DoD's $77M Raytheon Contract for Missile Production Lacks Competition, Raises Cost Concerns

Contract Overview

Contract Amount: $77,000,000 ($77.0M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2018-05-17

End Date: 2023-09-29

Contract Duration: 1,961 days

Daily Burn Rate: $39.3K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: TRANSITION TO PRODUCTION (TTP)

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $77.0 million to RAYTHEON COMPANY for work described as: TRANSITION TO PRODUCTION (TTP) Key points: 1. Significant contract value of $77 million awarded to Raytheon. 2. Lack of competition suggests potential for inflated pricing. 3. Long contract duration (1961 days) increases risk over time. 4. Guided Missile and Space Vehicle Manufacturing sector is defense-critical.

Value Assessment

Rating: questionable

The contract's total award value is $77 million. Without available benchmark data or competitive pricing, it's difficult to definitively assess value for money. The firm fixed-price structure offers some cost control, but the lack of competition is a primary concern.

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 limits price discovery and negotiation leverage for the government, potentially leading to higher costs than if multiple bidders were involved.

Taxpayer Impact: The absence of competition on a $77 million contract means taxpayers may be paying a premium, as the government did not benefit from a competitive bidding process to secure the best possible price.

Public Impact

Taxpayers may be overpaying due to the lack of competitive bidding. The long contract duration could expose the government to price increases over time. Dependence on a single contractor for critical missile components poses a supply chain risk.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of Competition
Limited Price Discovery
Long Contract Duration
Potential for Cost Overruns

Positive Signals

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 and specialized manufacturing capabilities, making competition challenging but essential for cost efficiency.

Small Business Impact

The data indicates this is a large contract awarded to Raytheon Company, with no specific mention of small business participation. It is unlikely that small businesses were primary awardees on this sole-source contract, though they might be subcontractors.

Oversight & Accountability

The contract was awarded as a definitive contract, suggesting a more formal and potentially scrutinized process. However, the 'NOT AVAILABLE FOR COMPETITION' status warrants further oversight to ensure the pricing is justified and that future opportunities for competition are explored.

Related Government Programs

Guided Missile and Space Vehicle Manufacturing
Department of Defense Contracting
Department of the Navy Programs

Risk Flags

Sole-source award limits price negotiation.
Potential for inflated costs due to lack of competition.
Long contract duration increases long-term cost risk.
Lack of transparency in pricing justification.
Dependency on a single supplier.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $77.0 million to RAYTHEON COMPANY. TRANSITION TO PRODUCTION (TTP)

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 $77.0 million.

What is the period of performance?

Start: 2018-05-17. End: 2023-09-29.

What specific factors prevented this contract from being competed, and are these justifications still valid?

The contract status 'NOT AVAILABLE FOR COMPETITION' suggests specific circumstances, such as unique technical requirements, proprietary technology, or urgent national security needs, may have precluded a competitive bidding process. A thorough review would be needed to ascertain the validity of these reasons and determine if they persist, or if future procurements could be opened to competition.

How does the firm fixed price compare to industry benchmarks for similar missile production contracts, given the lack of competition?

Without competitive bids, establishing a precise benchmark is challenging. However, the absence of competition inherently raises concerns about whether the firm fixed price reflects the best possible value. An independent cost analysis or comparison with similar, albeit potentially older or differently scoped, contracts would be necessary to assess if the pricing is reasonable and justifiable.

What is the long-term strategy for ensuring cost-effectiveness and innovation in this critical missile manufacturing area?

The long-term strategy should focus on fostering innovation and cost-effectiveness through various means. This could include exploring phased competition, incentivizing contractor efficiency, investing in alternative technologies, and conducting regular market research to identify potential new entrants or competitive approaches for future contract awards in this vital defense sector.

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: N0002416R5417

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

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: $77,000,000

Exercised Options: $77,000,000

Current Obligation: $77,000,000

Subaward Activity

Number of Subawards: 263

Total Subaward Amount: $105,779,115

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline