Navy's $276M Standard Missile Services Contract Awarded to Raytheon Without Competition

Contract Overview

Contract Amount: $276,393,451 ($276.4M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2013-05-31

End Date: 2018-05-31

Contract Duration: 1,826 days

Daily Burn Rate: $151.4K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: FISCAL YEAR 2013 THROUGH FISCAL YEAR 2017 U.S. NAVY, OTHER GOVERNMENT AGENCIES, AND FOREIGN MILITARY SALES STANDARD MISSILE (SM) ENGINEERING AND TECHNICAL SERVICES.

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $276.4 million to RAYTHEON COMPANY for work described as: FISCAL YEAR 2013 THROUGH FISCAL YEAR 2017 U.S. NAVY, OTHER GOVERNMENT AGENCIES, AND FOREIGN MILITARY SALES STANDARD MISSILE (SM) ENGINEERING AND TECHNICAL SERVICES. Key points: 1. Significant spending on engineering and technical services for Standard Missiles over five years. 2. Sole awardee, Raytheon Company, highlights a lack of competition for these critical services. 3. Contract type is Cost Plus Fixed Fee, which can lead to cost overruns. 4. The absence of competition raises concerns about potential overpricing and reduced innovation.

Value Assessment

Rating: questionable

The Cost Plus Fixed Fee contract type, combined with a lack of competition, makes it difficult to assess value. Without competitive bids, it's hard to benchmark pricing against market rates for similar engineering and technical 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 limits price discovery and potentially leads to higher costs for the government compared to a competitive process.

Taxpayer Impact: The lack of competition for a contract of this magnitude may result in taxpayers paying more than necessary for essential defense services.

Public Impact

Ensures continued availability of critical Standard Missile systems for national defense. Supports advanced engineering and technical services vital for missile readiness and upgrades. Potential for higher costs impacts overall defense budget allocation.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition
Cost Plus Fixed Fee contract type
Long contract duration (5 years)

Positive Signals

Ensures critical engineering support for Standard Missile systems
Awarded to a known prime contractor with relevant expertise

Sector Analysis

This contract falls within the Defense sector, specifically for engineering services related to missile systems. Spending benchmarks for similar sole-source engineering services can vary widely, but a lack of competition often inflates costs.

Small Business Impact

The provided data does not indicate any subcontracting to small businesses. Further analysis would be needed to determine if small businesses had opportunities to participate in this contract.

Oversight & Accountability

The sole-source nature of this award warrants close oversight to ensure Raytheon is providing services at a fair and reasonable price, and that performance meets all requirements.

Related Government Programs

Engineering Services
Department of Defense Contracting
Defense Contract Management Agency Programs

Risk Flags

Potential for inflated costs due to lack of competition
Cost Plus Fixed Fee structure may lead to cost overruns
Limited transparency in pricing and performance metrics
Risk of vendor lock-in for critical missile support

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $276.4 million to RAYTHEON COMPANY. FISCAL YEAR 2013 THROUGH FISCAL YEAR 2017 U.S. NAVY, OTHER GOVERNMENT AGENCIES, AND FOREIGN MILITARY SALES STANDARD MISSILE (SM) ENGINEERING AND TECHNICAL SERVICES.

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 $276.4 million.

What is the period of performance?

Start: 2013-05-31. End: 2018-05-31.

What is the justification for awarding this contract sole-source to Raytheon?

The justification for a sole-source award typically involves factors such as unique capabilities, proprietary technology, or urgent needs where only one source can fulfill the requirement. Without specific documentation, it's difficult to ascertain the precise reasons, but it implies a belief that competition was not feasible or advantageous.

How does the Cost Plus Fixed Fee structure impact risk and cost control?

Cost Plus Fixed Fee (CPFF) contracts reimburse the contractor for allowable costs plus a fixed fee representing profit. While it incentivizes the contractor to control costs to maximize their profit margin, it shifts much of the cost risk to the government. If costs exceed estimates, the government pays more, potentially leading to higher overall expenditure.

What is the potential impact of this sole-source award on future competition for similar services?

A long-term sole-source award can create a barrier to entry for potential competitors, as Raytheon likely possesses significant institutional knowledge and established relationships. This can perpetuate a lack of competition in subsequent procurements, making it harder for new or smaller firms to enter the market and offer alternative solutions.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services

Product/Service Code: RESEARCH AND DEVELOPMENT › C – National Defense R&D Services

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0002412R5403

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: $321,935,476

Exercised Options: $305,297,903

Current Obligation: $276,393,451

Actual Outlays: $911

Subaward Activity

Number of Subawards: 893

Total Subaward Amount: $221,974,845

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline