DoD Awards Raytheon $135M for Standard Missile Maintenance and Repairs, Sole-Sourced

Contract Overview

Contract Amount: $134,889,083 ($134.9M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2013-02-04

End Date: 2018-06-30

Contract Duration: 1,972 days

Daily Burn Rate: $68.4K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: STANDARD MISSILE-2 DEPOT AND INTERMEDIATE LEVEL MAINTENANCE, ALL-UP-ROUND RECERTIFICATIONS, SM-2 AND SM-6 SPECIAL MAINTENANCE TASKS, AND FOREIGN MILITARY SALES SM-2 REPAIRS AND MAINTENANCE.

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $134.9 million to RAYTHEON COMPANY for work described as: STANDARD MISSILE-2 DEPOT AND INTERMEDIATE LEVEL MAINTENANCE, ALL-UP-ROUND RECERTIFICATIONS, SM-2 AND SM-6 SPECIAL MAINTENANCE TASKS, AND FOREIGN MILITARY SALES SM-2 REPAIRS AND MAINTENANCE. Key points: 1. Significant contract value of $134.9 million for critical missile system maintenance. 2. Sole-source award to Raytheon Company, raising questions about competition and price discovery. 3. Contract covers depot, intermediate, and special maintenance for SM-2 and SM-6 missiles. 4. Includes Foreign Military Sales (FMS) repairs, indicating international reliance on US missile support.

Value Assessment

Rating: questionable

The contract type is Cost Plus Fixed Fee (CPFF), which can lead to cost overruns as the contractor is reimbursed for costs plus a fixed fee. Without competitive bidding, it's difficult to benchmark pricing against similar services.

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 potentially leads to higher costs for the government.

Taxpayer Impact: The absence of competition may result in taxpayers paying a premium for these essential missile maintenance services.

Public Impact

Ensures readiness of critical Standard Missile systems for national defense. Supports Foreign Military Sales, impacting international security relationships. Potential for increased costs due to sole-source nature of the award. Long contract duration (over 5 years) suggests ongoing need for these specialized services.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competition.
Cost-plus contract type can incentivize higher costs.
Lack of clear performance metrics for maintenance effectiveness.
Potential for cost overruns due to fixed fee structure.

Positive Signals

Ensures critical missile system readiness.
Supports FMS, strengthening alliances.
Raytheon's established expertise in missile systems.

Sector Analysis

This contract falls within the Defense sector, specifically Guided Missile and Space Vehicle Manufacturing. Spending benchmarks for specialized maintenance of complex weapon systems are often high due to technical requirements and limited qualified contractors.

Small Business Impact

The data indicates this contract was not awarded to small businesses. Given the specialized nature of missile maintenance, it is unlikely that small businesses would be primary contractors for such work.

Oversight & Accountability

The Department of Defense, through the Defense Contract Management Agency, is responsible for overseeing this contract. However, the sole-source nature and CPFF structure warrant close monitoring to ensure cost control and effective performance.

Related Government Programs

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

Risk Flags

Sole-source award
Cost Plus Fixed Fee contract type
Potential for cost overruns
Limited transparency in pricing
Reliance on a single contractor for critical systems

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $134.9 million to RAYTHEON COMPANY. STANDARD MISSILE-2 DEPOT AND INTERMEDIATE LEVEL MAINTENANCE, ALL-UP-ROUND RECERTIFICATIONS, SM-2 AND SM-6 SPECIAL MAINTENANCE TASKS, AND FOREIGN MILITARY SALES SM-2 REPAIRS AND MAINTENANCE.

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 $134.9 million.

What is the period of performance?

Start: 2013-02-04. End: 2018-06-30.

What is the estimated cost savings or premium paid due to the sole-source award compared to a competitive process?

Quantifying the exact cost premium of a sole-source award is challenging without a competitive baseline. However, historical data and industry analysis suggest that competitive bidding can yield savings of 10-30% or more compared to sole-source procurements, especially for services with established market alternatives. The CPFF structure further complicates cost control, potentially increasing the premium.

What are the specific risks associated with the Cost Plus Fixed Fee (CPFF) contract type for this missile maintenance service?

The primary risk of a CPFF contract is that the contractor is incentivized to incur costs, as their fee is fixed regardless of the total cost. This can lead to cost overruns and reduced government oversight effectiveness if not managed diligently. For specialized maintenance, ensuring the 'fixed fee' adequately reflects efficient performance is crucial.

How is the effectiveness of the missile maintenance and recertification services being measured and ensured under this contract?

Effectiveness is typically measured through performance metrics, quality assurance surveillance plans (QASPs), and adherence to technical specifications. For missile maintenance, this would include successful recertification rates, defect-free repairs, and timely completion of tasks. The government's quality assurance representatives play a critical role in monitoring and verifying these aspects.

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: N0002412R5402

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: RTX Corp

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: $196,674,598

Exercised Options: $135,541,270

Current Obligation: $134,889,083

Subaward Activity

Number of Subawards: 322

Total Subaward Amount: $119,838,788

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline