Raytheon Company awarded $51.6M contract for guided missile manufacturing, a sole-source award

Contract Overview

Contract Amount: $51,567,496 ($51.6M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2012-12-18

End Date: 2016-09-30

Contract Duration: 1,382 days

Daily Burn Rate: $37.3K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: CONTRACT AWARD

Place of Performance

Location: ANDOVER, ESSEX County, MASSACHUSETTS, 01810

State: Massachusetts Government Spending

Plain-Language Summary

Department of Defense obligated $51.6 million to RAYTHEON COMPANY for work described as: CONTRACT AWARD Key points: 1. This contract represents a significant investment in guided missile and space vehicle manufacturing capabilities. 2. The firm-fixed-price structure suggests a clear understanding of project scope and cost expectations. 3. The duration of the contract (1382 days) indicates a long-term need for these specialized manufacturing services. 4. Awarded to a single vendor, this contract bypasses competitive bidding, raising questions about potential cost efficiencies. 5. The absence of small business participation flags a potential area for future consideration in similar procurements.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging without comparable sole-source awards for similar guided missile systems. The firm-fixed-price nature provides some cost certainty, but the lack of competition prevents a direct comparison of pricing against market alternatives. Without a competitive process, it's difficult to definitively assess if the government received the best possible value for the $51.6 million expenditure.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. This approach is typically used when only one vendor possesses the necessary capabilities, technology, or security clearances. The lack of competition limits the government's ability to leverage market forces to drive down prices and ensure the most cost-effective solution.

Taxpayer Impact: Sole-source awards mean taxpayers do not benefit from the price reductions that can arise from competitive bidding. This can lead to higher overall costs for the government and, consequently, for taxpayers.

Public Impact

The primary beneficiaries are the Department of the Army, which receives critical missile systems for national defense. The contract supports the production of guided missiles and related space vehicles, essential for military operations. The manufacturing activities are likely concentrated in Massachusetts, where the contractor is based, potentially impacting the local workforce and economy. This award contributes to maintaining and advancing the United States' capabilities in missile technology and defense.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may have resulted in a higher price than a competed award.
Sole-source awards can limit opportunities for innovation from a broader range of suppliers.
Absence of small business participation could be a missed opportunity for economic inclusion.

Positive Signals

Firm-fixed-price contract provides cost certainty for the government.
Long contract duration suggests a sustained and critical need for the product.
Award to a known entity (Raytheon) may indicate a reliance on established expertise and reliability.

Sector Analysis

The guided missile and space vehicle manufacturing sector is a highly specialized and critical component of the defense industrial base. This industry is characterized by high barriers to entry due to complex technology, stringent quality control, and significant R&D investment. Spending in this sector is heavily influenced by national security priorities and geopolitical factors. Comparable spending benchmarks are difficult to establish due to the proprietary nature of many missile systems and the unique requirements of defense contracts.

Small Business Impact

This contract was not set aside for small businesses, nor does it appear to have specific subcontracting requirements for small businesses mentioned in the provided data. The sole-source nature of the award further limits the direct inclusion of small businesses in this specific procurement. This could represent a missed opportunity to engage the small business industrial base in critical defense manufacturing, although larger prime contractors often utilize small businesses in their broader supply chains.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and program management offices. Accountability measures are inherent in the firm-fixed-price structure, which obligates the contractor to deliver within the agreed-upon cost. Transparency is limited due to the sole-source nature and the classified aspects often associated with defense procurement. Inspector General jurisdiction would apply to investigations of fraud, waste, or abuse.

Related Government Programs

Guided Missile Manufacturing
Space Vehicle Manufacturing
Department of Defense Procurement
Army Weapon Systems
Sole-Source Contracts

Risk Flags

Sole-source award
Lack of competition
No small business participation specified

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $51.6 million to RAYTHEON COMPANY. CONTRACT 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 $51.6 million.

What is the period of performance?

Start: 2012-12-18. End: 2016-09-30.

What is Raytheon Company's track record with the Department of Defense, particularly in missile systems?

Raytheon Company, now part of RTX Corporation, has a long and extensive history as a major defense contractor for the U.S. Department of Defense. They are a primary developer and manufacturer of a wide array of missile systems, including air-to-air, surface-to-air, and land-attack missiles. Their track record includes numerous successful awards and deliveries of critical defense hardware. However, like many large defense contractors, they have also faced scrutiny regarding contract costs, performance issues on specific programs, and the implications of sole-source awards. Analyzing their broader portfolio and historical performance data would provide a more comprehensive view of their capabilities and reliability in fulfilling complex defense manufacturing contracts.

How does the $51.6 million award compare to other guided missile manufacturing contracts awarded by the DoD?

The $51.6 million award to Raytheon Company for guided missile and space vehicle manufacturing is a substantial sum, but its relative value depends heavily on the specific type and quantity of missiles being produced. The defense industry sees contracts ranging from tens of millions to billions of dollars for missile systems. For instance, contracts for advanced fighter jet missiles might be in the tens of millions, while programs for large strategic missile systems or extensive production runs could easily exceed hundreds of millions or even billions. Without knowing the exact nature of the 'guided missile and space vehicle' covered by this specific contract, a direct comparison is difficult. However, it falls within the typical range for significant, but not necessarily program-defining, production or development awards in this specialized sector.

What are the primary risks associated with a sole-source contract of this magnitude in the defense sector?

The primary risks associated with a sole-source contract of this magnitude in the defense sector include potential overpricing due to the lack of competitive pressure, reduced incentive for innovation from the contractor, and a lack of transparency in the procurement process. Taxpayers may bear a higher cost than if the contract had been competed. Furthermore, reliance on a single source can create vulnerabilities in the supply chain and reduce flexibility if the contractor faces production issues or strategic shifts. While sole-source awards are sometimes justified by unique capabilities or urgent needs, they necessitate robust government oversight to mitigate these inherent risks and ensure fair pricing and adequate performance.

What is the typical performance context for guided missile manufacturing contracts awarded by the Department of the Army?

Performance context for guided missile manufacturing contracts awarded by the Department of the Army is typically characterized by stringent quality control, adherence to strict technical specifications, and demanding delivery schedules. These systems are critical for national security, meaning failure is not an option. Contractors are expected to meet rigorous testing and validation requirements, often involving extensive government oversight and acceptance testing. Performance is measured not only by on-time delivery and cost adherence (especially in fixed-price contracts) but also by the reliability, accuracy, and effectiveness of the manufactured missiles in operational environments. The Army often employs performance metrics tied to mission success and system readiness.

How has federal spending in the 'Guided Missile and Space Vehicle Manufacturing' (NAICS 336414) sector trended over the past decade?

Federal spending in the 'Guided Missile and Space Vehicle Manufacturing' sector (NAICS 336414) has generally remained robust, reflecting ongoing national security needs and technological advancements. While specific year-over-year fluctuations occur based on defense budgets, geopolitical events, and the lifecycle of major weapon systems, the overall trend indicates sustained investment. This sector is a critical component of defense spending, and demand is driven by modernization programs, replacement of aging inventory, and the development of new capabilities. Data from sources like the U.S. Census Bureau or specialized defense analytics firms would show that while overall defense budgets may shift, the allocation to advanced weapons systems, including missiles, tends to be a priority, ensuring consistent, albeit variable, spending in this area.

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: W31P4Q12R0001

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: $51,567,496

Exercised Options: $51,567,496

Current Obligation: $51,567,496

Subaward Activity

Number of Subawards: 1

Total Subaward Amount: $69,138

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline