Raytheon Company awarded $58.8M for missile components, with limited competition impacting price discovery

Contract Overview

Contract Amount: $58,864,670 ($58.9M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2009-12-18

End Date: 2013-06-30

Contract Duration: 1,290 days

Daily Burn Rate: $45.6K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: FOREBODY,GUIDED MIS

Place of Performance

Location: ANDOVER, ESSEX County, MASSACHUSETTS, 01810

State: Massachusetts Government Spending

Plain-Language Summary

Department of Defense obligated $58.9 million to RAYTHEON COMPANY for work described as: FOREBODY,GUIDED MIS Key points: 1. Contract awarded at a firm fixed price, indicating clear cost expectations. 2. Limited competition suggests potential for higher pricing than a fully competed contract. 3. Contract duration of 1290 days allowed for sustained performance and potential cost efficiencies. 4. The contract falls under the 'Other Guided Missile and Space Vehicle Parts' manufacturing sector. 5. Awarded by the Department of the Army, indicating a focus on defense procurement. 6. The contract's value is significant within its specific niche of missile components.

Value Assessment

Rating: fair

The contract value of $58.8 million for missile components appears reasonable given the specialized nature of the goods. However, without direct benchmarks for comparable 'Other Guided Missile and Space Vehicle Parts' contracts, a precise value-for-money assessment is challenging. The firm fixed-price structure provides cost certainty for the government, but the limited competition may have led to a higher price than could have been achieved in a more open bidding environment. The award amount is substantial, suggesting a critical need for these components.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

This contract was not competed openly, falling under the 'NOT COMPETED' category. This indicates that the government did not solicit bids from multiple sources. The specific reasons for this limited competition are not detailed in the provided data, but it could be due to factors such as specialized capabilities, urgent need, or existing sole-source relationships. The lack of broad competition limits the government's ability to leverage market forces to secure the best possible price and terms.

Taxpayer Impact: The limited competition means taxpayers may not have benefited from the cost savings that typically arise from a competitive bidding process. This could translate to a higher overall expenditure for the required missile components.

Public Impact

The primary beneficiaries are the Department of the Army and potentially broader defense operations requiring advanced missile systems. The services delivered involve the manufacturing and supply of critical components for guided missiles. The geographic impact is primarily within Massachusetts, where Raytheon Company is located, and wherever the missile systems are deployed. Workforce implications include employment for skilled manufacturing and engineering personnel at Raytheon.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition raises concerns about potential overpayment and lack of cost-effectiveness.
Lack of transparency in the 'NOT COMPETED' justification hinders full accountability.
Reliance on a single source, even if qualified, can create supply chain vulnerabilities.

Positive Signals

Firm fixed-price contract provides budget certainty for the government.
Award to a known entity (Raytheon) suggests a level of trust in their capability.
The contract addresses a specific and likely critical defense need.

Sector Analysis

This contract falls within the 'Other Guided Missile and Space Vehicle Parts and Auxiliary Equipment Manufacturing' sector, a highly specialized segment of the aerospace and defense industry. This sector is characterized by high barriers to entry, significant R&D investment, and stringent quality control requirements. Spending in this area is driven by national defense priorities and technological advancements in missile systems. Comparable spending benchmarks are difficult to establish without more granular data on specific component types and quantities.

Small Business Impact

The data indicates this contract was not competed and does not specify any small business set-aside provisions (ss: false, sb: false). Therefore, there is no direct indication of subcontracting opportunities for small businesses related to this specific award. The focus appears to be on a large prime contractor, Raytheon Company, for specialized defense components.

Oversight & Accountability

Oversight for this contract would typically 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 at an agreed-upon price. Transparency is limited by the 'NOT COMPETED' status, making it difficult to assess the full decision-making process. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Guided Missile Manufacturing
Defense Procurement
Aerospace Parts Manufacturing
Department of the Army Contracts
Raytheon Company Contracts

Risk Flags

Limited Competition
Lack of Transparency in Award Justification
Potential for Cost Overruns due to Non-Competition

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $58.9 million to RAYTHEON COMPANY. FOREBODY,GUIDED MIS

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 $58.9 million.

What is the period of performance?

Start: 2009-12-18. End: 2013-06-30.

What is Raytheon Company's track record with the Department of Defense for similar missile component contracts?

Raytheon Company, now part of RTX, has a long and extensive history of contracting with the Department of Defense, particularly in the area of missile systems and components. They are a major defense contractor known for producing a wide range of advanced weaponry, including air-to-air missiles, surface-to-air missiles, and associated guidance and control systems. Their track record typically involves large, complex contracts, often awarded through competitive processes but also through sole-source or limited competition avenues when specific technological expertise or existing system integration is required. Analyzing their past performance on similar 'Other Guided Missile and Space Vehicle Parts' contracts would involve reviewing contract awards, delivery performance, quality metrics, and any past disputes or contract modifications. Given their established position, it's likely they have a substantial portfolio of related work, though specific details for this $58.8M contract would require deeper database analysis.

How does the $58.8 million award compare to other 'Other Guided Missile and Space Vehicle Parts' contracts awarded by the DoD?

The $58.8 million award for 'Other Guided Missile and Space Vehicle Parts' by the Department of the Army falls into a significant but not exceptionally large category for major defense procurements. Contracts in this specific sub-sector can range from a few million dollars for specialized components or upgrades to hundreds of millions or even billions for complete missile systems or large-scale production runs. This particular award suggests a substantial procurement of specific parts, likely for a particular missile program or a fleet-wide sustainment effort. To benchmark effectively, one would need to compare it against contracts with similar Product Service Codes (PSCs) or North American Industry Classification System (NAICS) codes, looking at the average award values, contract durations, and the number of bidders for comparable items. Without that granular comparison, it's difficult to definitively state if this represents a particularly high or low value, but it signifies a considerable investment in missile component manufacturing.

What are the primary risks associated with a 'NOT COMPETED' contract of this magnitude?

The primary risks associated with a 'NOT COMPETED' contract of $58.8 million are centered around cost and competition. Firstly, the lack of competition means the government may not have achieved the lowest possible price, potentially leading to overspending. The justification for not competing is crucial; if it's based on proprietary technology or unique capabilities, the risk might be mitigated, but if it's due to convenience or lack of market research, the risk of inflated costs increases. Secondly, it can stifle innovation by not encouraging new entrants or alternative solutions. Thirdly, it can create a perception of favoritism or lack of transparency, potentially undermining public trust. Finally, over-reliance on non-competed contracts can weaken the overall defense industrial base's competitive landscape, making future procurements potentially more expensive and less efficient. Robust oversight and clear, justifiable reasons for non-competition are essential to mitigate these risks.

What does the contract duration of 1290 days imply about the program's stability and the nature of the components?

A contract duration of 1290 days (approximately 3.5 years) for missile components suggests a program that requires sustained production, integration, or sustainment activities rather than a one-off delivery. This extended period implies that the components are likely critical to an ongoing operational system or a long-term production plan. It allows the contractor, Raytheon Company, to establish efficient production lines, manage supply chains effectively, and potentially achieve economies of scale over time. For the government, it provides supply chain stability and predictability for essential parts, reducing the risk of shortages. Such durations are common for major defense systems where development, testing, and fielding phases are lengthy, and ongoing support is paramount. It also indicates that the components are not subject to rapid obsolescence, suggesting they are part of a mature or strategically important technology.

How does the 'Other Guided Missile and Space Vehicle Parts and Auxiliary Equipment Manufacturing' NAICS code typically perform in terms of government contracting?

The NAICS code 'Other Guided Missile and Space Vehicle Parts and Auxiliary Equipment Manufacturing' (likely 336419) represents a highly specialized and critical segment of the defense industrial base. Companies operating under this code are typically involved in producing components that are essential for the functioning of complex missile and space systems. Government contracting within this sector is characterized by high technical requirements, stringent quality control, and often long-term relationships between contractors and agencies like the Department of Defense. Awards can be substantial due to the high value and complexity of the end products. Competition can be limited due to the specialized nature of the manufacturing processes and the need for specific technical expertise, often leading to sole-source or limited-competition awards. Performance metrics often focus on reliability, precision, and adherence to strict military specifications. This sector is vital for national security, and government spending reflects its strategic importance.

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

Solicitation ID: W31P4Q09R0193

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

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: $59,214,670

Exercised Options: $59,214,670

Current Obligation: $58,864,670

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline