Raytheon Company awarded $128M contract for Standard Missile DLMF/ILM, a sole-source procurement

Contract Overview

Contract Amount: $128,217,864 ($128.2M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2017-12-27

End Date: 2018-12-31

Contract Duration: 369 days

Daily Burn Rate: $347.5K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: STANDARD MISSILE DLMF/ILM

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $128.2 million to RAYTHEON COMPANY for work described as: STANDARD MISSILE DLMF/ILM Key points: 1. Contract value of $128.2M for missile system components. 2. Procurement was sole-source, raising questions about price competition. 3. Contract duration of 369 days suggests a focused, short-term effort. 4. Awarded to Raytheon Company, a major defense contractor. 5. Missile manufacturing falls under Guided Missile and Space Vehicle Manufacturing NAICS code. 6. Contract type is Cost Plus Fixed Fee, which can shift risk to the government. 7. Performance location in Arizona (AZ) may have local economic implications.

Value Assessment

Rating: questionable

The contract value of $128.2 million for Standard Missile DLMF/ILM components is significant. Without comparable sole-source procurements for similar missile systems, a direct value-for-money assessment is challenging. The Cost Plus Fixed Fee (CPFF) contract type, while common in complex defense procurements, can lead to higher costs for the government if contractor efficiencies are not rigorously managed. Benchmarking this specific component's cost against market rates or similar systems is difficult due to the specialized nature of defense articles and the sole-source award.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning there was no open competition. This typically occurs when a single source is deemed to possess the unique capabilities or intellectual property required for the product or service. The lack of competition limits the government's ability to leverage market forces to achieve the lowest possible price and may indicate a reliance on a single supplier for critical defense components.

Taxpayer Impact: Sole-source procurements can result in higher costs for taxpayers as the government cannot solicit bids from multiple vendors to drive down prices. This limits price discovery and potentially reduces the overall value obtained for taxpayer funds.

Public Impact

The primary beneficiaries are the Department of Defense, specifically units requiring Standard Missile systems. The contract supports the production and delivery of critical components for guided missiles. Geographic impact is concentrated in Arizona, where the contractor is located. Workforce implications include employment at Raytheon Company's facilities in Arizona.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially increasing costs for taxpayers.
Cost Plus Fixed Fee contract type may incentivize less cost-consciousness from the contractor.
Lack of transparency in pricing due to sole-source nature.
Reliance on a single contractor for critical missile components poses supply chain risk.

Positive Signals

Award to a major defense contractor like Raytheon suggests established manufacturing capabilities.
Contract supports a critical defense capability (Standard Missile systems).
Fixed fee component of the contract provides some cost certainty for the government.

Sector Analysis

The defense industrial base, particularly the guided missile and space vehicle manufacturing sector, is characterized by high barriers to entry, significant R&D investment, and a limited number of prime contractors. This contract falls within that specialized segment, focusing on components for a specific missile system. Spending in this sector is driven by national security requirements and technological advancements. Comparable spending benchmarks are difficult to establish without detailed knowledge of the specific missile system and its components, but overall defense spending on missile systems runs into billions annually.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Furthermore, the 'ss' flag is also false, suggesting no specific small business subcontracting goals were explicitly mentioned or tracked in this data snippet. The prime contractor, Raytheon Company, is a large defense firm, and while they may engage small businesses as subcontractors, this specific award data does not highlight direct small business participation or set-aside provisions.

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 contract type (CPFF) necessitates close monitoring of costs incurred by the contractor. Transparency is limited due to the sole-source nature. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Standard Missile Program
Naval Air Systems Command (NAVAIR) Contracts
Missile Manufacturing
Defense Procurement

Risk Flags

Sole-source procurement
Cost Plus Fixed Fee contract type
Potential for limited price competition

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $128.2 million to RAYTHEON COMPANY. STANDARD MISSILE DLMF/ILM

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 $128.2 million.

What is the period of performance?

Start: 2017-12-27. End: 2018-12-31.

What is the historical spending trend for Standard Missile DLMF/ILM components awarded to Raytheon Company?

Analyzing historical spending requires access to a broader dataset of past contracts. This specific data point represents a single award from 2017-2018 valued at $128.2 million. To understand trends, one would need to examine contract awards for the same or similar components over multiple fiscal years, identify any patterns in award values, contract types, and competition levels. Without this historical context, it's impossible to determine if this $128.2 million award represents an increase, decrease, or stable level of spending for these specific missile components.

How does the Cost Plus Fixed Fee (CPFF) structure impact the government's financial risk compared to other contract types for this missile component procurement?

The Cost Plus Fixed Fee (CPFF) contract structure places a significant portion of the financial risk on the government. While the contractor is reimbursed for allowable costs, their profit is fixed. This means that if the contractor's costs exceed initial estimates, the government still pays the incurred costs plus the fixed fee. This contrasts with fixed-price contracts, where the contractor bears the risk of cost overruns. For complex, R&D-intensive, or uncertain procurements like specialized missile components, CPFF can be necessary to incentivize contractor participation. However, it requires robust government oversight to manage costs effectively and prevent potential overspending compared to a scenario where the contractor assumes more cost risk.

What specific components or services does 'DLMF/ILM' refer to within the Standard Missile program?

The designation 'DLMF/ILM' likely refers to specific components or sub-assemblies critical to the Standard Missile's functionality. DLMF could potentially stand for 'Digital/Analog Module' or a similar electronic component, while ILM might denote 'Integrated Logistics Module' or another system integration aspect. Without access to the detailed contract statement of work or technical specifications, the precise nature of these components remains proprietary. These are specialized parts essential for the missile's guidance, control, or operational systems, procured from Raytheon as the likely original equipment manufacturer or a key supplier.

What are the implications of this contract being sole-source for the future development and sustainment of the Standard Missile system?

A sole-source award for critical components like those designated DLMF/ILM has several implications for the Standard Missile system's future. Firstly, it entrenches Raytheon Company as the sole provider, potentially limiting future competition for upgrades or replacements. This reliance can reduce pressure on Raytheon to innovate or reduce costs. Secondly, it may complicate efforts to transition to newer technologies or alternative suppliers if Raytheon's components become obsolete or if pricing becomes prohibitive. The government might need to invest in developing alternative sources or accepting Raytheon's terms to ensure continued system availability and performance.

Are there any known performance issues or contractor track record concerns associated with Raytheon Company regarding similar missile component contracts?

Raytheon Company is a major, established defense contractor with a long history of producing complex weapon systems, including various missile platforms. While specific performance issues are not detailed in this data snippet, large contractors often face scrutiny regarding cost overruns, schedule delays, or technical challenges on complex programs. A comprehensive assessment of Raytheon's track record for similar missile component contracts would require reviewing past performance evaluations, contract modifications, and any documented disputes or quality issues across their portfolio. Generally, their extensive experience suggests a high level of capability, but individual program performance can vary.

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: N0002417R5402

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: $303,134,159

Exercised Options: $128,894,365

Current Obligation: $128,217,864

Actual Outlays: $18

Subaward Activity

Number of Subawards: 280

Total Subaward Amount: $287,757,862

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline