Raytheon Missile Systems awarded $12.7M for guided missile launchers, with a 2,243-day performance period

Contract Overview

Contract Amount: $12,683,275 ($12.7M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 1998-04-10

End Date: 2004-05-31

Contract Duration: 2,243 days

Daily Burn Rate: $5.7K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 199809!1700!2326!BZ005!NAVAL SEA SYSTEMS COMMAND !N0002498C5427 !A!*!* !19980410!20000930!794598573!794598573!001339159!N!15090!RAYTHEON MISSILE SYSTEMS COMPA!1151 E HERMANS RD !TUCSON !AZ!85706!77000!019!04!TUCSON !PIMA !ARIZONA !0001!+000010901482!N!N!000000000000!1440!LAUNCHERS, GUIDED MISSILE !A7 !ELECTRONICS AND COMMUNICATION !2000!NOT DISCERNABLE OR CLASSIFIED !3761!3!*!*!*!B!A!*!B !U!J!1!001!N!4A!Z!Y!Z!* !* !N!C!*!A!Z!A!A!A!*!* !*!N!A!C!N!*!*!*!*!*!

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $12.7 million to RAYTHEON COMPANY for work described as: 199809!1700!2326!BZ005!NAVAL SEA SYSTEMS COMMAND !N0002498C5427 !A!*!* !19980410!20000930!794598573!794598573!001339159!N!15090!RAYTHEON MISSILE SYSTEMS COMPA!1151 E HERMANS RD !TUCSON !AZ!85706!77000!019!04!TUCSON !PIMA … Key points: 1. Contract awarded for a significant duration, suggesting a long-term need for the specified equipment. 2. The contract was not competed, raising questions about potential cost efficiencies and market exploration. 3. A single award suggests limited market engagement or a specific capability requirement. 4. The firm-fixed-price structure aims to transfer cost risk to the contractor. 5. The contract falls under the Defense sector, specifically for missile systems. 6. Performance is concentrated in Arizona, indicating a specific geographic footprint for this acquisition.

Value Assessment

Rating: fair

The total contract value is $12,683,275.30. Without comparable contract data or detailed cost breakdowns, a precise value-for-money assessment is challenging. The firm-fixed-price nature indicates an agreed-upon price, but the lack of competition makes it difficult to benchmark against market rates or alternative solutions. The long performance period of 2,243 days (over 6 years) suggests a substantial investment, and the absence of competitive bidding means taxpayers may not have benefited from the lowest possible price.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded as 'NOT COMPETED,' indicating a sole-source procurement. This means that only one vendor, Raytheon Missile Systems, was solicited for this requirement. The lack of competition limits the government's ability to explore a wider range of solutions or negotiate prices based on multiple offers. It suggests either a unique capability possessed by Raytheon or a situation where competition was deemed impractical or not in the government's best interest at the time of award.

Taxpayer Impact: Sole-source awards can potentially lead to higher prices for taxpayers as there is no competitive pressure to drive down costs. It also limits opportunities for other businesses to compete for government contracts.

Public Impact

The primary beneficiary is the U.S. Department of Defense, specifically naval forces requiring guided missile launchers. The contract delivers essential components for missile defense systems, contributing to national security. Services are likely delivered through Raytheon's facilities in Tucson, Arizona. The contract supports specialized manufacturing and engineering roles within the defense industry.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may result in a higher price than if multiple bids were solicited.
Long contract duration without clear performance metrics makes it difficult to assess ongoing value.
Sole-source awards can stifle innovation by limiting market entry for potential competitors.

Positive Signals

Firm-fixed-price contract shifts cost overrun risk to the contractor.
Award to an established defense contractor suggests a known entity with relevant expertise.
Long performance period indicates a sustained commitment to a critical defense capability.

Sector Analysis

This contract falls within the Defense Industrial Base sector, specifically focusing on the production of advanced weapon systems. The market for guided missile launchers is highly specialized, dominated by a few large defense contractors. Spending in this area is driven by national security requirements and technological advancements in military capabilities. Comparable spending benchmarks would typically involve other large-scale defense procurements for similar weapon systems or components.

Small Business Impact

There is no indication of small business set-asides or subcontracting plans in the provided data. As a sole-source award to a large prime contractor, the direct impact on small businesses is likely limited unless Raytheon actively engages them for subcontracting opportunities. Further investigation into Raytheon's subcontracting practices would be needed to assess the broader impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would typically fall under the purview of the Naval Sea Systems Command (NAVSEA) and the Defense Contract Management Agency (DCMA). These agencies are responsible for ensuring contract compliance, monitoring performance, and verifying payments. Transparency is limited due to the sole-source nature and lack of public detail on performance metrics. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Naval Sea Systems Command Contracts
Missile Systems Procurement
Department of Defense Weapon Systems
Raytheon Defense Contracts
Guided Missile Systems

Risk Flags

Sole-source award
Lack of competition
Long performance period

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $12.7 million to RAYTHEON COMPANY. 199809!1700!2326!BZ005!NAVAL SEA SYSTEMS COMMAND !N0002498C5427 !A!*!* !19980410!20000930!794598573!794598573!001339159!N!15090!RAYTHEON MISSILE SYSTEMS COMPA!1151 E HERMANS RD !TUCSON !AZ!85706!77000!019!04!TUCSON !PIMA !ARIZONA !0001!+000010901482!N!N!000000000000!1440!LAUNCHERS, GUIDED MISSILE !A7 !ELECTRONICS AND COMMUNICATION !2000!NOT DISCERNABLE OR CLASSIFIED !3761!3!*!*!*!B!A!*!B !U!J!1!0

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 $12.7 million.

What is the period of performance?

Start: 1998-04-10. End: 2004-05-31.

What is Raytheon's track record with similar missile launcher contracts awarded by the DoD?

Raytheon Missile Systems, now part of RTX Corporation, has a long and extensive history of producing missile systems for the U.S. military and international allies. They are a primary contractor for numerous air-to-air, surface-to-air, and land-attack missile programs. Their track record includes delivering complex systems like the Patriot missile defense system, Tomahawk cruise missile, and various advanced air-launched missiles. For guided missile launchers specifically, Raytheon has been involved in developing and manufacturing systems such as the Vertical Launching System (VLS) components and associated fire control systems used on naval vessels. Their experience suggests a deep understanding of the technical requirements and manufacturing processes involved in such critical defense procurements. However, the specific performance and cost-effectiveness of past contracts would require detailed analysis of individual contract data.

How does the $12.7 million award compare to other guided missile launcher procurements?

Comparing the $12.7 million award for guided missile launchers requires context regarding the scope and quantity of items procured. This figure represents the total contract value over its 2,243-day (approximately 6.1 years) performance period. If this contract is for a small number of specialized launchers or components, the value might be within a typical range. However, if it represents a larger quantity or more complex systems, it could be considered moderate. Without knowing the specific type of launcher, the number of units, and the associated services (e.g., integration, training, maintenance), a direct comparison to other procurements is difficult. Large-scale programs for advanced missile systems can run into hundreds of millions or even billions of dollars. This particular award appears to be for a specific, potentially niche, requirement or a sustainment-related effort rather than a major new system development or large-scale fleet-wide procurement.

What are the primary risks associated with this sole-source contract?

The primary risks associated with this sole-source contract stem from the lack of competition. Firstly, there is a significant risk of 'cost inefficiency,' meaning the government may be paying a higher price than if multiple bidders had competed. Without competitive pressure, the contractor has less incentive to minimize costs. Secondly, there's a 'performance risk' if the contractor's capabilities are not as robust as anticipated, although Raytheon is a known entity. A third risk is 'technological obsolescence'; a long-term sole-source contract might lock the government into a particular technology without exploring potentially superior or more cost-effective alternatives that could emerge during the contract's extended duration. Finally, there's a 'dependency risk,' where the government becomes reliant on a single supplier for a critical capability, potentially limiting future flexibility.

How effective is the firm-fixed-price (FFP) contract type in managing costs for this acquisition?

The Firm-Fixed-Price (FFP) contract type is generally considered effective in managing costs when the scope of work is well-defined and the risks are understood. In this case, it places the primary responsibility for cost control on the contractor, Raytheon Missile Systems. If Raytheon incurs costs exceeding their estimates, their profit margin will be reduced, but the government's payment obligation remains fixed. This structure incentivizes the contractor to be efficient and manage their resources effectively. However, the effectiveness of FFP is somewhat diminished in a sole-source environment. While the price is fixed, the government lacks the assurance that this fixed price represents the best possible value achievable through competition. Therefore, while FFP provides cost certainty for the government, the lack of competition means the 'fixed' price might be higher than it otherwise would be.

What are the historical spending patterns for guided missile launchers by the Naval Sea Systems Command?

Historical spending patterns for guided missile launchers by the Naval Sea Systems Command (NAVSEA) typically show significant and consistent investment, reflecting the critical role of missile defense in naval operations. NAVSEA procures launchers and associated systems for various classes of warships, including destroyers, cruisers, and aircraft carriers. Spending often involves large, multi-year contracts for system development, production, and sustainment. These contracts can range from tens of millions to billions of dollars, depending on the program's scale, technological complexity, and the number of units required. Spending is influenced by geopolitical factors, fleet modernization plans, and the development of new missile technologies. The data indicates that NAVSEA frequently engages in complex, high-value procurements within this category, often involving established defense contractors like Raytheon.

What is the significance of the 2,243-day performance period for this contract?

The performance period of 2,243 days, which is approximately 6 years and 2 months, is highly significant for this contract. Such a long duration suggests that the requirement for these guided missile launchers is not a short-term need but rather a sustained, long-term operational requirement or a multi-year production run. This extended period could encompass initial production, integration, testing, and potentially initial sustainment or training activities. For the contractor, it provides a stable revenue stream and allows for long-term production planning. For the government, it signifies a commitment to a specific capability over an extended period. However, it also increases the risk of technological obsolescence and necessitates robust oversight to ensure continued relevance and value throughout the contract's life.

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

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

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline