Raytheon awarded $282M for MK 144 MOD 3 Guided Missile Launchers, a sole-source contract

Contract Overview

Contract Amount: $282,445,947 ($282.4M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2020-12-22

End Date: 2028-09-29

Contract Duration: 2,838 days

Daily Burn Rate: $99.5K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: MK 144 MOD 3 GUIDED MISSILE LAUNCHER

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $282.4 million to RAYTHEON COMPANY for work described as: MK 144 MOD 3 GUIDED MISSILE LAUNCHER Key points: 1. Contract awarded on a firm-fixed-price basis, indicating defined costs for the government. 2. The contract spans nearly 8 years, suggesting a long-term need for these missile launchers. 3. Awarded by the Department of the Navy, highlighting its importance in naval defense capabilities. 4. The contractor, Raytheon Company, is a major defense manufacturer with extensive experience. 5. This contract falls under Guided Missile and Space Vehicle Manufacturing, a specialized defense sector. 6. The contract's sole-source nature warrants scrutiny regarding price justification and market alternatives.

Value Assessment

Rating: fair

Benchmarking the value of this sole-source contract is challenging without competitive bids. The firm-fixed-price structure provides cost certainty, but the absence of competition means the government did not benefit from potential price reductions that could arise from a bidding process. The total value of over $282 million over almost eight years suggests a significant investment in these specific missile launchers. Without comparable contracts or market data, assessing whether this represents excellent value for money is difficult, leaning towards fair due to the lack of competitive pressure.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed. This typically occurs when only one responsible source can provide the required supplies or services. The lack of competition means that the government did not have the opportunity to solicit bids from multiple vendors, which could potentially lead to lower prices and more innovative solutions. The justification for a sole-source award needs to be robust to ensure taxpayer funds are used efficiently.

Taxpayer Impact: Sole-source awards limit the government's ability to secure the best possible pricing through competition, potentially resulting in higher costs for taxpayers compared to a competed contract.

Public Impact

The primary beneficiaries are the U.S. Navy, which will receive advanced missile launching systems. The contract ensures the delivery of MK 144 MOD 3 Guided Missile Launchers, crucial for naval defense. The geographic impact is primarily within the defense industrial base, with potential for operations and maintenance across naval installations. Workforce implications include employment at Raytheon Company and its subcontractors, particularly in specialized manufacturing and engineering roles.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potential for cost savings.
Long contract duration may not account for rapid technological advancements in missile systems.
Lack of transparency in sole-source justification could obscure potential inefficiencies.
Dependence on a single supplier for critical defense equipment poses supply chain risks.

Positive Signals

Firm-fixed-price contract provides cost certainty for the government.
Award to an established defense contractor like Raytheon suggests reliability and expertise.
Contract addresses a specific, likely critical, defense requirement for the Navy.

Sector Analysis

The Guided Missile and Space Vehicle Manufacturing sector is a highly specialized and critical component of the defense industrial base. Companies in this sector, such as Raytheon, invest heavily in research, development, and advanced manufacturing capabilities. Spending in this area is driven by national security requirements and geopolitical factors. Comparable spending benchmarks are difficult to establish for sole-source contracts, but the overall defense budget allocates significant resources to missile systems and related technologies.

Small Business Impact

This contract does not appear to include a small business set-aside, as indicated by 'sb: false'. Given the specialized nature of guided missile launchers and the sole-source award to a large prime contractor, subcontracting opportunities for small businesses may exist but are not explicitly mandated by this award's structure. The prime contractor's subcontracting plan would determine the extent of small business involvement.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. The Defense Contract Management Agency (DCMA) would likely provide contract administration. Transparency regarding the sole-source justification and any performance metrics would be key to assessing accountability. Inspector General reviews could be initiated if specific concerns regarding fraud, waste, or abuse arise.

Related Government Programs

Naval Weapons Systems
Missile Manufacturing
Defense Procurement
Guided Missile Launchers
Raytheon Defense Contracts

Risk Flags

Sole-source award requires careful justification and oversight.
Long-term contract duration may not align with rapid technological obsolescence.
Dependence on a single supplier can create supply chain vulnerabilities.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $282.4 million to RAYTHEON COMPANY. MK 144 MOD 3 GUIDED MISSILE LAUNCHER

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 $282.4 million.

