Raytheon Company awarded $38.7M contract for ESSM BLK2 TTFRP AND PRR

Contract Overview

Contract Amount: $38,679,892 ($38.7M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2021-09-30

End Date: 2024-12-15

Contract Duration: 1,172 days

Daily Burn Rate: $33.0K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: ESSM BLK2 TTFRP AND PRR BASE AWARD

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $38.7 million to RAYTHEON COMPANY for work described as: ESSM BLK2 TTFRP AND PRR BASE AWARD Key points: 1. Contract awarded as a definitive contract with a firm fixed price. 2. The contract is for Guided Missile and Space Vehicle Manufacturing. 3. Performance period spans over 1172 days. 4. Awarded by the Department of the Navy. 5. Contractor is Raytheon Company. 6. The contract was not competed. 7. Small business set-aside is false.

Value Assessment

Rating: questionable

The contract value of $38.7 million for ESSM BLK2 TTFRP AND PRR is difficult to benchmark without more specific details on the deliverables. As a definitive contract with a firm fixed price, it suggests a defined scope. However, the lack of competition raises concerns about whether this price represents optimal value for the government. Further analysis would require comparing this award to similar sole-source procurements for missile system components or upgrades, considering the technological sophistication and specialized nature of the ESSM BLK2 system.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not open to competitive bidding. This typically occurs when a specific contractor possesses unique capabilities, intellectual property, or is the sole provider of a required good or service. The lack of competition means the government did not benefit from the price discovery mechanisms inherent in a competitive bidding process, potentially leading to higher costs than if multiple vendors had vied for the contract.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competition. Without bids from other qualified companies, there is less pressure on the contractor to offer the most cost-effective solution.

Public Impact

The primary beneficiaries are the U.S. Navy warfighters who will receive enhanced missile capabilities. The contract supports the production and delivery of the ESSM BLK2 (Evolved Sea Sparrow Missile Block 2) system. This contract contributes to the operational readiness and defense capabilities of naval fleets. The contract is being performed in Arizona, supporting the defense industrial base in that state.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potentially increases costs for taxpayers.
Lack of transparency in the procurement process due to non-competitive award.
Potential for cost overruns if not rigorously managed due to lack of market pressure.

Positive Signals

Award to a known defense contractor, Raytheon Company, suggests a level of established capability.
Firm fixed price contract provides cost certainty for the government, assuming scope is well-defined.
Contract supports a critical defense system (ESSM BLK2) essential for naval defense.

Sector Analysis

The defense sector, specifically guided missile and space vehicle manufacturing, is characterized by high technological barriers to entry and significant government investment. Contracts in this area are often awarded to a limited number of specialized firms due to the complexity and proprietary nature of the technology. The ESSM BLK2 is a key component of naval air defense, and its procurement reflects ongoing modernization efforts within the Department of Defense. Spending in this sub-sector is substantial, driven by national security requirements and technological advancements.

Small Business Impact

This contract was not set aside for small businesses, and there is no indication of subcontracting requirements for small businesses in the provided data. As a sole-source award to a large defense contractor, it is unlikely to directly benefit the small business ecosystem through prime contract opportunities. However, Raytheon may engage small businesses as subcontractors, but this is not explicitly detailed in the award information.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. As a definitive contract, it is subject to standard government oversight for performance, quality, and delivery. The firm fixed price nature provides some cost control, but the sole-source aspect necessitates careful monitoring of scope and execution to ensure value. Inspector General involvement would be triggered by specific allegations of fraud, waste, or abuse.

Related Government Programs

Evolved Sea Sparrow Missile (ESSM) Program
Naval Air Defense Systems
Missile Manufacturing
Department of Defense Procurement

Risk Flags

Sole-source award
Lack of competition
Potential for cost escalation without competitive pressure

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $38.7 million to RAYTHEON COMPANY. ESSM BLK2 TTFRP AND PRR BASE AWARD

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 $38.7 million.

What is the period of performance?

Start: 2021-09-30. End: 2024-12-15.

What is the specific technical scope of the ESSM BLK2 TTFRP AND PRR base award?

The 'TTFRP' likely refers to 'Test and Training Range Facility Requirements' or a similar testing and evaluation phase, while 'PRR' could stand for 'Production Readiness Review' or 'Program Requirements Review'. The 'Base Award' indicates the initial contract action. The ESSM BLK2 is an upgrade to the existing Sea Sparrow missile, designed to counter modern threats like anti-ship cruise missiles. This specific award likely covers the final stages of development, testing, and initial production setup to ensure the missile system meets performance specifications and is ready for full-scale manufacturing and deployment within naval platforms. Detailed technical specifications are typically found in the contract's Statement of Work (SOW), which is not publicly available in this summary.

How does the $38.7 million award compare to previous ESSM BLK2 procurements?

Direct comparison of this $38.7 million award to previous ESSM BLK2 procurements is challenging without access to historical contract data for the specific 'TTFRP AND PRR BASE AWARD' line item. However, the ESSM program has seen numerous contract actions over its lifecycle, with individual awards varying significantly based on the phase (e.g., development, testing, low-rate initial production, full-rate production), quantity of missiles, and specific system components. Given that this appears to be a base award for a specific phase, its value might represent a portion of a larger overall program cost. To provide a meaningful comparison, one would need to aggregate spending on similar phases or look at the total contract value awarded to Raytheon for the ESSM BLK2 program over time.

What are the primary risks associated with a sole-source contract for advanced missile systems?

The primary risks associated with a sole-source contract for advanced missile systems like the ESSM BLK2 include potential cost overruns due to a lack of competitive pressure, reduced incentive for innovation from the contractor, and a potential for vendor lock-in. Without competing bids, the government may not achieve the best possible price. Furthermore, reliance on a single source can create vulnerabilities if that contractor experiences production issues, financial instability, or strategic shifts. Robust government oversight, stringent performance metrics, and clear contract terms are crucial to mitigate these risks, ensuring the system is delivered on time, within budget, and to specification.

What is Raytheon Company's track record with the ESSM program and similar defense contracts?

Raytheon Company, now part of RTX, has a long and established track record as a prime contractor for numerous advanced defense systems, including the ESSM program. They have been instrumental in the development, production, and sustainment of the ESSM and its predecessors. Their experience spans decades in missile manufacturing, radar systems, and integrated defense solutions for various branches of the U.S. military and allied nations. Raytheon's history with complex, high-value defense contracts suggests a deep understanding of the technological requirements, production processes, and program management necessary for programs like the ESSM BLK2. Their performance on similar large-scale, sole-source or competitively awarded contracts provides a basis for assessing their capability and reliability.

How does the firm fixed price (FFP) contract type mitigate risks for this specific award?

The Firm Fixed Price (FFP) contract type is generally considered the most advantageous for the government when the scope of work is well-defined and understood, as it shifts most of the risk to the contractor. For this ESSM BLK2 award, an FFP structure means Raytheon is obligated to complete the work for the agreed-upon price, regardless of their actual costs. This provides significant cost certainty for the Department of the Navy and incentivizes the contractor to manage their resources efficiently to maintain profitability. It minimizes the risk of cost overruns for the government, unlike cost-reimbursement contracts. However, the effectiveness of FFP relies heavily on the accuracy of the initial cost estimates and the clarity of the contract's specifications.

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: N0002421R5455

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: $38,679,892

Exercised Options: $38,679,892

Current Obligation: $38,679,892

Subaward Activity

Number of Subawards: 103

Total Subaward Amount: $12,264,152

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline