Raytheon Company awarded $46.3M for National Advanced Surface to Air Missile System, a sole-source contract

Contract Overview

Contract Amount: $46,350,049 ($46.4M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2020-05-21

End Date: 2024-09-18

Contract Duration: 1,581 days

Daily Burn Rate: $29.3K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: NATIONAL ADVANCED SURFACE TO AIR MISSILE SYSTEM

Place of Performance

Location: HUNTSVILLE, MADISON County, ALABAMA, 35898

State: Alabama Government Spending

Plain-Language Summary

Department of Defense obligated $46.4 million to RAYTHEON COMPANY for work described as: NATIONAL ADVANCED SURFACE TO AIR MISSILE SYSTEM Key points: 1. Contract awarded for engineering services related to a critical missile defense system. 2. Sole-source award indicates limited competition, potentially impacting price negotiation. 3. Long contract duration of over 4 years suggests a significant, ongoing requirement. 4. The contract is a delivery order under a larger, unspecified contract vehicle. 5. Fixed-price contract type shifts some performance risk to the contractor. 6. The award is for engineering services, not the direct procurement of missiles.

Value Assessment

Rating: fair

Benchmarking the value for this specific delivery order is challenging without knowing the parent contract's terms and the specific services rendered. However, the total award amount of $46.3 million for engineering services over approximately four years for a complex defense system suggests a moderate level of investment. Without comparable sole-source engineering contracts for similar advanced missile systems, a precise value-for-money assessment is difficult. The fixed-price nature of the contract provides some cost certainty, but the absence of competition raises questions about whether the most competitive pricing was achieved.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, Raytheon Company, was solicited. This approach is typically used when a unique capability or proprietary technology is required, or in situations where only one responsible source can fulfill the requirement. The lack of competition means that the government did not benefit from a bidding process that could have driven down prices or spurred innovation from multiple offerors. The justification for this sole-source award would need to be thoroughly documented by the agency.

Taxpayer Impact: Sole-source awards limit the government's ability to leverage market competition to secure the best possible prices for taxpayers. This can result in higher costs compared to a competitively bid contract.

Public Impact

The primary beneficiary is the U.S. Army, which will receive engineering services to support the National Advanced Surface to Air Missile System. These services are crucial for the continued development, sustainment, and potential upgrades of a key air defense capability. The contract's performance location in Alabama suggests potential workforce implications and economic impact within that state. The system itself is designed to protect ground forces from aerial threats, enhancing overall military operational effectiveness.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potential for cost savings.
Lack of transparency in the justification for sole-sourcing could obscure potential alternatives.
Long contract duration may not allow for reassessment of market conditions or technological advancements.
Reliance on a single contractor for critical engineering services poses a potential risk if performance issues arise.

Positive Signals

Fixed-price contract shifts some financial risk to the contractor.
Award to a known defense contractor like Raytheon suggests a level of established capability and experience.
Engineering services are essential for maintaining and improving a complex defense system.

Sector Analysis

The defense engineering services sector is characterized by high barriers to entry, specialized technical expertise, and significant government investment. Contracts often involve complex systems integration, research and development, and lifecycle support. Raytheon Company is a major player in this sector, particularly in missile defense and aerospace. This contract fits within the broader landscape of defense procurement focused on maintaining and advancing critical military capabilities, where specialized engineering support is paramount for system effectiveness and longevity.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Furthermore, the 'ss': false flag suggests it is not a small business prime award. Therefore, the direct impact on small businesses as prime contractors is likely minimal. However, Raytheon, as the prime contractor, may engage small businesses as subcontractors for specialized services or components, contributing indirectly to the small business ecosystem. The extent of subcontracting to small businesses would depend on Raytheon's procurement practices and the specific needs of the engineering services required.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Army's contracting and program management offices. The Defense Contract Management Agency (DCMA) likely provides contract administration and quality assurance. Inspector General (IG) investigations could be initiated if performance issues, fraud, or waste are suspected. Transparency regarding the sole-source justification and performance metrics would be key to assessing accountability.