What is the period of performance?

Start: 2020-12-22. End: 2028-09-29.

What is the specific justification for awarding this contract on a sole-source basis to Raytheon Company?

The provided data indicates the contract was awarded as 'NOT AVAILABLE FOR COMPETITION,' which is synonymous with a sole-source award. The specific justification would typically be documented in a Justification for Other Than Full and Open Competition (JOFOC) or a similar document filed with the Federal Procurement Data System (FPDS). Common reasons for sole-source awards include unique capabilities, urgent and compelling needs where only one source can meet the requirement, or if the acquisition is for a follow-on product to a previously competed item where only the original contractor can provide compatible parts. Without access to the JOFOC, the precise rationale remains undisclosed, but it implies that the Department of the Navy determined that Raytheon was the only responsible source capable of fulfilling the requirement for the MK 144 MOD 3 Guided Missile Launcher at this time.

How does the firm-fixed-price contract type impact the government's financial risk compared to other contract types?

A firm-fixed-price (FFP) contract shifts the majority of the cost risk from the government to the contractor. Under an FFP agreement, the contractor is obligated to complete the work for a predetermined price, regardless of the actual costs incurred. This provides the government with significant cost certainty, as the total expenditure is known upfront. Unlike cost-reimbursement contracts, where the government pays the contractor's actual costs plus a fee, FFP contracts do not allow for upward adjustments to the price due to contractor cost overruns. This makes FFP contracts highly desirable for the government when the scope of work is well-defined and the contractor has a clear understanding of the costs involved, as is often the case with established defense systems like missile launchers.

What is the historical spending trend for MK 144 MOD 3 Guided Missile Launchers or similar systems by the Department of the Navy?

The provided data only details this specific contract award of $282,445,946.70 for the MK 144 MOD 3 Guided Missile Launcher, with an award date of December 22, 2020, and an estimated completion date of September 29, 2028. To understand historical spending trends, one would need to access broader federal procurement databases (like FPDS) to search for previous contracts awarded for the MK 144 MOD 3, or for functionally similar missile launcher systems, by the Department of the Navy or other military branches. Analyzing past contract values, quantities, and award dates would reveal whether spending on this specific system or category has been increasing, decreasing, or remaining stable over time, and whether this current award represents a significant deviation from historical patterns.

What are the potential performance risks associated with a sole-source contract for advanced defense equipment?

Sole-source contracts, while sometimes necessary, can introduce performance risks due to the lack of competitive pressure. Without the incentive of competing for future contracts or the threat of losing business to rivals, the contractor might have less motivation to innovate, improve efficiency, or maintain the highest quality standards. There's also a risk that the contractor may not be as responsive to the government's evolving needs or may prioritize other, more competitive, contracts. Furthermore, if the sole-source contractor experiences financial difficulties or operational issues, the government has limited alternative options for fulfilling the requirement, potentially leading to program delays or disruptions. Robust contract management, clear performance metrics, and strong government oversight are crucial to mitigate these risks.

How does the geographic location of the contractor (Arizona) influence the contract's execution and potential economic impact?

The contractor, Raytheon Company, is located in Arizona (st: AZ, sn: ARIZONA). This indicates that a significant portion of the contract's value will likely be spent within Arizona, supporting local employment, businesses, and the state's economy, particularly within the defense manufacturing sector. For the Department of the Navy, having a key supplier located domestically, even if not in a traditional shipbuilding hub, can be strategically advantageous for supply chain security and management. However, the geographic location itself does not inherently dictate performance quality or cost-effectiveness, which are primarily driven by the contractor's capabilities and the contract's terms. Logistics and transportation costs for the final product delivery to naval bases would be a factor, but likely minor compared to the overall contract value for such specialized equipment.

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: N0002420R5401

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

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: $283,741,529

Exercised Options: $282,445,947

Current Obligation: $282,445,947

Actual Outlays: $524,405

Subaward Activity

Number of Subawards: 250

Total Subaward Amount: $87,815,630

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline