DoD's $73M Missile Contract with Raytheon: Uncompeted, Firm Fixed Price, and Lacking Small Business Participation

Contract Overview

Contract Amount: $73,017,955 ($73.0M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2009-06-05

End Date: 2013-07-31

Contract Duration: 1,517 days

Daily Burn Rate: $48.1K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: GRIFFIN MUNITIONS, ASSOCIATED HARDWARE AND ENGINEERING SERVICES.

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $73.0 million to RAYTHEON COMPANY for work described as: GRIFFIN MUNITIONS, ASSOCIATED HARDWARE AND ENGINEERING SERVICES. Key points: 1. Significant contract value of $73 million for missile manufacturing and related services. 2. Sole-source award to Raytheon Company raises questions about competition and potential price inflation. 3. Lack of small business participation limits opportunities for smaller, innovative firms in this sector. 4. Firm Fixed Price contract type shifts risk to the contractor but requires careful oversight to ensure value.

Value Assessment

Rating: questionable

The $73 million contract value is substantial. Without competitive bidding, it's difficult to assess if this price is optimal compared to similar missile manufacturing contracts. Benchmarking against industry standards for guided missile production is crucial.

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 significantly limits price discovery and may lead to higher costs for taxpayers compared to a competitive process.

Taxpayer Impact: The absence of competition likely results in a higher cost to taxpayers than if multiple vendors had vied for the contract.

Public Impact

Taxpayers may be overpaying for critical defense hardware due to the lack of competitive bidding. Limited opportunities for small and medium-sized businesses to contribute to national defense manufacturing. Potential for reduced innovation in missile technology if only one prime contractor is engaged. Ensuring the quality and effectiveness of the delivered missiles is paramount given the sole-source nature.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award
No small business participation
High contract value without competition

Positive Signals

Firm Fixed Price contract type manages cost risk for the government
Established contractor (Raytheon) likely has proven capabilities

Sector Analysis

This contract falls within the Guided Missile and Space Vehicle Manufacturing sector, a critical component of national defense. Spending in this area is often characterized by high R&D costs, long production cycles, and significant government oversight due to national security implications.

Small Business Impact

The contract explicitly states no small business participation (sb: false). This represents a missed opportunity to foster innovation and economic growth within the small business sector, particularly in specialized defense manufacturing.

Oversight & Accountability

Given the sole-source nature and significant value, robust oversight by the Defense Contract Management Agency is essential to ensure contract compliance, quality control, and fair pricing, even under a firm fixed price agreement.

Related Government Programs

Guided Missile and Space Vehicle Manufacturing
Department of Defense Contracting
Defense Contract Management Agency Programs

Risk Flags

Lack of competition may lead to inflated prices.
Potential for contractor lock-in and reduced future innovation.
No small business involvement limits economic opportunity and potential for diverse solutions.
High contract value requires diligent oversight to ensure taxpayer value.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $73.0 million to RAYTHEON COMPANY. GRIFFIN MUNITIONS, ASSOCIATED HARDWARE AND ENGINEERING SERVICES.

Who is the contractor on this award?

The obligated recipient is RAYTHEON COMPANY.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $73.0 million.

What is the period of performance?

Start: 2009-06-05. End: 2013-07-31.

What was the justification for awarding this contract on a sole-source basis instead of seeking competitive bids?

The justification for a sole-source award typically involves unique capabilities, urgent needs, or the unavailability of alternative sources. For this specific contract, the government would need to document why Raytheon was the only viable option, potentially citing proprietary technology, specialized expertise, or critical program timelines that precluded a competitive solicitation process.

How can the Department of Defense ensure fair pricing and value for money on this uncompeted contract?

Ensuring fair pricing involves rigorous cost analysis, benchmarking against similar historical contracts or commercial equivalents, and potentially negotiating price adjustments based on performance or market changes. The Defense Contract Management Agency plays a crucial role in monitoring contractor performance, costs, and adherence to contract terms to mitigate risks associated with sole-source awards.

What are the long-term implications of relying on sole-source contracts for critical defense systems like missiles?

Long-term reliance on sole-source contracts can stifle innovation, reduce competition, and potentially lead to higher costs and technological stagnation. It may also create dependencies on specific contractors, limiting strategic flexibility. Diversifying the supplier base and actively seeking competitive opportunities, where feasible, are essential for maintaining a robust and innovative defense industrial base.

Industry Classification

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

Product/Service Code: WEAPONS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: W31P4Q09R0177

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 1151 E HERMANS RD, TUCSON, AZ, 85756

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: $73,413,247

Exercised Options: $73,413,247

Current Obligation: $73,017,955

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline