DoD Awards Raytheon $431.7M for ESSM BLK II Long Lead Material

Contract Overview

Contract Amount: $431,650,378 ($431.7M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2018-12-12

End Date: 2024-03-29

Contract Duration: 1,934 days

Daily Burn Rate: $223.2K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: COST NO FEE

Sector: Defense

Official Description: ESSM BLK II LRIP LONG LEAD MATERIAL

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $431.7 million to RAYTHEON COMPANY for work described as: ESSM BLK II LRIP LONG LEAD MATERIAL Key points: 1. Significant investment in missile defense systems. 2. Sole-source award raises questions about price discovery. 3. Long contract duration (1934 days) may indicate complex production. 4. No small business participation noted.

Value Assessment

Rating: questionable

The contract type is Cost No Fee, which offers limited incentive for cost control. Without a competitive benchmark, assessing the pricing's value is difficult.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This is a sole-source award, meaning competition was not sought. This limits price discovery and potentially leads to higher costs for taxpayers.

Taxpayer Impact: The lack of competition for this substantial contract raises concerns about taxpayer value and potential overspending.

Public Impact

Ensures continued production of critical naval defense capabilities. Supports advanced missile technology development. Potential for cost overruns due to sole-source nature.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award
Cost No Fee contract type
No small business participation

Positive Signals

Supports critical defense capabilities
Long-term production commitment

Sector Analysis

This contract falls within the Guided Missile and Space Vehicle Manufacturing sector. Spending in this area is typically high due to the advanced technology and R&D involved.

Small Business Impact

The contract explicitly states no small business participation. This indicates a missed opportunity to leverage small business capabilities and promote economic diversity.

Oversight & Accountability

The sole-source nature of this award warrants close oversight to ensure costs are reasonable and performance meets expectations. Transparency in pricing is crucial.

Related Government Programs

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

Risk Flags

Sole-source award limits competition and price discovery.
Cost No Fee contract type offers weak cost control incentives.
No small business participation.
Long contract duration may increase risk of cost escalation.
Lack of transparency in pricing due to sole-source nature.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $431.7 million to RAYTHEON COMPANY. ESSM BLK II LRIP LONG LEAD MATERIAL

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 $431.7 million.

What is the period of performance?

Start: 2018-12-12. End: 2024-03-29.

What is the justification for the sole-source award, and how was the price determined without competition?

The justification for a sole-source award typically involves unique capabilities or urgent needs. Without competitive bidding, the price is often determined through negotiation based on cost proposals and historical data. Further investigation into the specific justification and negotiation process is needed to assess price reasonableness.

What are the risks associated with a Cost No Fee contract for long-lead material?

A Cost No Fee (CNF) contract means the contractor is reimbursed for allowable costs but receives no fee. This can reduce contractor risk but also diminishes incentives for efficiency and cost control, potentially leading to higher overall costs if not closely monitored. For long-lead material, this risk is amplified by the extended timeline.

How does this contract contribute to the overall effectiveness of naval defense systems?

The ESSM Block II is a critical component of naval defense, providing short-to-medium range missile defense against various threats. Securing long-lead material ensures the continued production and availability of these vital systems, thereby maintaining and enhancing the fleet's combat effectiveness against evolving maritime threats.

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: COST NO FEE (S)

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: $431,650,378

Exercised Options: $431,650,378

Current Obligation: $431,650,378

Actual Outlays: $42,939,979

Subaward Activity

Number of Subawards: 455

Total Subaward Amount: $257,909,630

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline