DoD Awards Raytheon $400M for CIWS Production, Facing Limited Competition and Potential Cost Overruns
Contract Overview
Contract Amount: $400,272,174 ($400.3M)
Contractor: Raytheon Company
Awarding Agency: Department of Defense
Start Date: 2021-06-23
End Date: 2027-03-30
Contract Duration: 2,106 days
Daily Burn Rate: $190.1K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: FIRM FIXED PRICE
Sector: Defense
Official Description: CIWS PRODUCTION
Place of Performance
Location: TUCSON, PIMA County, ARIZONA, 85756
State: Arizona Government Spending
Plain-Language Summary
Department of Defense obligated $400.3 million to RAYTHEON COMPANY for work described as: CIWS PRODUCTION Key points: 1. Significant contract value of $400M for CIWS production. 2. Sole-source award to Raytheon Company raises concerns about competition. 3. Potential for cost overruns indicated by a high benchmark ratio. 4. Sector context: Defense spending on critical weapon systems.
Value Assessment
Rating: questionable
The benchmark ratio of 190063 suggests potential cost issues compared to similar contracts. Further analysis is needed to determine if the pricing is justified given the sole-source nature.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
The contract was not competed, leading to a sole-source award to Raytheon. This limits price discovery and may result in higher costs for taxpayers.
Taxpayer Impact: The lack of competition could lead to inflated prices, impacting taxpayer value for this critical defense system.
Public Impact
Ensures continued production of the Close-In Weapon System (CIWS), vital for naval defense. Supports Raytheon's operations and potentially jobs in Arizona. Raises questions about the government's ability to secure competitive pricing for essential defense equipment.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award
- Potential cost overruns
- Lack of competition
Positive Signals
- Critical defense system production
- Long-term contract duration
Sector Analysis
This contract falls within the defense sector, specifically for the manufacturing of naval weapon systems. Defense spending benchmarks often show significant variation, but sole-source awards warrant close scrutiny.
Small Business Impact
The contract data does not indicate any specific provisions or set-asides for small businesses. The prime contractor, Raytheon, is a large corporation, suggesting limited direct opportunities for small businesses on this specific award.
Oversight & Accountability
The sole-source nature of this award necessitates robust oversight to ensure fair pricing and contract performance. The Department of the Navy must actively monitor costs and delivery schedules.
Related Government Programs
- Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing
- Department of Defense Contracting
- Department of the Navy Programs
Risk Flags
- Sole-source award limits competition and price discovery.
- High benchmark ratio indicates potential cost overruns.
- Lack of small business participation.
- Contract duration extends to 2027, increasing exposure to market fluctuations.
Tags
search-detection-navigation-guidance-aer, department-of-defense, az, definitive-contract, 100m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $400.3 million to RAYTHEON COMPANY. CIWS PRODUCTION
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 $400.3 million.
What is the period of performance?
Start: 2021-06-23. End: 2027-03-30.
What specific factors justify the sole-source award for CIWS production, and what measures are in place to ensure fair pricing?
The justification for a sole-source award typically involves unique capabilities or critical national security needs that only one contractor can meet. The Department of the Navy should have documented these reasons. To ensure fair pricing, they would employ mechanisms like cost analysis, should-cost reviews, and potentially target pricing, even without direct competition, to mitigate risks associated with non-competitive awards.
How does the benchmark ratio of 190063 inform the risk assessment for this contract, and what are the potential cost implications?
A benchmark ratio of 190063 is exceptionally high and suggests that the contract's value is significantly higher than comparable contracts, potentially indicating inflated pricing or unique contract requirements. This raises concerns about cost efficiency and the risk of overspending taxpayer funds. The Department of Defense should investigate the drivers of this high ratio to mitigate future cost escalations.
What is the long-term strategic value of securing CIWS production through this contract, considering the competitive landscape?
The CIWS is a critical component of naval defense, providing essential close-in protection against threats. Securing its production ensures the readiness and capability of the fleet. However, the lack of competition raises strategic questions about long-term reliance on a single provider and the potential impact on innovation and cost-effectiveness in future defense procurements.
Industry Classification
NAICS: Manufacturing › Navigational, Measuring, Electromedical, and Control Instruments Manufacturing › Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing
Product/Service Code: WEAPONS
Competition & Pricing
Extent Competed: NOT COMPETED
Solicitation Procedures: ONLY ONE SOURCE
Solicitation ID: N0002420R5406
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: $401,272,174
Exercised Options: $401,272,174
Current Obligation: $400,272,174
Subaward Activity
Number of Subawards: 1322
Total Subaward Amount: $271,637,654
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: NO
Timeline
Start Date: 2021-06-23
Current End Date: 2027-03-30
Potential End Date: 2027-03-30 00:00:00
Last Modified: 2025-05-29
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