DoD's $214.7M Raytheon Contract for Missile Support Lacks Competition, Raises Oversight Concerns
Contract Overview
Contract Amount: $214,747,009 ($214.7M)
Contractor: Raytheon Company
Awarding Agency: Department of Defense
Start Date: 2012-12-31
End Date: 2016-09-30
Contract Duration: 1,369 days
Daily Burn Rate: $156.9K/day
Competition Type: NOT AVAILABLE FOR COMPETITION
Number of Offers Received: 1
Pricing Type: COST PLUS FIXED FEE
Sector: Defense
Official Description: ESSM DESIGN AGENT, IN-SERVICE SUPPORT, TECHNICAL ENGINEERING SUPPORT SERVICES AND BLK II RISK REDUCTION
Place of Performance
Location: TUCSON, PIMA County, ARIZONA, 85756
State: Arizona Government Spending
Plain-Language Summary
Department of Defense obligated $214.7 million to RAYTHEON COMPANY for work described as: ESSM DESIGN AGENT, IN-SERVICE SUPPORT, TECHNICAL ENGINEERING SUPPORT SERVICES AND BLK II RISK REDUCTION Key points: 1. Significant contract value ($214.7M) awarded to a single large business (Raytheon). 2. Lack of competition suggests potential for suboptimal pricing and reduced innovation. 3. Contract type (Cost Plus Fixed Fee) can incentivize cost overruns. 4. Limited public data on performance and specific deliverables hinders full assessment.
Value Assessment
Rating: questionable
The Cost Plus Fixed Fee contract type, while common for complex R&D, can lead to higher costs if not tightly managed. Without performance data, it's difficult to assess if the $214.7M represents good value.
Cost Per Unit: N/A
Competition Analysis
Competition Level: limited
The contract was 'NOT AVAILABLE FOR COMPETITION,' indicating a sole-source or limited competition award. This significantly restricts price discovery and may lead to higher costs than a competitive process.
Taxpayer Impact: The lack of competition and potentially less efficient contract type could result in taxpayers paying more than necessary for these essential engineering and support services.
Public Impact
Taxpayers may be overpaying due to the absence of competitive bidding. The specific technical services provided are critical for missile systems, impacting national security. Oversight is crucial to ensure Raytheon delivers effectively within the awarded budget and scope.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Lack of Competition
- Cost-Plus Contract Type
- Limited Public Data
Positive Signals
- Essential Service for National Security
- Established Contractor
Sector Analysis
This contract falls under the 'Other Guided Missile and Space Vehicle Parts and Auxiliary Equipment Manufacturing' sector. Spending in this defense sub-sector is substantial, but transparency and competition are key to ensuring efficient use of funds.
Small Business Impact
The contract was awarded to Raytheon Company, a large business. There is no indication that small businesses were involved as subcontractors or partners in this specific award.
Oversight & Accountability
The 'NOT AVAILABLE FOR COMPETITION' status warrants close oversight to ensure the government received fair pricing and adequate performance. The contract duration and value necessitate robust monitoring mechanisms.
Related Government Programs
- Other Guided Missile and Space Vehicle Parts and Auxiliary Equipment Manufacturing
- Department of Defense Contracting
- Department of the Navy Programs
Risk Flags
- Lack of competitive bidding may have inflated costs.
- Cost-Plus contract type carries inherent risk of cost overruns.
- Limited public information hinders independent assessment of value and performance.
- Sole-source award requires heightened scrutiny of pricing and deliverables.
Tags
other-guided-missile-and-space-vehicle-p, department-of-defense, az, definitive-contract, 100m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $214.7 million to RAYTHEON COMPANY. ESSM DESIGN AGENT, IN-SERVICE SUPPORT, TECHNICAL ENGINEERING SUPPORT SERVICES AND BLK II RISK REDUCTION
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 $214.7 million.
What is the period of performance?
Start: 2012-12-31. End: 2016-09-30.
What specific technical engineering support services were provided under this contract, and how were they essential to the ESSM program's success?
The contract covered 'ESSM DESIGN AGENT, IN-SERVICE SUPPORT, TECHNICAL ENGINEERING SUPPORT SERVICES AND BLK II RISK REDUCTION.' These services are crucial for the ongoing operational readiness, maintenance, and future development of the Evolved Sea Sparrow Missile (ESSM) system, a key component of naval defense capabilities.
Given the sole-source nature, what mechanisms were in place to ensure Raytheon's pricing was fair and reasonable?
For sole-source contracts, agencies typically rely on contractor cost and pricing data, forward pricing rates, and should conduct detailed cost or price analysis. However, without competition, the government's negotiating position is inherently weaker, making robust internal analysis and negotiation critical.
How effectively did the Cost Plus Fixed Fee structure incentivize Raytheon to control costs and deliver efficiently within the $214.7M award?
Cost Plus Fixed Fee contracts provide reimbursement for allowable costs plus a fixed fee representing profit. While the fixed fee incentivizes completion, it can also encourage cost growth if the baseline estimate is inaccurate or if scope creep occurs without adequate adjustments. Effective oversight is key to managing this.
Industry Classification
NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Other Guided Missile and Space Vehicle Parts and Auxiliary Equipment Manufacturing
Product/Service Code: GUIDED MISSLES
Competition & Pricing
Extent Competed: NOT AVAILABLE FOR COMPETITION
Solicitation Procedures: ONLY ONE SOURCE
Solicitation ID: N0002412R5410
Offers Received: 1
Pricing Type: COST PLUS FIXED FEE (U)
Evaluated Preference: NONE
Contractor Details
Parent Company: Rockwell Collins Australia PTY Limited
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: $236,999,997
Exercised Options: $236,999,997
Current Obligation: $214,747,009
Subaward Activity
Number of Subawards: 601
Total Subaward Amount: $8,493,901,102
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2012-12-31
Current End Date: 2016-09-30
Potential End Date: 2016-09-30 00:00:00
Last Modified: 2024-09-17
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