DoD awards $42M for missile kits to Raytheon, raising concerns about competition and value

Contract Overview

Contract Amount: $42,007,436 ($42.0M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2016-09-30

End Date: 2020-03-31

Contract Duration: 1,278 days

Daily Burn Rate: $32.9K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: LSMU/LICA ORDALT KITS

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $42.0 million to RAYTHEON COMPANY for work described as: LSMU/LICA ORDALT KITS Key points: 1. Significant award value of $42M for specialized missile components. 2. Sole-source award to Raytheon Company limits competitive pricing. 3. Potential risk associated with lack of competition and limited oversight. 4. Defense sector spending on advanced manufacturing and missile systems.

Value Assessment

Rating: questionable

The contract's value of $42M is substantial, but without competitive bidding, it's difficult to assess if this represents fair market value. Benchmarking against similar sole-source contracts is challenging due to proprietary information and unique specifications.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, Raytheon Company, was considered. This significantly limits price discovery and potentially leads to higher costs for taxpayers as competition is absent.

Taxpayer Impact: The lack of competition in this sole-source award means taxpayers may be paying a premium for these missile kits, as there was no market pressure to drive down costs.

Public Impact

Taxpayers may be overpaying for critical defense components due to the absence of competitive bidding. The sole-source nature of the contract raises questions about the government's procurement strategy for essential defense equipment. Limited transparency into the pricing structure could obscure potential inefficiencies or excessive profits.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award
Lack of competition
Limited price discovery
Potential for overpayment

Positive Signals

Award to established defense contractor
Definitive contract type
Firm fixed price contract

Sector Analysis

This contract falls within the Guided Missile and Space Vehicle Manufacturing sector, a critical area for national defense. Spending in this sector is often characterized by high R&D costs, specialized manufacturing, and a limited number of qualified contractors, which can lead to sole-source awards.

Small Business Impact

The contract was awarded to Raytheon Company, a large defense contractor, and there is no indication that small businesses were involved as subcontractors or partners. This award does not appear to support small business participation.

Oversight & Accountability

The contract was awarded by the Department of Defense through the Defense Contract Management Agency. While a definitive contract was issued, the sole-source nature limits the typical oversight mechanisms driven by competitive processes. Further review of the justification for sole-sourcing is warranted.

Related Government Programs

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

Risk Flags

Sole-source award limits competition.
Potential for inflated pricing due to lack of competitive pressure.
Limited transparency into cost drivers.
No apparent small business participation.
Need for strong government oversight to ensure value.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $42.0 million to RAYTHEON COMPANY. LSMU/LICA ORDALT KITS

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 $42.0 million.

What is the period of performance?

Start: 2016-09-30. End: 2020-03-31.

What was the specific justification provided by the Department of Defense for awarding this contract on a sole-source basis?

The justification for a sole-source award typically involves demonstrating that only one responsible source can provide the required supplies or services. This could be due to unique capabilities, proprietary technology, or urgent and compelling needs. Without access to the specific justification document, it's impossible to confirm the exact reasoning, but it is crucial for ensuring the government is not foregoing competitive opportunities unnecessarily.

How does the $42M award compare to the estimated value of similar missile kits if procured competitively?

Direct comparison is difficult without knowing the exact specifications of the 'LSMU/LICA ORDALT KITS' and their intended use. However, sole-source contracts are generally expected to be higher than competitively bid ones. A thorough cost analysis by the agency, even for a sole-source award, should have been conducted to ensure the price was fair and reasonable, but the absence of competition makes this assessment less robust.

What measures are in place to ensure the effectiveness and performance of these missile kits, given the sole-source award?

Despite the sole-source nature, the contract is firm fixed price, which shifts some cost risk to the contractor. The Defense Contract Management Agency's role includes ensuring contract compliance and performance. However, the government should maintain rigorous quality assurance and testing protocols to verify the effectiveness and reliability of the delivered missile kits, especially without the market validation of competition.

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 AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0002415R5421

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: $42,007,436

Exercised Options: $42,007,436

Current Obligation: $42,007,436

Subaward Activity

Number of Subawards: 28

Total Subaward Amount: $10,176,393

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline