DoD's $310M Raytheon Contract for Missile Sustainment: A Cost Plus Fixed Fee Award
Contract Overview
Contract Amount: $310,058,179 ($310.1M)
Contractor: Raytheon Company
Awarding Agency: Department of Defense
Start Date: 2008-04-01
End Date: 2013-03-01
Contract Duration: 1,795 days
Daily Burn Rate: $172.7K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: COST PLUS FIXED FEE
Sector: Defense
Official Description: SUSTAINMENT
Place of Performance
Location: ANDOVER, ESSEX County, MASSACHUSETTS, 01810
Plain-Language Summary
Department of Defense obligated $310.1 million to RAYTHEON COMPANY for work described as: SUSTAINMENT Key points: 1. Significant contract value of over $310 million awarded to Raytheon Company. 2. The contract falls under Guided Missile and Space Vehicle Manufacturing, a specialized sector. 3. Awarded as a 'NOT COMPETED' definitive contract, raising questions about competition. 4. The Cost Plus Fixed Fee (CPFF) pricing structure can incentivize cost overruns.
Value Assessment
Rating: questionable
The Cost Plus Fixed Fee (CPFF) structure, while allowing flexibility, can lead to higher costs if not managed tightly. Without competitive bidding, it's difficult to benchmark pricing against market rates.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was not competed, indicating a sole-source award. This limits price discovery and potentially leads to higher costs for the government compared to a competitive process.
Taxpayer Impact: The lack of competition may result in taxpayers paying a premium for missile sustainment services.
Public Impact
Taxpayers may be overpaying due to the absence of competitive bidding. The long duration (5 years) of the contract could lock in potentially inefficient pricing. Dependence on a single contractor for critical missile sustainment raises national security concerns if performance falters.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Lack of competition
- Cost-plus contract type
- Long contract duration
Positive Signals
- Awarded to a major defense contractor with established capabilities
Sector Analysis
This contract is within the Defense sector, specifically for guided missile and space vehicle manufacturing and sustainment. Spending in this area is critical for national security, but often involves complex, high-value, and specialized systems where competition can be challenging.
Small Business Impact
The contract was awarded to Raytheon Company, a large prime contractor. There is no indication of subcontracting opportunities for small businesses within the provided data.
Oversight & Accountability
The 'NOT COMPETED' designation suggests potential limitations in the pre-award oversight process regarding market research and justification for sole-sourcing. Post-award oversight would be crucial to manage costs under the CPFF structure.
Related Government Programs
- Guided Missile and Space Vehicle Manufacturing
- Department of Defense Contracting
- Defense Contract Management Agency Programs
Risk Flags
- Lack of competitive bidding
- Cost-plus contract type may inflate costs
- Potential for contractor inefficiency without competitive pressure
- Long contract duration limits flexibility
- Sole-source award raises concerns about fair pricing
Tags
guided-missile-and-space-vehicle-manufac, department-of-defense, ma, definitive-contract, 100m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $310.1 million to RAYTHEON COMPANY. SUSTAINMENT
Who is the contractor on this award?
The obligated recipient is RAYTHEON COMPANY.
Which agency awarded this contract?
Awarding agency: Department of Defense (Defense Contract Management Agency).
What is the total obligated amount?
The obligated amount is $310.1 million.
What is the period of performance?
Start: 2008-04-01. End: 2013-03-01.
What was the justification for not competing this significant missile sustainment contract?
The justification for not competing this contract is not provided in the data. Typically, sole-source awards require extensive documentation demonstrating that only one responsible source can provide the required supplies or services. This could be due to unique technical requirements, proprietary technology, or urgent needs where competition is not feasible or in the government's best interest.
How does the Cost Plus Fixed Fee (CPFF) structure impact the risk of cost overruns for this contract?
The CPFF structure shifts a significant portion of the cost risk to the government. While the contractor receives a fixed fee, they are reimbursed for all allowable costs. This can incentivize contractors to incur higher costs, as their fee remains constant, potentially leading to cost overruns if not rigorously monitored and controlled by the contracting agency.
What is the potential long-term effectiveness and value for money given the sole-source nature and CPFF terms?
The long-term effectiveness and value for money are questionable due to the sole-source award and CPFF terms. Without competition, there's less pressure on the contractor to innovate or reduce costs. The CPFF structure, while providing flexibility, can lead to higher overall spending. Effective contract management and performance monitoring are critical to ensure the government receives adequate value.
Industry Classification
NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Guided Missile and Space Vehicle Manufacturing
Product/Service Code: RESEARCH AND DEVELOPMENT › DEFENSE (OTHER) R&D
Competition & Pricing
Extent Competed: NOT COMPETED
Solicitation Procedures: ONLY ONE SOURCE
Offers Received: 1
Pricing Type: COST PLUS FIXED FEE (U)
Evaluated Preference: NONE
Contractor Details
Parent Company: Rockwell Collins Australia PTY Limited
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: $341,019,376
Exercised Options: $318,144,788
Current Obligation: $310,058,179
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: NO
Timeline
Start Date: 2008-04-01
Current End Date: 2013-03-01
Potential End Date: 2013-03-01 00:00:00
Last Modified: 2025-12-31
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