Raytheon Company awarded $37.2M for Stinger Missile engineering, a sole-source contract for cruise missile defense

Contract Overview

Contract Amount: $37,196,275 ($37.2M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2013-02-27

End Date: 2018-12-31

Contract Duration: 2,133 days

Daily Burn Rate: $17.4K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: NEW ENGINEERING SERVICES TO SUPPORT STINGER MISSILE FOR CRUISE MISSILE DEFENCE SYSTEMS (CMDS)

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $37.2 million to RAYTHEON COMPANY for work described as: NEW ENGINEERING SERVICES TO SUPPORT STINGER MISSILE FOR CRUISE MISSILE DEFENCE SYSTEMS (CMDS) Key points: 1. Contract awarded on a sole-source basis, limiting competitive pricing benefits. 2. Long contract duration of over 5 years suggests a sustained need for specialized services. 3. The contract is a definitive contract, indicating a firm commitment for goods or services. 4. Fixed-price contract type aims to control costs for the government. 5. The contract supports critical defense systems, specifically cruise missile defense. 6. The awardee, Raytheon Company, is a major defense contractor with extensive experience.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging due to its sole-source nature and specific technical requirements for Stinger Missile support. Without competitive bids, it's difficult to ascertain if the $37.2 million represents optimal value for money. However, the firm-fixed-price structure provides some cost certainty for the Department of the Army. The long duration of over five years suggests a significant and ongoing need, which could justify the investment if the services are critical and effectively delivered.

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 typically occurs when only one vendor possesses the necessary specialized knowledge, technology, or capability to fulfill the requirement. While this ensures the specific expertise is utilized, it bypasses the price discovery benefits that come from a competitive bidding process, potentially leading to higher costs for the government.

Taxpayer Impact: Sole-source awards mean taxpayers do not benefit from the cost savings that can arise from competitive bidding, potentially resulting in a higher overall expenditure for this critical defense support.

Public Impact

The primary beneficiaries are the Department of the Army and the broader U.S. military, ensuring the continued operational readiness of Stinger Missile systems for cruise missile defense. Services delivered include essential engineering support, crucial for maintaining and enhancing the effectiveness of a key defensive weapon system. The geographic impact is primarily within the United States, with potential implications for defense industry jobs in Arizona where the contractor is located. Workforce implications include the retention of highly skilled engineers and technical personnel within Raytheon Company, contributing to the specialized defense industrial base.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated pricing.
Sole-source nature limits opportunities for new entrants or innovative solutions.
Long-term reliance on a single contractor can create vendor lock-in.

Positive Signals

Awardee has established expertise in missile systems.
Firm-fixed-price contract provides cost predictability.
Contract supports a critical national defense capability.

Sector Analysis

This contract falls within the Guided Missile and Space Vehicle 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 long product development cycles. Spending in this area is driven by national security requirements and technological advancements. Comparable spending benchmarks are difficult to establish due to the unique nature of missile system support, but it represents a critical investment in maintaining the effectiveness of defensive assets.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Furthermore, the 'ss' (small business set-aside) is also false. This suggests that the primary contract was not specifically targeted towards small businesses, and there is no explicit indication of subcontracting requirements for small businesses within the provided data. The focus is on a large, sole-source award to a major defense contractor.

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 incentivizes the contractor to meet performance requirements within the agreed-upon budget. Transparency is limited due to the sole-source nature of the award, but contract details and performance reports would likely be available through official channels and potentially subject to Inspector General review if performance issues arise.

Related Government Programs

Stinger Missile Production
Cruise Missile Defense Systems
Air Defense Systems
Missile Manufacturing
Defense Engineering Services

Risk Flags

Sole-source award limits price competition.
Potential for cost overruns if scope is not tightly managed.
Long contract duration requires sustained oversight.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $37.2 million to RAYTHEON COMPANY. NEW ENGINEERING SERVICES TO SUPPORT STINGER MISSILE FOR CRUISE MISSILE DEFENCE SYSTEMS (CMDS)

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 $37.2 million.

