DoD awards Raytheon $37.7M for PDB-8 Kits, raising concerns about competition and taxpayer value
Contract Overview
Contract Amount: $37,724,753 ($37.7M)
Contractor: Raytheon Company
Awarding Agency: Department of Defense
Start Date: 2016-09-29
End Date: 2019-08-31
Contract Duration: 1,066 days
Daily Burn Rate: $35.4K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: FIRM FIXED PRICE
Sector: Defense
Official Description: PROCUREMENT OF PDB-8 KITS FOR US AND FMS CUSTOMERS.
Place of Performance
Location: ANDOVER, ESSEX County, MASSACHUSETTS, 01810
Plain-Language Summary
Department of Defense obligated $37.7 million to RAYTHEON COMPANY for work described as: PROCUREMENT OF PDB-8 KITS FOR US AND FMS CUSTOMERS. Key points: 1. Significant contract value of $37.7M for specialized missile components. 2. Sole-source award to Raytheon Company limits competitive pricing. 3. Potential risk associated with limited competition and long contract duration. 4. Spending falls within the Guided Missile and Space Vehicle Manufacturing sector.
Value Assessment
Rating: questionable
The contract value of $37.7M for PDB-8 kits appears high given the lack of competitive bidding. Without market analysis or comparison to similar procurements, it's difficult to ascertain if this price represents fair market value.
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 lack of competition likely prevented price discovery and may have led to a higher overall cost for the government.
Taxpayer Impact: The absence of competition raises concerns about the efficient use of taxpayer funds, as a potentially lower price may have been achievable through a competitive bidding process.
Public Impact
Taxpayers may be overpaying for essential missile components due to the sole-source nature of the contract. The long contract duration (1066 days) could lock in potentially inflated prices. Lack of transparency in pricing due to no competitive bidding process.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award
- Lack of competition
- Potential for overpricing
- Long contract duration
Positive Signals
- Essential defense procurement
- Established contractor relationship
Sector Analysis
This procurement falls under the Guided Missile and Space Vehicle Manufacturing sector, a critical area for national defense. Spending benchmarks in this specialized sector can be difficult to establish due to proprietary technologies and limited market players.
Small Business Impact
The contract was awarded to Raytheon Company, a large business. There is no indication that small businesses were involved in this specific procurement, either as prime contractors or subcontractors.
Oversight & Accountability
The sole-source nature of this award warrants further oversight to ensure the pricing is justified and that future procurements in this category are competed to maximize value.
Related Government Programs
- Guided Missile and Space Vehicle Manufacturing
- Department of Defense Contracting
- Department of the Army Programs
Risk Flags
- Sole-source award limits competition.
- Potential for inflated pricing.
- Lack of transparency in cost justification.
- Long contract duration may not reflect current market conditions.
- No small business participation noted.
Tags
guided-missile-and-space-vehicle-manufac, department-of-defense, ma, definitive-contract, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $37.7 million to RAYTHEON COMPANY. PROCUREMENT OF PDB-8 KITS FOR US AND FMS CUSTOMERS.
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 $37.7 million.
What is the period of performance?
Start: 2016-09-29. End: 2019-08-31.
What is the justification for awarding this contract on a sole-source basis, and what steps were taken to ensure fair pricing?
The justification for a sole-source award typically involves unique capabilities or proprietary technology held by a single vendor. However, without detailed documentation, it's unclear if such justification exists here. Steps to ensure fair pricing in sole-source contracts often include detailed cost analysis, benchmarking against similar items, and negotiation. The absence of competition makes these steps crucial but harder to verify externally.
What are the risks associated with procuring critical missile components through a sole-source contract with a long duration?
The primary risk is paying a premium due to the lack of competitive pressure, potentially leading to inefficient use of taxpayer funds. A long duration (1066 days) exacerbates this risk by locking in prices for an extended period, making the government vulnerable to market fluctuations or technological advancements that could offer better value. It also limits opportunities for other capable firms to enter the market.
How does this procurement contribute to the overall effectiveness of US and FMS missile defense capabilities?
The PDB-8 kits are essential components for guided missile systems, directly impacting the operational readiness and effectiveness of both US and Foreign Military Sales (FMS) customers. Ensuring a reliable supply chain for these critical parts is vital for maintaining defense capabilities. However, the procurement method's efficiency impacts the overall value for money invested in these capabilities.
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: W31P4Q16R0028
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: $37,724,754
Exercised Options: $37,724,753
Current Obligation: $37,724,753
Subaward Activity
Number of Subawards: 9
Total Subaward Amount: $24,419,540
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2016-09-29
Current End Date: 2019-08-31
Potential End Date: 2019-08-31 12:08:00
Last Modified: 2019-02-13
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