Related Government Programs

Missile Defense Systems
Air Defense Systems
Advanced Weapon Systems
Engineering and Technical Services
Department of Defense Contracts

Risk Flags

Sole-source award
Lack of competition
Potential for cost growth without competitive pressure

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $46.4 million to RAYTHEON COMPANY. NATIONAL ADVANCED SURFACE TO AIR MISSILE SYSTEM

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 $46.4 million.

What is the period of performance?

Start: 2020-05-21. End: 2024-09-18.

What is the specific justification provided by the Department of the Army for awarding this contract on a sole-source basis to Raytheon Company?

The provided data does not include the specific justification for the sole-source award. Typically, sole-source contracts are awarded under specific circumstances outlined in federal acquisition regulations, such as when only one responsible source can provide the required supplies or services, or when there is a compelling urgency. For a system like the National Advanced Surface to Air Missile System, the justification likely centers on proprietary technology, unique manufacturing capabilities, or the need for specialized expertise held exclusively by Raytheon. A thorough review of the contract file and associated documentation would be necessary to ascertain the precise justification and ensure it aligns with regulatory requirements.

How does the $46.3 million award compare to historical spending on the National Advanced Surface to Air Missile System or similar engineering services contracts?

Direct comparison of this $46.3 million award to historical spending on the National Advanced Surface to Air Missile System (NASAMS) is difficult without more granular data on prior NASAMS contracts, particularly for engineering services. However, given that NASAMS is a sophisticated, multi-component air defense system, annual spending on its sustainment, upgrades, and associated engineering support can easily reach tens of millions of dollars. If this $46.3 million represents a significant portion of the system's annual engineering budget over its 4-year duration, it suggests a substantial investment. Benchmarking against other sole-source engineering contracts for comparable advanced weapon systems would provide a better context for assessing value, but such data is not readily available in the provided snippet.

What are the key performance risks associated with this sole-source contract for engineering services, and what mitigation strategies are in place?

Key performance risks for this sole-source contract include potential cost overruns if the fixed-price structure is not adequately managed, delays in service delivery impacting system readiness, and insufficient quality of engineering work. Since it's sole-source, there's also the risk that the contractor may not be as incentivized to perform efficiently as they would be in a competitive environment. Mitigation strategies typically involve robust government oversight, clear performance metrics and milestones defined in the contract, regular progress reviews, and strong contract administration by the Defense Contract Management Agency (DCMA). The fixed-price nature itself is a risk mitigation tool, placing financial accountability on the contractor. However, the effectiveness of these measures depends heavily on the government's diligence in monitoring performance.

What is Raytheon Company's track record with the Department of Defense, particularly concerning large engineering services contracts and air defense systems?

Raytheon Company, now part of RTX, has an extensive and long-standing track record as a major defense contractor for the Department of Defense (DoD). They are a primary developer and manufacturer of numerous advanced weapon systems, including various air defense platforms and missile technologies, making them a key player in this domain. Historically, Raytheon has managed numerous large-scale contracts for the DoD, encompassing research, development, production, and sustainment of complex systems. While specific performance details for every contract are not publicly detailed, their continued success in securing significant sole-source and competitive awards suggests a generally positive performance history and established trust with the DoD for delivering critical defense capabilities. Any significant performance issues would typically be reflected in contract modifications, terminations, or negative past performance reviews, which are not indicated here.

What is the anticipated impact of this contract on the workforce, particularly in Alabama where the contract is managed?

This contract is expected to have a positive impact on the workforce, particularly in Alabama, given the 'st': 'AL' and 'sn': 'ALABAMA' indicators. Raytheon Company, as the prime contractor, will likely utilize its engineering and technical staff located in Alabama to perform the services required for the National Advanced Surface to Air Missile System. This could translate to job creation or the retention of existing high-skilled engineering jobs within the state. The duration of the contract (over 4 years) suggests sustained employment opportunities. The specific number of jobs supported would depend on the scope and intensity of the engineering tasks, but it represents a significant investment in the region's defense-related technical workforce.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Rockwell Collins Australia PTY Limited

Address: 50 APPLE HILL DR, TEWKSBURY, MA, 01876

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: $46,350,049

Exercised Options: $46,350,049

Current Obligation: $46,350,049

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: W31P4Q20D0008

IDV Type: IDC

Timeline