What is the period of performance?

Start: 2013-02-27. End: 2018-12-31.

What is Raytheon Company's track record with similar sole-source missile defense contracts?

Raytheon Company, now part of RTX, has a long and extensive history of working with the Department of Defense on various missile systems, including the Stinger. As a major defense contractor, they frequently receive sole-source or limited-competition awards for specialized engineering, sustainment, and upgrade services due to their proprietary knowledge, existing infrastructure, and established production lines. Their track record generally involves delivering complex systems and support, though like any large contractor, specific contract performance can vary. For sole-source awards, the government relies heavily on past performance evaluations and technical expertise assessments to justify the selection of Raytheon for critical needs like the Stinger missile support.

How does the $37.2 million value compare to other Stinger missile support contracts?

Direct comparison of the $37.2 million value to other Stinger missile support contracts is challenging without access to detailed historical contract data, especially considering the sole-source nature of this award. However, the Stinger is a mature but critical weapon system, and engineering support contracts for such systems often span several years and involve significant sums due to the specialized expertise required. The value reflects the ongoing need for sustainment, upgrades, and technical assistance to maintain the missile's readiness and effectiveness against evolving threats. Without competitive bids, it's difficult to definitively state if this represents a 'good' or 'fair' market price, but it aligns with the typical investment required for maintaining advanced defense capabilities.

What are the primary risks associated with this sole-source contract?

The primary risk associated with this sole-source contract is the potential for higher costs due to the lack of competitive pressure. Without multiple bidders vying for the contract, Raytheon may have less incentive to offer the most competitive pricing. Another risk is vendor lock-in, where the government becomes overly reliant on a single provider, potentially limiting future flexibility or access to alternative solutions. There's also the inherent risk of performance issues, although this is mitigated by the firm-fixed-price structure and the contractor's established reputation. Ensuring adequate government oversight is crucial to manage these risks effectively.

How effective is the firm-fixed-price contract type in managing costs for this specific service?

The firm-fixed-price (FFP) contract type is generally considered effective for managing costs when the scope of work is well-defined and the risks of cost overruns are relatively low or can be reasonably estimated. For engineering services like those supporting the Stinger missile, FFP provides cost certainty to the government, as the contractor assumes the risk of cost overruns. This incentivizes the contractor to perform efficiently. However, if unforeseen technical challenges arise that significantly increase the contractor's costs, the FFP structure might lead to disputes or a reluctance to incorporate necessary changes unless a contract modification is negotiated, potentially impacting schedule or scope.

What are the historical spending patterns for Stinger missile engineering support?

Historical spending patterns for Stinger missile engineering support would likely show consistent investment over the years, reflecting the system's long service life and its continued importance in air defense. Awards for such support often occur through multi-year contracts or a series of task orders under larger indefinite-delivery/indefinite-quantity (IDIQ) vehicles. Given the sole-source nature of this particular $37.2 million award spanning over five years, it represents a significant, albeit potentially isolated, expenditure for a specific period. Broader historical analysis would reveal fluctuations based on modernization programs, threat assessments, and overall defense budget allocations for missile defense.

What oversight mechanisms are in place for this sole-source contract?

Oversight for this sole-source contract would primarily be managed by the Department of the Army's contracting officer and the program office responsible for the Stinger missile system. These entities are responsible for monitoring contract performance, ensuring compliance with terms and conditions, and approving payments. The firm-fixed-price nature of the contract shifts some risk to the contractor, but government oversight is still critical to verify deliverables, track progress, and ensure the services meet the required technical specifications. The Defense Contract Management Agency (DCMA) may also play a role in overseeing contractor performance and facilities.

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: W31P4Q11R0086

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Rockwell Collins Australia PTY Limited

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: $131,642,509

Exercised Options: $37,196,275

Current Obligation: $37,196,275

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline