Raytheon Company awarded $44M for Griffin munitions, a sole-source contract with limited competition

Contract Overview

Contract Amount: $44,032,940 ($44.0M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2008-02-06

End Date: 2009-12-31

Contract Duration: 694 days

Daily Burn Rate: $63.4K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIXED PRICE AWARD FEE

Sector: Defense

Official Description: GRIFFIN STAND-OFF PRECISION GUIDED MUNITIONS.

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756, UNITED STATES OF AMERICA

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $44.0 million to RAYTHEON COMPANY for work described as: GRIFFIN STAND-OFF PRECISION GUIDED MUNITIONS. Key points: 1. Contract awarded for guided munitions, indicating a need for advanced defense capabilities. 2. Sole-source award suggests potential lack of competitive pressure on pricing. 3. Limited competition may raise concerns about overall value for taxpayer dollars. 4. Contract duration of 694 days points to a medium-term supply requirement. 5. Awarded by the Department of the Army, highlighting its role in ground force modernization. 6. The contract falls under the Guided Missile and Space Vehicle Manufacturing sector.

Value Assessment

Rating: questionable

Benchmarking the value of this specific contract is challenging due to its sole-source nature and the specialized nature of guided munitions. Without competitive bids, it's difficult to ascertain if the $44 million price reflects optimal market value. Comparisons to similar, competitively procured munitions contracts would be necessary to assess if the pricing is reasonable. The fixed-price award fee structure introduces some flexibility but also requires careful monitoring of performance against cost.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one bidder, Raytheon Company, was solicited. This approach bypasses the standard competitive bidding process, which typically involves multiple companies vying for the contract. While sole-source awards can be justified for unique capabilities or urgent needs, they inherently limit price discovery and can lead to higher costs for the government.

Taxpayer Impact: The lack of competition means taxpayers may not benefit from the cost savings that typically arise from a bidding process. This could result in a higher overall expenditure for these munitions compared to what might have been achieved through open competition.

Public Impact

The primary beneficiaries are the U.S. Army ground forces who will receive advanced Griffin munitions. The contract delivers essential guided missile technology for enhanced combat effectiveness. The contract's performance is tied to Arizona (AZ), indicating potential manufacturing or logistical impact in that state. The acquisition of these munitions supports the readiness and operational capabilities of the armed forces.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially impacting cost-effectiveness.
Lack of transparency in the procurement process due to sole-source justification.
Specialized nature of munitions means limited alternative suppliers, increasing reliance on Raytheon.
Fixed Price Award Fee structure requires diligent oversight to ensure performance aligns with cost.

Positive Signals

Award to a known defense contractor (Raytheon) suggests established manufacturing and quality control processes.
Specific munitions type (Griffin) indicates a targeted capability enhancement for the Army.
Contract duration suggests a planned, rather than emergency, procurement, allowing for some level of planning.

Sector Analysis

The Guided Missile and Space Vehicle Manufacturing sector is a highly specialized and critical component of the defense industrial base. Companies in this sector often possess unique technological expertise and face stringent regulatory requirements. Spending in this area is driven by national security needs and technological advancements in warfare. Comparable spending benchmarks are difficult to establish due to the proprietary nature of many defense technologies and the infrequent, large-scale nature of procurement for advanced munitions.

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 prime contractors or through mandated subcontracting opportunities on this specific award. The focus is on a large, established prime contractor, Raytheon.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Army's contracting and program management offices. As a sole-source award, the justification and terms would be subject to review by relevant procurement authorities. Transparency is limited due to the non-competitive nature. Inspector General jurisdiction would apply to investigations of fraud, waste, or abuse related to the contract's execution.

Related Government Programs

Department of Defense Procurement
Army Aviation and Missile Command
Guided Missile Systems
Ordnance and Ammunition Procurement
Defense Industrial Base Contracts

Risk Flags

Sole-source procurement
Lack of competitive bidding
Potential for cost overruns
Dependency on a single supplier

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $44.0 million to RAYTHEON COMPANY. GRIFFIN STAND-OFF PRECISION GUIDED MUNITIONS.

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 $44.0 million.

What is the period of performance?

Start: 2008-02-06. End: 2009-12-31.

What is the specific capability and intended use of the Griffin Stand-Off Precision Guided Munitions?

The Griffin Stand-Off Precision Guided Munitions are designed as a lightweight, multi-mission munition capable of being launched from various platforms, including helicopters, drones, and ground vehicles. Its primary purpose is to provide precision strike capabilities against a range of targets, including personnel, light armored vehicles, and hardened structures. The 'stand-off' designation implies it can engage targets from a distance, enhancing platform survivability. These munitions are crucial for providing close air support and interdiction capabilities to ground forces, offering a more precise and less collateral-damage-prone alternative to unguided munitions.

Why was this contract awarded on a sole-source basis instead of through full and open competition?

Sole-source awards are typically justified when only one responsible source is available or capable of meeting the government's needs. For advanced munitions like the Griffin, this could be due to proprietary technology, unique manufacturing capabilities held exclusively by Raytheon, or a critical and urgent need where initiating a full competitive process would cause unacceptable delays. The specific justification for this sole-source award would be documented by the Department of the Army, likely citing factors such as the maturity of the technology, existing production lines, and the need for rapid deployment or sustainment of a fielded system.

How does the 'Fixed Price Award Fee' (FPA) contract type influence cost control and performance incentives?

A Fixed Price Award Fee (FPA) contract establishes a fixed price for the work, but includes a performance-based award fee component. The contractor, Raytheon, is guaranteed the base fixed price. Additionally, they can earn an award fee based on meeting or exceeding specific performance criteria outlined in the contract. This structure aims to incentivize high performance while providing cost certainty to the government. However, the government must establish clear, measurable performance metrics and diligently evaluate performance to ensure the award fee effectively drives desired outcomes and doesn't become a de facto increase in cost without commensurate benefit.

What is Raytheon's track record with producing guided munitions for the U.S. military?

Raytheon Company, now RTX, has a long and extensive track record as a major defense contractor specializing in missile systems and guided munitions. They are a primary producer of numerous advanced weapon systems for the U.S. military and its allies, including the Tomahawk cruise missile, Patriot air defense system, and various air-to-ground munitions. Their experience spans decades, encompassing research, development, manufacturing, and sustainment of complex guided weapon technologies. This extensive history suggests a high level of expertise and established production capabilities relevant to contracts like the one for Griffin munitions.

Are there any publicly available benchmarks for the cost per Griffin munition under this contract?

Publicly available, precise per-unit cost data for specific munitions like the Griffin under this particular contract is generally not disclosed due to the sensitive nature of defense procurement and proprietary pricing information. The total award amount of $44,032,940 for 1 unit (likely representing a contract line item number or a placeholder for a larger quantity) is not indicative of the per-unit cost. To estimate a per-unit cost, one would need the total quantity of munitions procured under this award, which is not provided in the summary data. Even then, such figures are often aggregated and may not reflect the true cost of individual units due to variations in lot sizes, production runs, and contract terms.

What are the potential risks associated with relying on a single supplier for critical munitions?

Relying on a single supplier, as is the case with a sole-source contract, presents several risks. Firstly, it can lead to reduced bargaining power for the government, potentially resulting in higher prices over time. Secondly, it creates a dependency on that specific supplier's production capacity, quality control, and financial stability. Disruptions at the supplier's facility (e.g., due to natural disasters, labor disputes, or financial distress) could severely impact the availability of critical munitions. Lastly, it can stifle innovation, as there is less incentive for alternative suppliers to enter the market or for the incumbent to drastically improve efficiency if competition is absent.

Industry Classification

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

Product/Service Code: GUIDED MISSLES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: W31P4Q08R0262

Offers Received: 1

Pricing Type: FIXED PRICE AWARD FEE (M)

Evaluated Preference: NONE

Contractor Details

Address: 1151 E HERMANS RD, TUCSON, AZ, 85706

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

Financial Breakdown

Contract Ceiling: $44,032,940

Exercised Options: $44,032,940

Current Obligation: $44,032,940

Contract Characteristics

Cost or Pricing Data: YES

Timeline