optimal market value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one bidder, Raytheon Company, was solicited. This approach is typically used when a unique capability or proprietary technology is required, or in situations where competition is not feasible or cost-effective. The absence of multiple bidders means there was no direct price comparison or negotiation driven by competitive pressures, which can impact price discovery.

Taxpayer Impact: For taxpayers, a sole-source award means the absence of competitive bidding may lead to a higher price than could have been achieved in an open market. Oversight is crucial to ensure the price is fair and reasonable.

Public Impact

The primary beneficiaries are the Department of the Navy and potentially other branches of the U.S. military, receiving advanced missile systems. The services delivered include the manufacturing of guided missiles and space vehicles, crucial for national defense. The geographic impact is primarily within Arizona, where Raytheon Company's facility is located, supporting local employment and the defense industrial base. Workforce implications include skilled labor in manufacturing, engineering, and quality assurance within Raytheon's operations.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure on pricing.
Lack of transparency in the justification for sole-sourcing.
Potential for cost overruns if not rigorously managed due to lack of competition.
Reliance on a single contractor for critical defense components.

Positive Signals

Fixed-price contract shifts cost risk to the contractor.
Long-term contract duration provides stability for production.
Award to a known, established defense contractor with relevant expertise.

Sector Analysis

The defense sector, specifically guided missile and space vehicle manufacturing, is characterized by high technological complexity, significant R&D investment, and long production cycles. This contract falls within the broader aerospace and defense industry, which is a critical component of national security. Spending in this area is often driven by strategic needs and technological advancements rather than purely market-driven demand. Comparable spending benchmarks would involve analyzing other large-scale missile system procurements by the DoD.

Small Business Impact

This contract was not set aside for small businesses, nor does it appear to have specific subcontracting requirements mentioned in the provided data. As a sole-source award to a large prime contractor, the direct impact on small businesses is likely limited unless Raytheon Company voluntarily includes them in its supply chain. Further investigation into subcontracting plans would be needed to assess the broader impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Navy's contracting and program management offices. Accountability measures would include performance reviews, quality inspections, and adherence to contract terms. Transparency is often limited in sole-source procurements, but contract award details are usually made public. Inspector General jurisdiction would apply to any allegations of fraud, waste, or abuse.

Related Government Programs

Department of Defense Procurement
Missile Defense Systems
Naval Aviation Programs
Guided Missile Manufacturing
Space Vehicle Production

Risk Flags

Sole-source award
Lack of competition
Potential for price inflation

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $101.1 million to RAYTHEON COMPANY. BLOCK 2 RAM GMRP

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 $101.1 million.

What is the period of performance?

Start: 2012-07-30. End: 2016-02-29.

What specific type of guided missile or space vehicle is being manufactured under this contract?

The provided data indicates the contract is for 'Guided Missile and Space Vehicle Manufacturing' under NAICS code 336414. However, the specific model or type of missile or space vehicle is not detailed in the abbreviated information. This level of specificity is typically found in the contract's statement of work or technical exhibits, which are not included here. Understanding the exact product is crucial for assessing its technological sophistication, strategic importance, and cost drivers.

What was the justification for awarding this contract on a sole-source basis?

Sole-source awards are generally justified when only one responsible source can provide the required supplies or services. Common justifications include unique capabilities, proprietary technology, urgent and compelling needs where competition is not feasible, or when the contract is a follow-on to a previously competed effort where the original contractor possesses unique knowledge. For this $101M contract awarded to Raytheon Company, the justification likely stems from proprietary technology, specialized manufacturing processes, or the need for a specific, integrated system that only Raytheon can provide, possibly due to prior development or existing infrastructure.

How does the $101 million contract value compare to similar missile system procurements?

Comparing the $101 million value requires context on the specific missile system. For instance, if this contract is for a large quantity of a standard missile, it might be considered moderate. If it's for a highly advanced, low-volume, next-generation system, it could be relatively low. Defense contracts for major weapon systems often run into billions of dollars. However, for specific components, upgrades, or smaller missile types, $101 million over the contract's duration (approximately 3.5 years) is a substantial but not extraordinary amount. Benchmarking would involve looking at contracts for similar platforms like air-to-air missiles, surface-to-air missiles, or cruise missiles from other defense contractors.

What are the potential risks associated with a sole-source contract of this magnitude?

The primary risk with a sole-source contract of this magnitude ($101 million) is the potential for inflated pricing due to the lack of competitive pressure. Without competing bids, there's less incentive for the contractor to offer the lowest possible price. Other risks include contractor performance issues, where the government has fewer alternatives if the contractor fails to meet expectations. There's also a risk of technological obsolescence if the sole-source provider doesn't innovate rapidly. Ensuring robust oversight, fair pricing analysis, and clear performance metrics becomes paramount to mitigate these risks.

What is Raytheon Company's track record in manufacturing guided missiles and space vehicles?

Raytheon Company (now RTX) has a long and extensive track record in the defense industry, particularly in missile systems. They are a major producer of various air-to-air, air-to-ground, and surface-to-air missiles, including well-known systems like the Patriot missile defense system, Tomahawk cruise missile, and Sidewinder missile. Their experience spans decades, involving significant research, development, and large-scale production. This history suggests a high level of technical expertise and manufacturing capability relevant to the contract's scope.

What oversight mechanisms are in place for this sole-source definitive contract?

Oversight for this sole-source definitive contract would typically involve the Department of the Navy's contracting officers, program managers, and quality assurance representatives. These entities are responsible for monitoring contractor performance against the contract's requirements, ensuring adherence to specifications, delivery schedules, and quality standards. For fixed-price contracts, oversight also focuses on ensuring the contractor manages costs effectively to meet the agreed-upon price. Audits by government agencies, including the Defense Contract Audit Agency (DCAA), may also be conducted to verify costs and pricing, especially if there were any cost-reimbursement elements or modifications.

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: N0002411R5450

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: $104,110,636

Exercised Options: $101,053,718

Current Obligation: $101,053,710

Subaward Activity

Number of Subawards: 178

Total Subaward Amount: $247,803,545

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline