Raytheon Company awarded $38.8M for missile parts, raising questions about competition and value

Contract Overview

Contract Amount: $38,844,702 ($38.8M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2021-07-01

End Date: 2024-10-31

Contract Duration: 1,218 days

Daily Burn Rate: $31.9K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: MK73 SSTX MISSING PARTS KIT

Place of Performance

Location: PORTSMOUTH, NEWPORT County, RHODE ISLAND, 02871

State: Rhode Island Government Spending

Plain-Language Summary

Department of Defense obligated $38.8 million to RAYTHEON COMPANY for work described as: MK73 SSTX MISSING PARTS KIT Key points: 1. Contract awarded on a sole-source basis, limiting price discovery and potentially increasing costs. 2. Significant duration of the contract (over 3 years) suggests a long-term need for these parts. 3. The contract is for 'Other Guided Missile and Space Vehicle Parts,' indicating a specialized niche. 4. No small business set-aside was utilized, potentially excluding smaller players from this opportunity. 5. The contract type is Firm Fixed Price, which shifts some risk to the contractor. 6. The award is a delivery order under a larger contract, details of which are not provided.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging without knowing the specific parts and their market rates. The sole-source nature of the award means there was no direct comparison to other vendors to ensure competitive pricing. The base value of $31.89M for the base period suggests a substantial procurement, but without competitive bids, it's difficult to ascertain if this represents a fair market price. Further analysis would require understanding the criticality and uniqueness of these missile parts.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, Raytheon Company, was solicited. This approach is typically used when a product or service is unique and only available from a single source, or in cases of urgent and compelling need. The lack of competition means that taxpayers did not benefit from the price reductions that can arise from a competitive bidding process.

Taxpayer Impact: Sole-source awards limit the government's ability to negotiate the best possible price, potentially leading to higher costs for taxpayers. Without competition, there's less incentive for the contractor to offer the lowest price.

Public Impact

The Department of the Navy benefits from the acquisition of essential missile parts, ensuring operational readiness. This contract supports the maintenance and functionality of guided missile and space vehicles. The primary impact is on national defense capabilities, ensuring the U.S. military has the necessary components. The contract is likely to support specialized manufacturing jobs within Raytheon Company and its supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and taxpayer value.
Lack of transparency on the specific parts and their necessity hinders full value assessment.
Contract duration and value suggest a significant, potentially long-term reliance on a single supplier.

Positive Signals

Firm Fixed Price contract shifts some performance risk to the contractor.
Awarding to Raytheon Company, a known defense contractor, suggests a reliance on established capabilities.
Delivery order structure implies it's part of a broader, potentially pre-vetted, acquisition strategy.

Sector Analysis

The defense industrial base, particularly the segment focused on aerospace and missile manufacturing, is characterized by high barriers to entry, significant R&D investment, and a limited number of prime contractors. Raytheon Company is a major player in this sector. Spending on specialized parts for guided missiles and space vehicles is critical for maintaining national security and technological superiority. Comparable spending benchmarks are difficult to establish due to the proprietary nature of defense components and the specialized expertise required.

Small Business Impact

This contract does not appear to have a small business set-aside. The award to a large prime contractor like Raytheon Company suggests that subcontracting opportunities may exist for small businesses within Raytheon's supply chain. However, the absence of a direct set-aside means small businesses did not have a primary opportunity to compete for the prime contract itself, potentially limiting their direct revenue generation from this specific award.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. As a delivery order under a larger contract, its specific oversight mechanisms would be tied to the parent contract's terms. Transparency is limited due to the sole-source nature and the proprietary details of defense components. The Inspector General for the Department of Defense would have jurisdiction for audits and investigations related to potential fraud, waste, or abuse.

Related Government Programs

Guided Missile and Space Vehicle Parts
Defense Procurement
Department of the Navy Contracts
Raytheon Company Contracts
Sole-Source Defense Acquisitions

Risk Flags

Sole-source award
Lack of competitive bidding
Limited transparency on specific parts
Potential for overpricing

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $38.8 million to RAYTHEON COMPANY. MK73 SSTX MISSING PARTS KIT

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 $38.8 million.

What is the period of performance?

Start: 2021-07-01. End: 2024-10-31.

What is Raytheon Company's track record with the Department of the Navy for similar missile parts?

Raytheon Company, now part of RTX, has a long and extensive history of supplying complex systems and components to the Department of the Navy and other branches of the U.S. military. Their portfolio includes a wide range of missile systems, aircraft components, and related support services. For 'Other Guided Missile and Space Vehicle Parts,' it is highly probable that Raytheon has a substantial track record, given their established position as a prime defense contractor. Analyzing past contracts for similar parts, including their performance history, delivery timeliness, and quality metrics, would provide further context on their reliability and capability in fulfilling this specific requirement. However, without access to detailed contract performance databases or specific part numbers, a precise historical comparison is limited.

How does the $38.8M contract value compare to similar sole-source awards for missile parts?

Comparing the $38.8 million value of this sole-source contract for missile parts to similar awards is challenging due to the proprietary nature of defense components and the lack of public data on specific part costs. Sole-source awards inherently bypass the competitive benchmarking process that would typically establish a fair market price. However, the value suggests a significant procurement, likely for critical or specialized components that are not readily available from multiple suppliers. To assess value, one would ideally need to compare the unit costs of these specific parts against internal cost estimates, historical pricing for the same or similar parts from Raytheon, or, if possible, against components with similar technical specifications from other manufacturers, though this is often difficult in sole-source defense scenarios.

What are the primary risks associated with a sole-source award for critical missile components?

The primary risks associated with a sole-source award for critical missile components include inflated pricing due to the absence of competition, potential for complacency from the sole supplier leading to quality or delivery issues, and a lack of flexibility if requirements change or a better alternative emerges. Taxpayers face the risk of overpaying for these components, as the government cannot leverage competitive bidding to secure the best possible price. Furthermore, reliance on a single supplier can create supply chain vulnerabilities, especially if that supplier experiences production issues, financial instability, or geopolitical disruptions. The government also loses the opportunity to foster innovation and competition among multiple vendors, which could lead to more advanced or cost-effective solutions in the long run.

What is the expected program effectiveness or outcome of receiving these missile parts?

The expected program effectiveness and outcome of receiving these missile parts is the sustained operational readiness and capability of the U.S. Navy's guided missile and space vehicle systems. These parts are essential for the maintenance, repair, and potentially the upgrade of existing platforms or the assembly of new ones. By ensuring the availability of these components, the contract directly contributes to national defense objectives, allowing naval forces to effectively carry out their missions. The effectiveness is measured by the reliability and performance of the systems that utilize these parts, ensuring that critical defense assets remain functional and capable of meeting strategic requirements. The timely delivery and quality of the parts are crucial for maintaining this operational effectiveness.

How has federal spending on 'Other Guided Missile and Space Vehicle Parts' evolved over the past five years?

Federal spending on 'Other Guided Missile and Space Vehicle Parts' has generally seen fluctuations driven by defense budgets, modernization programs, and geopolitical events. While specific data for the 'Other' category (PSC 3341) is not always granularly reported, the broader defense sector, particularly missile systems, often sees consistent or increasing investment. Major defense contractors like Raytheon are key recipients of such funding. Trends can be influenced by new program starts, sustainment needs for existing fleets, and the development of next-generation technologies. Analyzing historical spending patterns for this specific PSC code, or closely related ones, would reveal whether this $38.8 million award represents a typical investment level, an increase, or a decrease compared to previous years, providing context on the overall federal commitment to this segment of the defense supply chain.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Other Guided Missile and Space Vehicle Parts and Auxiliary Equipment Manufacturing

Product/Service Code: GUIDED MISSLES

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, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $46,887,683

Exercised Options: $38,844,702

Current Obligation: $38,844,702

Subaward Activity

Number of Subawards: 17

Total Subaward Amount: $77,356,293

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0002421G5421

IDV Type: BOA

Timeline