DoD Awards $39.4M Firm Fixed Price Contract for CIWS to Raytheon Company

Contract Overview

Contract Amount: $39,417,443 ($39.4M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2023-06-19

End Date: 2027-02-28

Contract Duration: 1,350 days

Daily Burn Rate: $29.2K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: CIWS LONG TERM CONTRACT

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $39.4 million to RAYTHEON COMPANY for work described as: CIWS LONG TERM CONTRACT Key points: 1. Significant contract value of $39.4 million for Close-In Weapon System (CIWS) components. 2. Sole-source award to Raytheon Company, raising questions about competition and potential price overruns. 3. Contract duration extends to February 2027, indicating a long-term need. 4. The sector is Optical Instrument and Lens Manufacturing, a specialized area within defense.

Value Assessment

Rating: questionable

The contract is a firm fixed price type, which typically offers good value. However, the lack of competition for this significant award raises concerns about whether the government secured the best possible price.

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 result in higher costs for taxpayers compared to a competitive process.

Taxpayer Impact: The lack of competition for a $39.4 million contract could lead to higher taxpayer costs due to the absence of market forces driving down prices.

Public Impact

Ensures continued availability of critical defense systems for the Navy. Supports advanced manufacturing capabilities within the defense industrial base. Potential for increased costs to taxpayers due to sole-source nature.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award
Lack of competition
Long contract duration

Positive Signals

Firm fixed price contract type
Critical defense system procurement

Sector Analysis

This contract falls within the Optical Instrument and Lens Manufacturing sector, a niche area critical for defense systems like the CIWS. Spending in this specialized sector is often concentrated among a few key contractors.

Small Business Impact

There is no indication that small businesses were involved in this specific contract award. Further analysis would be needed to determine if subcontracting opportunities were made available.

Oversight & Accountability

The sole-source nature of this award warrants close oversight to ensure fair pricing and adherence to contract terms. The Department of the Navy is responsible for managing this contract.

Related Government Programs

Optical Instrument and Lens Manufacturing
Department of Defense Contracting
Department of the Navy Programs

Risk Flags

Sole-source award limits competition.
Potential for inflated pricing due to lack of competition.
Long-term commitment may not reflect evolving technological needs.
Dependency on a single supplier for critical components.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $39.4 million to RAYTHEON COMPANY. CIWS LONG TERM CONTRACT

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 $39.4 million.

What is the period of performance?

Start: 2023-06-19. End: 2027-02-28.

What is the justification for the sole-source award, and what steps were taken to ensure fair and reasonable pricing?

The justification for a sole-source award typically involves unique capabilities or proprietary technology held by a single vendor. The government should have conducted a price reasonableness analysis, comparing the proposed price to historical data, other similar contracts, or independent cost estimates to ensure the price paid is fair and reasonable despite the lack of competition.

What are the potential risks associated with a long-term, sole-source contract for critical defense components?

Long-term, sole-source contracts carry risks such as price escalation over time, reduced innovation due to lack of competitive pressure, and potential supply chain vulnerabilities if the sole provider faces disruptions. The government might also become overly reliant on a single supplier, diminishing its negotiating leverage in the future.

How does this contract contribute to the overall effectiveness and readiness of the Navy's Close-In Weapon Systems?

This contract is crucial for maintaining and ensuring the operational readiness of the Navy's CIWS, which are vital for ship self-defense against anti-ship missiles and aircraft. Consistent and timely procurement of components through this contract directly supports the warfighting capability and overall effectiveness of naval assets.

Industry Classification

NAICS: Manufacturing › Commercial and Service Industry Machinery Manufacturing › Optical Instrument and Lens Manufacturing

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: 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: $39,417,443

Exercised Options: $39,417,443

Current Obligation: $39,417,443

Subaward Activity

Number of Subawards: 17

Total Subaward Amount: $3,590,912

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: N0038321DZM01

IDV Type: IDC

Timeline