DoD's $1.35B Raytheon Contract for Guided Missile Manufacturing Lacks Competition
Contract Overview
Contract Amount: $1,346,571,569 ($1.3B)
Contractor: Raytheon Company
Awarding Agency: Department of Defense
Start Date: 2009-02-01
End Date: 2015-06-30
Contract Duration: 2,340 days
Daily Burn Rate: $575.5K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: FIXED PRICE LEVEL OF EFFORT
Sector: Defense
Official Description: FY 09 ENGINEERING SERVICES BASIC AWARD
Place of Performance
Location: ANDOVER, ESSEX County, MASSACHUSETTS, 01810
Plain-Language Summary
Department of Defense obligated $1.35 billion to RAYTHEON COMPANY for work described as: FY 09 ENGINEERING SERVICES BASIC AWARD Key points: 1. Significant spending on guided missile manufacturing. 2. Sole awardee, Raytheon Company, raises competition concerns. 3. Long contract duration (2009-2015) warrants scrutiny. 4. Fixed Price Level of Effort contract type offers some cost control.
Value Assessment
Rating: questionable
The contract value of $1.35B is substantial. Without competitive bidding, it's difficult to assess if this price represents fair market value compared to similar missile manufacturing contracts.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
The contract was not competed, indicating a sole-source award. This lack of competition limits price discovery and potentially leads to higher costs for taxpayers.
Taxpayer Impact: The absence of competition likely resulted in a higher price than could have been achieved through a competitive process, impacting taxpayer funds.
Public Impact
Taxpayers funded a large contract for critical defense technology. The lack of competition may have inflated the cost of guided missiles. Long-term contract could indicate ongoing need but also potential for complacency.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Lack of competition
- High contract value
- Long contract duration
Positive Signals
- Fixed Price contract type
- Awarded by Department of Defense
Sector Analysis
This contract falls within the defense sector, specifically guided missile and space vehicle manufacturing. Spending in this area is critical for national security, but often involves high costs and complex technologies.
Small Business Impact
The data indicates this contract was not awarded to small businesses, as both 'ss' and 'sb' fields are false. This represents a missed opportunity for small business participation in defense manufacturing.
Oversight & Accountability
The 'NOT COMPETED' status suggests a potential lack of robust oversight in the initial award process. Further review is needed to understand the justification for the sole-source award and ensure accountability.
Related Government Programs
- Guided Missile and Space Vehicle Manufacturing
- Department of Defense Contracting
- Department of the Army Programs
Risk Flags
- Sole-source award
- High dollar value
- Long contract duration
- No small business participation indicated
Tags
guided-missile-and-space-vehicle-manufac, department-of-defense, ma, definitive-contract, billion-dollar
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $1.35 billion to RAYTHEON COMPANY. FY 09 ENGINEERING SERVICES BASIC AWARD
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 $1.35 billion.
What is the period of performance?
Start: 2009-02-01. End: 2015-06-30.
What was the specific justification for awarding this large missile manufacturing contract on a sole-source basis, and were alternative competitive strategies considered?
The justification for a sole-source award is crucial for understanding why competition was bypassed. Agencies typically require detailed documentation, such as a Justification and Approval (J&A), to support sole-source procurements. This document should outline why only one source could meet the requirement and why alternatives were not feasible. Without this information, it's impossible to assess the validity of the sole-source decision and its impact on value for money.
How does the unit cost of the guided missiles procured under this contract compare to industry benchmarks or similar contracts awarded competitively?
Benchmarking the unit cost against industry standards or competitively awarded contracts is essential for assessing value. If this contract's unit costs are significantly higher, it indicates potential overpayment due to the lack of competition. A detailed cost analysis, including material, labor, and overhead, would be necessary to determine if the price paid was reasonable and justified.
What mechanisms were in place to ensure effective performance and cost control under this fixed-price level-of-effort contract over its multi-year duration?
A fixed-price level-of-effort contract aims to control costs by setting a ceiling, but effectiveness hinges on monitoring the effort expended and the quality of deliverables. Oversight should include tracking labor hours, ensuring milestones are met, and verifying that the final product meets specifications. Regular performance reviews and audits are vital to ensure the contractor is delivering value and that taxpayer funds are used efficiently.
Industry Classification
NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Guided Missile and Space Vehicle Manufacturing
Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES
Competition & Pricing
Extent Competed: NOT COMPETED
Solicitation Procedures: ONLY ONE SOURCE
Solicitation ID: W31P4Q08R0277
Offers Received: 1
Pricing Type: FIXED PRICE LEVEL OF EFFORT (B)
Evaluated Preference: NONE
Contractor Details
Parent Company: Rockwell Collins Australia PTY Limited
Address: 350 LOWELL ST, ANDOVER, MA, 01810
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: $1,347,227,230
Exercised Options: $1,347,227,230
Current Obligation: $1,346,571,569
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2009-02-01
Current End Date: 2015-06-30
Potential End Date: 2015-06-30 00:00:00
Last Modified: 2025-08-04
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