Raytheon Awarded $1.42B for Tactical Missile Systems, Sole-Source Contract Raises Oversight Concerns

Contract Overview

Contract Amount: $1,418,484,084 ($1.4B)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2019-12-20

End Date: 2021-11-20

Contract Duration: 701 days

Daily Burn Rate: $2.0M/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: SM-6 BLK IA TACTICAL ALL UP ROUND (AUR)

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $1.42 billion to RAYTHEON COMPANY for work described as: SM-6 BLK IA TACTICAL ALL UP ROUND (AUR) Key points: 1. Significant investment in advanced tactical missile systems. 2. Sole-source award to Raytheon Company limits competitive pricing. 3. Potential for cost overruns due to Cost Plus Fixed Fee contract type. 4. Focus on defense sector spending, specifically guided missile manufacturing.

Value Assessment

Rating: questionable

The Cost Plus Fixed Fee contract type, coupled with a lack of competition, makes a definitive pricing assessment difficult. Benchmarking against similar sole-source contracts for advanced missile systems would be necessary to evaluate value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award to Raytheon Company. The absence of competition limits price discovery and may lead to higher costs for taxpayers.

Taxpayer Impact: The sole-source nature of this award means taxpayers may not be receiving the best possible price due to the lack of competitive bidding.

Public Impact

Taxpayers fund advanced missile development and production. National security implications tied to the effectiveness of these tactical systems. Potential for significant government expenditure on a single contractor.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award
Cost Plus Fixed Fee contract
Lack of competition
No small business participation noted

Positive Signals

Critical defense capability development
Award to established defense contractor

Sector Analysis

This contract falls within the Guided Missile and Space Vehicle Manufacturing sector, a critical component of national defense. Spending in this area is often characterized by high R&D costs and specialized manufacturing, with limited competition due to technological complexity.

Small Business Impact

There is no indication of small business participation in this contract. Given the specialized nature of guided missile manufacturing, opportunities for small businesses may be limited or subcontracted through the prime.

Oversight & Accountability

The sole-source nature of this award warrants close oversight to ensure cost reasonableness and performance. The Department of Defense and the Defense Contract Management Agency should actively monitor expenditures and deliverables.

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 and potentially inflates costs.
Cost Plus Fixed Fee contract type increases risk of cost overruns.
Lack of transparency regarding specific performance metrics and effectiveness.
No small business participation identified.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $1.42 billion to RAYTHEON COMPANY. SM-6 BLK IA TACTICAL ALL UP ROUND (AUR)

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 $1.42 billion.

What is the period of performance?

Start: 2019-12-20. End: 2021-11-20.

What is the projected cost growth for this Cost Plus Fixed Fee contract, and how is it being managed?

Cost Plus Fixed Fee contracts inherently carry a risk of cost growth as the contractor is reimbursed for incurred costs plus a fixed fee. Effective management requires robust oversight from the contracting agency to scrutinize all costs, ensure efficiency, and prevent unnecessary expenditures. Detailed reporting and regular audits are crucial to control potential overruns and ensure the final cost aligns with the initial objectives.

What are the justifications for awarding this contract on a sole-source basis, and were alternatives considered?

Sole-source awards are typically justified when only one responsible source can provide the required supplies or services, often due to unique capabilities, proprietary technology, or urgent needs. The Department of Defense would need to provide a compelling justification, such as the specific technological requirements of the SM-6 BLK IA TACTICAL ALL UP ROUND (AUR) missile system, which may not be replicable by other manufacturers. A thorough review of the justification and any documented consideration of alternative approaches is essential.

How does the performance of these tactical missile systems compare to similar systems, and what metrics are used to assess effectiveness?

Assessing the effectiveness of tactical missile systems involves rigorous testing, operational deployment data, and post-mission analysis. Key metrics likely include accuracy, range, warhead effectiveness, reliability, and survivability in contested environments. Comparisons would ideally be made against peer systems from other nations or previous generations of U.S. weaponry, considering factors like cost-per-shot and overall mission success rates.

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: N0002418R5405

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: $1,513,861,492

Exercised Options: $1,484,294,628

Current Obligation: $1,418,484,084

Subaward Activity

Number of Subawards: 1019

Total Subaward Amount: $1,050,955,783

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline