DoD's $134M missile contract awarded to Raytheon Company, a sole-source procurement

Contract Overview

Contract Amount: $133,975,311 ($134.0M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2014-06-24

End Date: 2017-12-31

Contract Duration: 1,286 days

Daily Burn Rate: $104.2K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: BLOCK 2 FY14 GMRP

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $134.0 million to RAYTHEON COMPANY for work described as: BLOCK 2 FY14 GMRP Key points: 1. This contract represents a significant investment in guided missile manufacturing capabilities. 2. The sole-source nature of the award warrants scrutiny regarding potential price inflation. 3. Long contract duration suggests a need for ongoing support and potential for scope creep. 4. Fixed-price contract type aims to transfer some risk to the contractor. 5. The geographic location of performance in Arizona may have local economic implications. 6. Focus on missile manufacturing highlights a critical defense capability.

Value Assessment

Rating: questionable

Benchmarking the value of this $134 million contract is challenging without specific details on the missiles procured and their technical specifications. However, sole-source procurements often carry a higher risk of inflated pricing compared to competitively awarded contracts. The firm fixed-price structure provides some cost certainty, but the absence of competition limits the government's ability to negotiate the best possible price. Further analysis would require comparing this award to similar missile system contracts awarded through competitive means.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple potential vendors. This approach is typically used when only one vendor possesses the necessary capabilities, technology, or when urgency dictates a rapid award. The lack of competition means that the government did not benefit from the price discovery and innovation that typically arise from a bidding process, potentially leading to higher costs.

Taxpayer Impact: Taxpayers may have paid a premium for this missile system due to the absence of competitive bidding. The government's negotiating power is diminished in sole-source situations, potentially resulting in less favorable pricing than could have been achieved in an open market.

Public Impact

The primary beneficiaries are the Department of Defense and its operational units requiring advanced missile systems. The contract supports the manufacturing and delivery of guided missiles and potentially related space vehicles. Performance is located in Arizona, potentially creating or sustaining jobs in the region. The contract contributes to the national defense industrial base and technological superiority in missile technology.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and may lead to higher costs for taxpayers.
Long contract duration (over 3 years) increases the risk of cost overruns if not managed effectively.
Lack of transparency in the sole-source justification could hide inefficiencies.
Potential for contractor lock-in due to specialized nature of missile systems.

Positive Signals

Firm fixed-price contract type provides cost predictability for the government.
Award to Raytheon Company, a known defense contractor, suggests established capabilities.
Contract supports critical national defense needs for guided missile technology.

Sector Analysis

The defense sector, specifically guided missile and space vehicle manufacturing, is characterized by high technological barriers to entry, significant R&D investment, and long product development cycles. Contracts in this area are often awarded to a limited number of specialized firms due to the complexity and national security implications. Raytheon Company is a major player in this market. Spending benchmarks are difficult to establish without specific program details, but multi-million dollar contracts for advanced weapon systems are common within the Department of Defense.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. There is no explicit information provided regarding subcontracting plans for small businesses. Without specific subcontracting goals or reporting, the direct impact on the small business ecosystem is unclear, though large prime contractors often engage small businesses for specialized components or services.

Oversight & Accountability

Oversight for this contract would typically fall under the purview of the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor performance and compliance. The firm fixed-price nature of the contract provides a degree of accountability for cost control on the contractor's side. Transparency regarding the sole-source justification and performance metrics would be key to assessing overall accountability.

Related Government Programs

Department of Defense Procurement
Missile Defense Systems
Guided Missile Manufacturing
Defense Industrial Base

Risk Flags

Sole-source procurement
Lack of competition
Potential for price inflation
Long contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $134.0 million to RAYTHEON COMPANY. BLOCK 2 FY14 GMRP

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 $134.0 million.

What is the period of performance?

Start: 2014-06-24. End: 2017-12-31.

What specific types of guided missiles or space vehicles are being procured under this contract?

The provided data indicates the contract falls under NAICS code 336414, 'Guided Missile and Space Vehicle Manufacturing,' and the description is 'BLOCK 2 FY14 GMRP.' While 'GMRP' could potentially stand for Guided Missile Repair Program or a similar designation, the specific missile systems are not detailed in the provided data. This level of specificity is crucial for understanding the technological scope and strategic importance of the procurement. Without this information, it's difficult to assess the contract's alignment with current defense strategies or compare its value to other missile programs.

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

The data explicitly states the contract type as 'NOT COMPETED,' which is synonymous with a sole-source award in this context. The specific justification for this sole-source determination is not provided. Typically, sole-source procurements are justified based on factors such as unique technical capabilities, lack of available alternatives, urgent and compelling needs, or specific government-directed sources. A thorough review would require accessing the official justification documentation (e.g., a Justification and Approval document) to understand why competition was deemed impracticable or not advantageous.

How does the $134 million contract value compare to similar missile system procurements by the DoD?

Comparing this $134 million contract value requires identifying comparable missile systems in terms of type, quantity, technological sophistication, and contract duration. Without knowing the specific missile systems procured under 'BLOCK 2 FY14 GMRP,' a direct comparison is difficult. However, the value is substantial, suggesting a significant procurement. For context, major missile programs can range from tens of millions to billions of dollars over their lifecycle. The fact that this is a sole-source award means its price may not be directly comparable to competitively bid programs, which often achieve lower prices through market forces.

What is Raytheon Company's track record with similar sole-source missile contracts?

Raytheon Company (now RTX) has a long history of developing and manufacturing complex defense systems, including various missile platforms, for the U.S. military and international allies. They are a prime contractor on numerous large-scale defense programs. While specific data on their track record with *sole-source* missile contracts of this exact nature isn't provided, their extensive experience in the field suggests they possess the necessary technical expertise and production capacity. However, sole-source awards to any large contractor warrant scrutiny regarding pricing and efficiency, regardless of past performance.

What are the potential risks associated with a firm fixed-price contract for missile manufacturing?

Firm fixed-price (FFP) contracts are generally preferred for their cost certainty. However, for complex, long-duration projects like missile manufacturing, risks can still emerge. If the initial cost estimates were inaccurate or if unforeseen technical challenges arise during production, the contractor might face financial strain, potentially leading to requests for contract modifications or disputes. Conversely, if the contractor significantly under-estimates costs, they might cut corners on quality, although stringent testing and acceptance criteria are designed to mitigate this. The primary risk for the government in an FFP contract is paying a premium if the contractor's initial price was too high due to lack of competition.

What is the historical spending trend for 'Guided Missile and Space Vehicle Manufacturing' by the Department of Defense?

Historical spending data for the 'Guided Missile and Space Vehicle Manufacturing' sector (NAICS 336414) by the Department of Defense is substantial, reflecting the critical nature of these capabilities. While the specific figure for FY14 is $134 million for this single contract, overall DoD spending in this category fluctuates annually based on strategic priorities, modernization efforts, and geopolitical demands. This sector consistently represents a significant portion of the defense budget, often involving multi-year procurement strategies and substantial investments in research, development, and production of advanced weapon systems.

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: N0002414R4107

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: RTX Corp (UEI: 001344142)

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: $133,975,311

Exercised Options: $133,975,311

Current Obligation: $133,975,311

Subaward Activity

Number of Subawards: 62

Total Subaward Amount: $14,346,617

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline