DoD awards Raytheon $24.9M for Patriot fuzes to Japan, raising concerns over sole-source procurement
Contract Overview
Contract Amount: $24,885,296 ($24.9M)
Contractor: Raytheon Company
Awarding Agency: Department of Defense
Start Date: 2011-08-01
End Date: 2017-07-31
Contract Duration: 2,191 days
Daily Burn Rate: $11.4K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: FIRM FIXED PRICE
Sector: Defense
Official Description: (PREDOMINANT) 9 NEW AND 27 UPGRADED PATRIOT FUZES FOR THE COUNTRY OF JAPAN.
Place of Performance
Location: ANDOVER, ESSEX County, MASSACHUSETTS, 01810
Plain-Language Summary
Department of Defense obligated $24.9 million to RAYTHEON COMPANY for work described as: (PREDOMINANT) 9 NEW AND 27 UPGRADED PATRIOT FUZES FOR THE COUNTRY OF JAPAN. Key points: 1. High value contract for critical defense components. 2. Sole-source award to Raytheon limits competitive pricing. 3. Potential risk in reliance on a single supplier for essential munitions. 4. Spending falls within the 'Other Guided Missile and Space Vehicle Parts' manufacturing sector.
Value Assessment
Rating: questionable
The contract value of $24.9 million for 36 fuzes (9 new, 27 upgraded) appears high on a per-unit basis, especially given the lack of competition. Benchmarking against similar sole-source procurements for advanced munitions components is difficult but suggests potential overpricing.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was awarded on a sole-source basis, meaning only Raytheon Company was solicited. This significantly limits price discovery and competition, potentially leading to higher costs for taxpayers compared to a fully competed procurement.
Taxpayer Impact: The sole-source nature of this award may result in higher costs for the U.S. taxpayer, as competitive pressures that typically drive down prices were absent.
Public Impact
Taxpayers may be paying a premium due to the lack of competition. Ensuring the long-term availability and affordability of critical defense components is vital. The U.S. government's reliance on sole-source contracts for specialized defense items warrants scrutiny.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source procurement
- Lack of price competition
- Potential for inflated costs
Positive Signals
- Awarded to a known, capable supplier
- Supports a key U.S. ally
Sector Analysis
This contract falls under the 'Other Guided Missile and Space Vehicle Parts and Auxiliary Equipment Manufacturing' sector. Spending in this niche area is often characterized by high R&D costs and limited suppliers, making sole-source awards more common but still requiring careful justification.
Small Business Impact
The contract was awarded to Raytheon Company, a large defense contractor. There is no indication that small businesses were involved in this specific procurement, either as prime contractors or significant subcontractors.
Oversight & Accountability
While the Department of the Army awarded the contract, the lack of competition raises questions about the oversight applied to ensure fair and reasonable pricing. Further review of the justification for the sole-source award is recommended.
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 lacks competitive pricing.
- Potential for inflated costs due to limited competition.
- Reliance on a single supplier for critical defense components.
- Limited transparency in price justification.
Tags
other-guided-missile-and-space-vehicle-p, department-of-defense, ma, definitive-contract, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $24.9 million to RAYTHEON COMPANY. (PREDOMINANT) 9 NEW AND 27 UPGRADED PATRIOT FUZES FOR THE COUNTRY OF JAPAN.
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 $24.9 million.
What is the period of performance?
Start: 2011-08-01. End: 2017-07-31.
What was the specific justification provided by the Department of the Army for awarding this contract on a sole-source basis to Raytheon Company, and was this justification adequately vetted?
The justification for sole-source procurement typically centers on unique capabilities, proprietary technology, or urgent needs where only one source can fulfill the requirement. For this contract, the Army would need to demonstrate why only Raytheon could provide these specific Patriot fuzes, especially considering the long lead times and specialized nature of missile components. Adequate vetting would involve independent cost analysis and a thorough review of alternative solutions.
How does the per-unit cost of these Patriot fuzes compare to similar components procured competitively or through other allied nations' defense programs?
Without access to specific cost data and competitive benchmarks for advanced munitions components, a precise comparison is difficult. However, sole-source contracts inherently lack the downward price pressure of competition. If comparable fuzes were available through competitive bidding or if allied nations secured similar items at lower prices, it would indicate potential overpayment on this contract, highlighting a risk to taxpayer value.
What is the long-term strategic risk associated with relying on a single supplier for critical components like Patriot fuzes, particularly for a key ally like Japan?
The long-term strategic risk involves potential supply chain disruptions, price escalations due to vendor monopoly, and reduced innovation. If Raytheon faces production issues or decides to significantly increase prices, both the U.S. and Japan could face shortages or unexpected cost increases. This dependence also limits flexibility in sourcing and potentially hinders the development of alternative or improved technologies from other manufacturers.
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: W31P4Q11R0018
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: $24,885,296
Exercised Options: $24,885,296
Current Obligation: $24,885,296
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2011-08-01
Current End Date: 2017-07-31
Potential End Date: 2017-07-31 12:07:00
Last Modified: 2018-10-22
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