Raytheon Company awarded $13.8M contract for missile vehicle parts, with no competition

Contract Overview

Contract Amount: $13,799,533 ($13.8M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2006-03-31

End Date: 2008-09-30

Contract Duration: 914 days

Daily Burn Rate: $15.1K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: LETTER CONTRACT ACQUIRING SVULS.

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $13.8 million to RAYTHEON COMPANY for work described as: LETTER CONTRACT ACQUIRING SVULS. Key points: 1. Contract awarded for specialized missile vehicle parts, indicating a need for specific technical capabilities. 2. The firm-fixed-price contract structure aims to control costs for the Department of Defense. 3. Lack of competition suggests potential for higher pricing or limited market availability of these components. 4. The contract duration of over two years implies a sustained requirement for these parts. 5. Awarded by the Department of the Army, this contract supports ongoing defense operations. 6. The value of the contract, while significant, needs to be benchmarked against similar specialized procurements.

Value Assessment

Rating: fair

The contract value of $13.8 million for specialized missile vehicle parts is difficult to assess without direct comparable contracts. The firm-fixed-price (FFP) type suggests an attempt to cap costs, but the lack of competition raises concerns about whether the price reflects true market value. Benchmarking this against other procurements for similar niche components within the defense sector would be necessary to determine if the pricing is competitive or represents a fair value for the goods received.

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 typically occurs when a product or service is unique, proprietary, or when there's an urgent need that cannot be met through a competitive process. The lack of competition limits the government's ability to explore alternative solutions or negotiate the best possible price through market forces.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive bidding. Without multiple offers, there is less pressure on the contractor to offer the lowest possible price, potentially leading to less efficient use of public funds.

Public Impact

The primary beneficiaries are the Department of Defense, specifically the Army, which receives critical components for its missile vehicle systems. This contract ensures the continued availability of specialized parts necessary for maintaining and operating defense equipment. The geographic impact is primarily within Arizona, where Raytheon Company is located, potentially supporting local jobs and the defense industrial base in that region. The contract supports the defense industrial base by providing work for a key contractor in the aerospace and defense sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated prices and reduced value for taxpayer money.
Sole-source awards can stifle innovation by not encouraging other companies to develop competing solutions.
Dependence on a single supplier can create supply chain risks if the contractor faces production issues.

Positive Signals

The firm-fixed-price contract type provides cost certainty for the government.
Awarding to Raytheon Company, a known defense contractor, suggests a level of confidence in their capability to deliver.
The contract supports the operational readiness of critical defense assets.

Sector Analysis

This contract falls within the Guided Missile and Space Vehicle Parts manufacturing sector, a highly specialized segment of the aerospace and defense industry. This sector is characterized by high barriers to entry due to complex technology, stringent quality requirements, and significant R&D investment. Spending in this area is driven by national security needs and technological advancements in defense systems. Comparable spending benchmarks would likely be found within other large defense contracts for similar specialized components, often awarded by agencies like the Department of Defense.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Furthermore, the 'ss' (small business subcontracting) is also false. This suggests that small businesses are unlikely to be directly involved as subcontractors on this specific award, potentially limiting opportunities for them within this particular procurement. The focus is likely on the prime contractor's capabilities.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Army's contracting and program management offices. Accountability measures are inherent in the firm-fixed-price structure, which obligates the contractor to deliver specified goods. Transparency is limited due to the sole-source nature of the award. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Missile Systems Procurement
Aerospace and Defense Manufacturing
Department of the Army Contracts
Specialized Component Manufacturing

Risk Flags

Sole-source award
Lack of competition
Potential for price inflation
Limited transparency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $13.8 million to RAYTHEON COMPANY. LETTER CONTRACT ACQUIRING SVULS.

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 $13.8 million.

What is the period of performance?

Start: 2006-03-31. End: 2008-09-30.

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

Raytheon Company, now part of RTX, has a long-standing and extensive history of contracting with the Department of Defense, including the Army, for a wide array of defense systems and components. Their track record includes the development and production of missiles, guidance systems, and related parts. While specific data on prior contracts for 'SVULS' (Specialized Vehicle Unit Launchers or similar) is not detailed here, Raytheon's established presence and expertise in aerospace and defense manufacturing suggest a high likelihood of prior engagements involving complex vehicle systems and their components. Analyzing historical contract databases would reveal the volume and nature of their past work with the Army, providing context for their capabilities and performance on this specific $13.8 million award.

How does the $13.8 million value compare to other contracts for specialized missile vehicle parts?

Benchmarking the $13.8 million value of this contract against similar procurements for specialized missile vehicle parts is challenging without access to a comprehensive database of comparable sole-source or competed awards. However, for highly specialized, low-volume components critical to defense systems, contract values can vary significantly based on technological complexity, required certifications, and production scale. If this contract is for a unique, proprietary part with limited manufacturers, the price might be considered fair within that niche market. Conversely, if alternative, albeit less advanced, solutions exist or if the production volume is substantial, $13.8 million could represent a significant investment. A detailed analysis would require identifying contracts for parts with similar technical specifications and functional requirements across different defense platforms.

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

The primary risks associated with a sole-source award for critical defense components like those for missile vehicles include potential price inflation due to the lack of competition, reduced incentive for the contractor to innovate or improve efficiency, and increased vulnerability to supply chain disruptions if the sole provider experiences issues. Taxpayers may bear a higher cost than if the contract were competed. Furthermore, the government's negotiating power is diminished, potentially leading to less favorable terms. There's also a risk of vendor lock-in, making it difficult and costly to switch suppliers in the future. Ensuring robust oversight and performance management becomes even more critical in sole-source situations to mitigate these inherent risks.

What is the expected program effectiveness or outcome of this contract?

The expected program effectiveness of this contract is centered on ensuring the operational readiness and capability of the Department of the Army's missile vehicle systems. By procuring essential parts, the contract directly supports the maintenance, repair, and potentially the upgrade of these critical defense assets. The successful delivery of high-quality components, on time and within the agreed-upon price, will contribute to the overall effectiveness of the Army's strategic and tactical capabilities. The ultimate outcome is the sustained ability of these vehicles to perform their intended missions, contributing to national security objectives. The specific effectiveness metrics would likely be tied to the performance and reliability of the missile systems themselves.

What are the historical spending patterns for 'Other Guided Missile and Space Vehicle Parts' by the Department of the Army?

Historical spending patterns for the 'Other Guided Missile and Space Vehicle Parts and Auxiliary Equipment Manufacturing' (NAICS 336419) category by the Department of the Army, and the broader Department of Defense, typically reflect significant and consistent investment. This sector is crucial for maintaining and modernizing defense capabilities. Spending often fluctuates based on geopolitical events, new program starts, and the lifecycle of existing weapon systems. While this specific $13.8 million contract is a single data point, the overall category often represents billions of dollars annually across the federal government. Analyzing trends within NAICS 336419 would reveal whether spending has been increasing or decreasing, and identify major contractors and contract types prevalent in this domain, providing context for the current award.

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

Address: 1151 E HERMANS RD, TUCSON, AZ, 90

Business Categories: Category Business, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $13,799,533

Exercised Options: $13,799,533

Current Obligation: $13,799,533

Contract Characteristics

Cost or Pricing Data: NO

Timeline