DoD's $185M Raytheon Contract for CIWS/RAM Support Lacks Competition, Raises Oversight Concerns

Contract Overview

Contract Amount: $184,871,336 ($184.9M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2019-09-01

End Date: 2022-08-31

Contract Duration: 1,095 days

Daily Burn Rate: $168.8K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: PERFORMANCE BASED LOGISTICS (PBL) SUPPORT OF THE CLOSE IN WEAPON SYSTEM (CIWS), LAND-BASED PHALANX WEAPON SYSTEM (LPWS), SEARAM AND ROLLING AIRFRAME MISSILE (RAM).

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $184.9 million to RAYTHEON COMPANY for work described as: PERFORMANCE BASED LOGISTICS (PBL) SUPPORT OF THE CLOSE IN WEAPON SYSTEM (CIWS), LAND-BASED PHALANX WEAPON SYSTEM (LPWS), SEARAM AND ROLLING AIRFRAME MISSILE (RAM). Key points: 1. Significant contract value ($185M) for weapon system sustainment. 2. Sole-source award to Raytheon Company, limiting competitive pricing. 3. Potential for reduced value and increased costs due to lack of competition. 4. Focus on critical defense systems (CIWS, RAM) highlights national security implications.

Value Assessment

Rating: questionable

The $185M contract value is substantial. Without competitive bidding, it's difficult to assess if the pricing is optimal compared to potential market rates for similar sustainment services.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award to Raytheon Company. This limits price discovery and may lead to higher costs for taxpayers as competitive pressure is absent.

Taxpayer Impact: The lack of competition on this large contract likely results in a higher cost to taxpayers than if it had been competed.

Public Impact

Ensures readiness of critical naval defense systems. Supports advanced weapon platforms essential for national security. Potential for taxpayer savings if competition were introduced. Highlights the importance of robust oversight for sole-source defense contracts.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award
Lack of competition
High contract value

Positive Signals

Supports critical defense systems
Performance-based logistics approach

Sector Analysis

This contract falls within the defense sector, specifically supporting shipbuilding and repairing related to weapon systems. Defense sustainment contracts can be substantial, and benchmarks vary widely based on system complexity and criticality.

Small Business Impact

The data does not indicate any specific involvement or benefit for small businesses in this contract. Sole-source awards often bypass opportunities for small business participation.

Oversight & Accountability

The sole-source nature of this contract warrants close oversight to ensure fair pricing and effective performance. The Department of the Navy's contracting activity should be scrutinized for justification of the non-competitive award.

Related Government Programs

Ship Building and Repairing
Department of Defense Contracting
Department of the Navy Programs

Risk Flags

Sole-source award lacks competition
Potential for inflated pricing
Limited transparency in cost justification
Risk of vendor lock-in
National security implications of sole-source reliance

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $184.9 million to RAYTHEON COMPANY. PERFORMANCE BASED LOGISTICS (PBL) SUPPORT OF THE CLOSE IN WEAPON SYSTEM (CIWS), LAND-BASED PHALANX WEAPON SYSTEM (LPWS), SEARAM AND ROLLING AIRFRAME MISSILE (RAM).

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 $184.9 million.

What is the period of performance?

Start: 2019-09-01. End: 2022-08-31.

What is the justification for awarding this significant contract on a sole-source basis, and what steps are being taken to ensure fair pricing and value for taxpayers?

The justification for a sole-source award typically relates to unique capabilities, proprietary technology, or urgent needs where only one source can fulfill the requirement. Robust oversight would involve detailed cost analysis, benchmarking against similar sole-source contracts, and potentially negotiating specific price reduction targets or performance incentives to mitigate the risks associated with a lack of competition and ensure taxpayer value.

What are the risks associated with relying on a single contractor for the sustainment of critical weapon systems like CIWS and RAM?

The primary risks include vendor lock-in, potential price escalation over time due to lack of competition, and reduced innovation. If the sole contractor faces financial difficulties, supply chain disruptions, or decides to discontinue support, it could severely impact the operational readiness of these critical defense systems, posing a significant national security risk.

How effectively does this performance-based logistics contract ensure the operational readiness of the specified weapon systems, and is the current pricing reflective of that effectiveness?

Performance-based logistics (PBL) aims to improve readiness and reduce costs by focusing on outcomes rather than specific parts or services. Without competitive benchmarking, it's challenging to definitively assess the effectiveness relative to cost. The $185M value suggests a significant commitment, but the sole-source nature raises questions about whether the pricing truly reflects optimal value for the achieved readiness levels.

Industry Classification

NAICS: Manufacturing › Ship and Boat Building › Ship Building and Repairing

Product/Service Code: AEROSPACE CRAFT COMPONENTS AND ACCESSORIES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

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: $246,495,114

Exercised Options: $246,495,114

Current Obligation: $184,871,336

Subaward Activity

Number of Subawards: 13

Total Subaward Amount: $5,701,179

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: N0038319DVP01

IDV Type: IDC

Timeline