DoD's $1B Raytheon Contract for Missile Parts: A 7-Year Deal with No Competition
Contract Overview
Contract Amount: $1,039,368,010 ($1.0B)
Contractor: Raytheon Company
Awarding Agency: Department of Defense
Start Date: 2004-01-30
End Date: 2010-01-31
Contract Duration: 2,193 days
Daily Burn Rate: $473.9K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: LABOR HOURS
Sector: Defense
Place of Performance
Location: ANDOVER, ESSEX County, MASSACHUSETTS, 01810
Plain-Language Summary
Department of Defense obligated $1.04 billion to RAYTHEON COMPANY for work described as: Key points: 1. Significant spending of over $1 billion on missile parts over seven years. 2. Lack of competition raises concerns about potential overpricing and reduced innovation. 3. The contract's duration and sole-source nature warrant close scrutiny for taxpayer value. 4. Focus on 'Other Guided Missile and Space Vehicle Parts' indicates a specialized defense need.
Value Assessment
Rating: questionable
The contract value of over $1 billion for 'Other Guided Missile and Space Vehicle Parts' is substantial. Without competitive bidding, it's difficult to assess if this price represents fair market value compared to similar defense procurements.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was not competed, indicating a sole-source award. This limits price discovery and potentially leads to higher costs for the government compared to a competitive environment.
Taxpayer Impact: The absence of competition for a contract exceeding $1 billion means taxpayers may not be receiving the best possible price for these critical missile components.
Public Impact
Taxpayers funded over $1 billion for specialized missile parts over a 7-year period. The Department of the Army relied on a single vendor, Raytheon Company, for these components. The contract spanned from 2004 to 2010, highlighting a long-term reliance on this sole-source agreement.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award for a large value contract
- Long contract duration without re-competition
- Lack of transparency in pricing due to no competition
Positive Signals
- Awarded to a known defense contractor
- Addresses a specific defense need for missile parts
Sector Analysis
This contract falls within the Defense sector, specifically manufacturing parts for guided missiles and space vehicles. Spending benchmarks in this area are often high due to specialized technology and R&D, but competition is crucial for cost control.
Small Business Impact
There is no indication that small businesses were involved in this contract, either as prime contractors or subcontractors. The sole-source nature likely precluded opportunities for small business participation.
Oversight & Accountability
The sole-source nature of this large, long-term contract suggests a potential gap in oversight. Regular reviews and justifications for continued sole-sourcing would be expected to ensure continued value for money.
Related Government Programs
- Other Guided Missile and Space Vehicle Parts and Auxiliary Equipment Manufacturing
- Department of Defense Contracting
- Department of the Army Programs
Risk Flags
- Lack of competition
- High contract value
- Long contract duration
- Potential for inflated pricing
- Limited transparency
Tags
other-guided-missile-and-space-vehicle-p, department-of-defense, ma, definitive-contract, billion-dollar
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $1.04 billion to RAYTHEON COMPANY. See the official description on USAspending.
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 Army).
What is the total obligated amount?
The obligated amount is $1.04 billion.
What is the period of performance?
Start: 2004-01-30. End: 2010-01-31.
What was the justification for awarding this $1 billion contract as sole-source?
The justification for a sole-source award of this magnitude would typically involve factors such as unique technical capabilities, proprietary technology, or urgent national security requirements that only Raytheon Company could meet. Without access to the specific contract documentation and justification, it is impossible to definitively state the reasons, but these are common drivers for non-competitive procurements in the defense sector.
How can the Department of Defense ensure fair pricing on sole-source contracts?
The Department of Defense employs several mechanisms to ensure fair pricing on sole-source contracts. These include conducting thorough cost and price analyses, negotiating profit margins, and utilizing should-cost models. Additionally, government auditors and inspectors play a vital role in verifying cost data and ensuring compliance with contract terms. However, the inherent lack of competitive pressure remains a risk factor.
What is the long-term impact of relying on sole-source contracts for critical defense components?
Long-term reliance on sole-source contracts can stifle innovation, reduce competition, and potentially lead to higher costs for taxpayers. It can also create vendor lock-in, making it difficult to switch suppliers or adopt new technologies. While sometimes necessary for unique capabilities, a strategy that prioritizes competition whenever feasible is generally more beneficial for long-term defense readiness and fiscal responsibility.
Industry Classification
NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Other Guided Missile and Space Vehicle Parts and Auxiliary Equipment Manufacturing
Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES
Competition & Pricing
Extent Competed: NOT COMPETED
Solicitation Procedures: ONLY ONE SOURCE
Offers Received: 1
Pricing Type: LABOR HOURS (Z)
Evaluated Preference: NONE
Contractor Details
Parent Company: RTX Corp
Address: 350 LOWELL ST, ANDOVER, MA, 01810
Business Categories: Category Business, Not Designated a Small Business
Financial Breakdown
Contract Ceiling: $1,094,486,331
Exercised Options: $1,094,486,331
Current Obligation: $1,039,368,010
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2004-01-30
Current End Date: 2010-01-31
Potential End Date: 2010-01-31 12:01:00
Last Modified: 2026-01-12
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