DoD Awards Raytheon $1.36B for Tube-Launched Missiles, Lacking Competition

Contract Overview

Contract Amount: $1,360,500,678 ($1.4B)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2017-09-30

End Date: 2026-08-31

Contract Duration: 3,257 days

Daily Burn Rate: $417.7K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIXED PRICE INCENTIVE

Sector: Defense

Official Description: CONTRACT IS FOR THE PROCUREMENT OF TUBE-LAUNCHED OPTICALLYTRACKED WIRELESS-GUIDED MISSILES FOR THE UNITED STATES ARMY, UNITED STATES MARINE CORPS AND FOREIGN MILITARY SALES CUSTOMERS.

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $1.36 billion to RAYTHEON COMPANY for work described as: CONTRACT IS FOR THE PROCUREMENT OF TUBE-LAUNCHED OPTICALLYTRACKED WIRELESS-GUIDED MISSILES FOR THE UNITED STATES ARMY, UNITED STATES MARINE CORPS AND FOREIGN MILITARY SALES CUSTOMERS. Key points: 1. Significant contract value of $1.36 billion for advanced missile systems. 2. Sole-source award to Raytheon Company raises concerns about price discovery. 3. Potential risks include lack of competitive pressure on pricing and innovation. 4. Spending concentrated in the Guided Missile and Space Vehicle Manufacturing sector.

Value Assessment

Rating: questionable

The contract's fixed-price incentive structure aims to control costs, but without competition, it's difficult to benchmark pricing against market alternatives. The large value suggests a need for rigorous cost analysis.

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 limits price discovery and may lead to higher costs for taxpayers as there is no competitive pressure to drive down prices.

Taxpayer Impact: The lack of competition for this substantial contract could result in taxpayers paying a premium for these missile systems.

Public Impact

Taxpayers may be overpaying for critical missile defense systems due to the absence of competition. The US Army and Marine Corps rely on these missiles, making the procurement essential but vulnerable to inflated costs. Foreign Military Sales customers are also impacted, potentially facing higher prices passed through by the DoD.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award
Lack of competition
High contract value
Long contract duration

Positive Signals

Essential defense procurement
Fixed-price incentive contract type

Sector Analysis

This contract falls within the Guided Missile and Space Vehicle Manufacturing sector, a critical area for national defense. Spending benchmarks are difficult to establish without competitive data, but the scale of this award is notable.

Small Business Impact

The contract data indicates that small businesses were not involved in this specific award, as it was a sole-source procurement with a large prime contractor. Further analysis would be needed to determine if small businesses are subcontracting opportunities.

Oversight & Accountability

The sole-source nature of this large contract warrants close oversight from the Department of Defense to ensure fair pricing and effective delivery. Accountability mechanisms should be robust given the lack of competitive pressure.

Related Government Programs

Guided Missile and Space Vehicle Manufacturing
Department of Defense Contracting
Department of the Army Programs

Risk Flags

Lack of competition may lead to inflated prices.
Sole-source award limits market-based price discovery.
Long contract duration increases exposure to cost overruns.
Potential for reduced procurement quantity due to high unit costs.
Dependence on a single supplier for critical defense assets.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $1.36 billion to RAYTHEON COMPANY. CONTRACT IS FOR THE PROCUREMENT OF TUBE-LAUNCHED OPTICALLYTRACKED WIRELESS-GUIDED MISSILES FOR THE UNITED STATES ARMY, UNITED STATES MARINE CORPS AND FOREIGN MILITARY SALES 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 $1.36 billion.

What is the period of performance?

Start: 2017-09-30. End: 2026-08-31.

What is the justification for awarding this critical missile contract on a sole-source basis, and what steps are being taken to ensure fair pricing?

The justification for a sole-source award typically involves unique capabilities or urgent needs. The Department of Defense should provide detailed documentation supporting this decision. To ensure fair pricing, robust cost analysis, independent government cost estimates, and potentially price negotiation techniques should be employed, even without direct competition.

What are the potential risks to national security or operational readiness if the cost of these missiles is significantly inflated due to the lack of competition?

Inflated costs could reduce the quantity of missiles the DoD can procure within budget, potentially impacting readiness and operational capability. It could also divert funds from other critical defense programs. Furthermore, reliance on a single supplier without competitive pressure might lead to complacency in quality or delivery timelines, posing indirect risks.

How will the effectiveness of these missiles be independently validated and ensured throughout the contract's long duration, especially without competitive benchmarks?

Effectiveness validation will rely heavily on stringent government testing, quality assurance protocols, and performance metrics defined in the contract. The DoD must maintain rigorous oversight of Raytheon's production and testing processes. Independent verification and validation (IV&V) efforts, along with post-delivery performance monitoring, are crucial to ensure the missiles meet all required specifications and operational standards.

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: W31P4Q16R0024

Offers Received: 1

Pricing Type: FIXED PRICE INCENTIVE (L)

Evaluated Preference: NONE

Contractor Details

Parent Company: RTX Corp

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: $2,394,938,812

Exercised Options: $1,470,175,969

Current Obligation: $1,360,500,678

Actual Outlays: $74,206,893

Subaward Activity

Number of Subawards: 1626

Total Subaward Amount: $2,350,520,933

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline