DoD awards Raytheon $11.36M contract for missile parts, raising concerns about competition

Contract Overview

Contract Amount: $11,359,918 ($11.4M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2006-03-31

End Date: 2011-05-31

Contract Duration: 1,887 days

Daily Burn Rate: $6.0K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Place of Performance

Location: MCKINNEY, COLLIN County, TEXAS, 75070

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $11.4 million to RAYTHEON COMPANY for work described as: Key points: 1. Significant contract value of $11.36 million awarded. 2. Sole-source award to Raytheon Company limits competitive pricing. 3. Long contract duration of 1887 days may indicate potential for cost overruns. 4. Focus on 'Other Guided Missile and Space Vehicle Parts' suggests a specialized, potentially high-cost sector.

Value Assessment

Rating: questionable

The contract's Cost Plus Fixed Fee (CPFF) structure, while common for complex projects, can lead to higher costs if not tightly managed. Without competitive benchmarks, assessing the fairness of the $11.36 million price is difficult.

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 lack of competition limits price discovery and potentially results in a higher price for taxpayers.

Taxpayer Impact: The absence of competition likely means taxpayers are paying a premium for these missile parts.

Public Impact

Taxpayers may be overpaying due to the lack of competitive bidding. The long contract duration could lead to inefficiencies and increased costs over time. Dependence on a single supplier for critical missile components poses a strategic risk.

Waste & Efficiency Indicators

Waste Risk Score: 60 / 10

Warning Flags

Sole-source award
Long contract duration
Cost-plus contract type
Lack of small business participation

Positive Signals

Award to established defense contractor
Specific need for specialized parts

Sector Analysis

The 'Other Guided Missile and Space Vehicle Parts' sector is highly specialized and dominated by a few large defense contractors. Spending in this area is critical for national security but often lacks transparency and competitive pressure.

Small Business Impact

The data indicates no small business participation in this contract. This is common in large, specialized defense contracts but represents a missed opportunity to foster small business growth within the defense industrial base.

Oversight & Accountability

The sole-source nature of this award warrants scrutiny to ensure the price is fair and reasonable. Robust oversight is needed to manage the Cost Plus Fixed Fee structure effectively and prevent potential cost creep.

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

Sole-source award
Lack of competition
Cost-plus contract type
Long contract duration
No small business participation
Potential for price inflation

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $11.4 million 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 $11.4 million.

What is the period of performance?

Start: 2006-03-31. End: 2011-05-31.

What was the justification for awarding this contract on a sole-source basis, and were alternative solutions explored?

The justification for a sole-source award typically involves unique capabilities or proprietary technology held by the contractor. Without further details, it's impossible to confirm if alternative solutions were explored or if this was truly the only viable option. This lack of competition is a primary driver of potential value loss for the government.

How will the Department of Defense ensure cost control and prevent overruns on this long-term, cost-plus contract?

Effective cost control on a CPFF contract relies heavily on stringent oversight, detailed performance metrics, and regular audits. The Department of Defense must actively monitor Raytheon's expenditures, validate costs, and ensure adherence to the fixed fee. Proactive risk management and clear communication channels are crucial to mitigate potential overruns over the 1887-day duration.

What is the strategic risk associated with relying solely on Raytheon for these specific missile components, and are there contingency plans?

Sole reliance on a single supplier for critical components creates a strategic vulnerability. Disruptions to Raytheon's supply chain, production issues, or geopolitical factors could significantly impact national security readiness. Contingency plans might include identifying alternative suppliers, developing domestic production capabilities, or maintaining strategic stockpiles to mitigate these risks.

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: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 2501 W UNIVERSITY DRIVE M, MC KINNEY, TX, 75070

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline