Navy's $291M Standard Missile Services Contract Awarded to Raytheon Company

Contract Overview

Contract Amount: $291,869,130 ($291.9M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2017-04-14

End Date: 2022-04-13

Contract Duration: 1,825 days

Daily Burn Rate: $159.9K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: FISCAL YEAR 2017 THROUGH FISCAL YEAR 2021 U.S. NAVY, OTHER GOVERNMENT AGENCIES, AND FOREIGN MILITARY SALES, STANDARD MISSILE (SM) ENGINEERING AND TECHNICAL SERVICES. IGF::OT::IGF

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $291.9 million to RAYTHEON COMPANY for work described as: FISCAL YEAR 2017 THROUGH FISCAL YEAR 2021 U.S. NAVY, OTHER GOVERNMENT AGENCIES, AND FOREIGN MILITARY SALES, STANDARD MISSILE (SM) ENGINEERING AND TECHNICAL SERVICES. IGF::OT::IGF Key points: 1. Significant contract value of $291.9 million over five fiscal years. 2. Sole-source award to Raytheon Company for critical Standard Missile engineering. 3. Potential for higher costs due to 'Cost Plus Fixed Fee' contract type. 4. Defense sector spending on essential missile technology.

Value Assessment

Rating: fair

The contract's 'Cost Plus Fixed Fee' structure allows for cost overruns, potentially increasing the final price beyond initial estimates. Benchmarking against similar engineering services contracts is difficult without more detailed cost breakdowns.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, limiting competition. The lack of competitive bidding may have resulted in a less favorable price discovery process for the government.

Taxpayer Impact: The sole-source nature of this award raises concerns about potential overspending by taxpayers, as competitive pressures that typically drive down costs were absent.

Public Impact

Ensures continued availability and modernization of Standard Missiles, crucial for national defense. Supports advanced engineering and technical services for a key military asset. Potential for taxpayer funds to be used less efficiently due to sole-source award.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competition and price negotiation.
Cost-plus contract type carries inherent risk of cost overruns.
Lack of small business participation noted.

Positive Signals

Ensures critical missile system support.
Long-term contract provides stability for essential services.

Sector Analysis

This contract falls within the defense sector, specifically for engineering services related to missile systems. Spending benchmarks for such specialized technical services can vary widely based on system complexity and contract type.

Small Business Impact

The data indicates no small business participation in this contract. This suggests that the prime contractor, Raytheon, is handling all aspects of the engineering and technical services internally or through other large subcontractors.

Oversight & Accountability

The contract is managed by the Department of Defense through the Defense Contract Management Agency. Oversight would focus on ensuring technical performance and managing costs within the 'Cost Plus Fixed Fee' framework.

Related Government Programs

Engineering Services
Department of Defense Contracting
Defense Contract Management Agency Programs

Risk Flags

Sole-source award
Cost-plus contract type
Lack of small business participation
Potential for cost overruns
Limited transparency on specific technical scope

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $291.9 million to RAYTHEON COMPANY. FISCAL YEAR 2017 THROUGH FISCAL YEAR 2021 U.S. NAVY, OTHER GOVERNMENT AGENCIES, AND FOREIGN MILITARY SALES, STANDARD MISSILE (SM) ENGINEERING AND TECHNICAL SERVICES. IGF::OT::IGF

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 $291.9 million.

What is the period of performance?

Start: 2017-04-14. End: 2022-04-13.

What is the total value of the Standard Missile program, including all related contracts, to understand the full scope of this expenditure?

Determining the total value of the Standard Missile program requires a comprehensive review of all associated contracts, including research and development, procurement, sustainment, and foreign military sales over multiple years. This single contract represents a significant portion of the engineering and technical services component, but a complete picture necessitates aggregating data from various sources and contract types.

How does the 'Cost Plus Fixed Fee' structure compare to alternative contract types in terms of cost efficiency for similar defense engineering services?

'Cost Plus Fixed Fee' contracts are often used when the scope of work is not precisely defined or involves significant uncertainty, allowing for flexibility. However, they shift cost risk to the government, potentially leading to higher final prices compared to fixed-price contracts. For well-defined engineering services, fixed-price or incentive-fee contracts might offer better cost control and taxpayer value.

What specific technical advancements or sustainment activities are covered under this $291 million contract to justify its sole-source award?

The contract details would specify the scope of work, likely encompassing ongoing engineering support, system upgrades, performance analysis, and troubleshooting for the Standard Missile. A sole-source justification would typically cite unique technical expertise, proprietary data, or the need for seamless integration with existing systems that only the incumbent contractor, Raytheon, can provide effectively.

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: N0002416R5410

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: $532,741,239

Exercised Options: $291,969,130

Current Obligation: $291,869,130

Actual Outlays: $8,367,079

Subaward Activity

Number of Subawards: 235

Total Subaward Amount: $79,794,552

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline