DoD's $46.6M Javelin Missile Contract Awarded to Raytheon/Lockheed Martin JV Without Competition

Contract Overview

Contract Amount: $46,598,619 ($46.6M)

Contractor: Raytheon/Lockheed Martin Javelin JV

Awarding Agency: Department of Defense

Start Date: 2001-01-16

End Date: 2010-02-10

Contract Duration: 3,312 days

Daily Burn Rate: $14.1K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS AWARD FEE

Sector: Defense

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $46.6 million to RAYTHEON/LOCKHEED MARTIN JAVELIN JV for work described as: Key points: 1. The contract was awarded on a cost-plus award fee basis, which can lead to higher costs if not managed closely. 2. The sole-source nature of this award limits price discovery and potentially reduces competitive pressure on the contractor. 3. The duration of the contract (over 9 years) suggests a long-term need for these missile systems. 4. The contract was awarded to a joint venture of two major defense contractors, indicating a concentrated market for this specific technology. 5. The absence of small business set-aside provisions means opportunities for smaller firms in this supply chain are not guaranteed. 6. The contract's value, while significant, needs to be assessed against the evolving threat landscape and technological advancements in missile defense.

Value Assessment

Rating: fair

The contract's cost-plus award fee structure necessitates robust oversight to ensure value for money. Without competitive benchmarking, it is difficult to definitively assess if the pricing is optimal. However, given the specialized nature of guided missile manufacturing and the involvement of established prime contractors, the costs may reflect the complexity and R&D investment required. Further analysis would require access to detailed cost breakdowns and performance metrics.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating that the Department of Defense likely determined that only one source, the Raytheon/Lockheed Martin Javelin JV, could fulfill the requirement. This could be due to proprietary technology, unique capabilities, or a strategic decision to consolidate production. The lack of competition means there was no opportunity for other firms to bid, potentially leading to higher prices than if a competitive process had been employed.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive bidding. Without alternative offers, the government had limited leverage to negotiate the lowest possible price for these critical missile systems.

Public Impact

The primary beneficiaries are the U.S. Army, receiving advanced anti-tank missile systems essential for ground combat operations. The contract ensures the continued production and supply of Javelin missiles, a key component of U.S. military readiness. The contract's performance is based in Arizona, contributing to the regional economy and defense industrial base in that state. The manufacturing and assembly of these complex weapons systems support a specialized workforce within the defense sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially increasing costs for taxpayers.
Cost-plus award fee structure requires diligent oversight to prevent cost overruns.
Long contract duration could lead to complacency or reduced incentive for innovation if not actively managed.
Concentration of production with a single joint venture may create supply chain vulnerabilities.
Lack of explicit small business participation may limit broader economic benefits.

Positive Signals

Award to established joint venture suggests access to mature technology and production capabilities.
Long-term contract provides supply chain stability for a critical defense asset.
Focus on a specific, proven weapon system ensures immediate operational capability.
Potential for high-quality production due to experienced contractors.

Sector Analysis

The guided missile and space vehicle manufacturing sector is a highly specialized and capital-intensive segment of the aerospace and defense industry. It is characterized by significant R&D investment, stringent quality control, and long production cycles. Major players often engage in joint ventures or strategic alliances to share costs and leverage expertise. Spending in this sector is driven by national security requirements and the need for advanced weapon systems. Comparable spending benchmarks would typically involve other major missile system procurements by the DoD.

Small Business Impact

This contract does not appear to have included specific small business set-aside provisions. As a sole-source award to a joint venture of large defense contractors, direct subcontracting opportunities for small businesses are not guaranteed and would depend on the internal procurement strategies of Raytheon and Lockheed Martin. The absence of a set-aside means that the direct economic impact on the small business defense ecosystem from this specific contract is likely limited.

Oversight & Accountability

Oversight for this contract would fall under the Department of Defense's contracting and program management structures. Given the cost-plus award fee nature, rigorous financial and performance monitoring by the Army Contracting Command and potentially the Defense Contract Audit Agency (DCAA) would be expected. Transparency would be facilitated through contract reporting mechanisms, though detailed cost breakdowns might be considered proprietary. Inspector General oversight would apply to any allegations of fraud, waste, or abuse.

Related Government Programs

Other Javelin Missile Production Contracts
Advanced Anti-Tank Weapon Systems
Department of Defense Missile Procurement
Raytheon Defense Contracts
Lockheed Martin Defense Contracts

Risk Flags

Sole-source award may limit price competition.
Cost-plus contract type requires diligent oversight to manage costs.
Long contract duration increases risk of technological obsolescence.
Potential for contractor complacency over extended period.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $46.6 million to RAYTHEON/LOCKHEED MARTIN JAVELIN JV. See the official description on USAspending.

Who is the contractor on this award?

The obligated recipient is RAYTHEON/LOCKHEED MARTIN JAVELIN JV.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Army).

What is the total obligated amount?

The obligated amount is $46.6 million.

What is the period of performance?

Start: 2001-01-16. End: 2010-02-10.

What is the historical spending trend for Javelin missile systems under this contract and similar awards?

The provided data indicates a single award to the Raytheon/Lockheed Martin Javelin JV with a total value of $46,598,619.23, spanning from January 16, 2001, to February 10, 2010. This represents a specific period of procurement for the Javelin system. To understand historical spending trends, one would need to examine other contract awards for the Javelin missile, both before and after this period, as well as contracts for other similar anti-tank missile systems. Analyzing the annual spending under this specific contract (approximately $5.18 million per year on average) provides a baseline, but a comprehensive trend analysis requires a broader dataset encompassing the entire lifecycle of the Javelin program and its predecessors/competitors within the DoD's budget allocations for guided missile manufacturing.

How does the cost-plus award fee (CPAF) structure compare to other contract types for similar defense systems?

The Cost-Plus Award Fee (CPAF) structure used for this Javelin missile contract is common in defense procurement for complex systems where defining precise requirements or performance outcomes upfront is challenging. Unlike fixed-price contracts, CPAF allows the contractor to recover allowable costs plus a fee that is composed of a base fee and an award amount determined by the government based on performance against defined criteria. This contrasts with Firm-Fixed-Price (FFP) contracts, which offer greater cost certainty to the government but can incentivize contractors to cut corners on quality if not carefully monitored. Cost-Plus-Incentive-Fee (CPIF) contracts also incorporate incentives but often focus more directly on cost targets. CPAF provides flexibility but places a significant burden on the government to establish objective performance metrics and diligently evaluate contractor performance to ensure fair award fees are paid, thereby controlling overall costs.

What are the key performance indicators (KPIs) used to determine the 'award' portion of the fee in this CPAF contract?

The specific Key Performance Indicators (KPIs) used to determine the award fee for this particular Javelin missile contract are not detailed in the provided summary data. However, in Cost-Plus Award Fee (CPAF) contracts, KPIs typically revolve around factors such as meeting or exceeding delivery schedules, achieving specified quality standards (e.g., defect rates, reliability), demonstrating effective cost management relative to projections, successful completion of testing phases, and responsiveness to government requests or changes. The government's contracting officer and technical team would establish a performance evaluation plan outlining these criteria and the associated weighting or scoring mechanism. The 'award' fee is then calculated based on the contractor's performance against these pre-defined metrics, aiming to incentivize superior performance beyond basic contract requirements.

What is the strategic importance of the Javelin missile system to the Department of the Army, and how does this contract support that?

The Javelin is a critical shoulder-fired, fire-and-forget anti-tank guided missile system, providing infantry and light combat units with a significant capability to engage and defeat main battle tanks, armored personnel carriers, and other hardened targets. Its relatively lightweight design and ease of use make it highly valuable for dismounted troops. This contract, awarded to the specialized joint venture of Raytheon and Lockheed Martin, directly supports the Department of the Army by ensuring the continued production and availability of this essential weapon system. The long duration and substantial value indicate a sustained commitment to equipping forces with Javelin missiles, underscoring its strategic importance in modern ground warfare scenarios where countering armored threats is paramount.

Given the sole-source nature, what mechanisms are in place to ensure the contractor maintains competitive pricing and efficiency over the contract's lifespan?

While the initial award was sole-source, mechanisms to ensure ongoing competitive pricing and efficiency in a Cost-Plus Award Fee (CPAF) contract typically involve robust government oversight and performance evaluation. The 'award fee' component is crucial here; it incentivizes the contractor to perform exceptionally well, including managing costs effectively, to earn a higher fee. The government would closely monitor cost submissions, conduct audits through agencies like the Defense Contract Audit Agency (DCAA), and benchmark costs against historical data or industry standards where possible. Furthermore, the contract likely includes clauses for equitable adjustments if market conditions change significantly. Regular performance reviews and clear communication channels are vital to ensure the contractor remains focused on delivering value and efficiency, even without direct price competition from other bidders.

What are the potential risks associated with a long-duration contract (over 9 years) for a weapon system like the Javelin?

Long-duration contracts, such as this over 9-year award for Javelin missiles, present several potential risks. Firstly, technological obsolescence is a concern; weapon systems can become outdated relatively quickly due to rapid advancements in threat capabilities or countermeasures. The government risks procuring systems that may have a reduced lifespan of effectiveness. Secondly, cost escalation is a risk, especially with CPAF structures, as inflation, material cost fluctuations, and potential inefficiencies can increase the total expenditure over time. Thirdly, contractor complacency can set in, reducing the incentive to innovate or optimize production processes if they feel secure due to the long-term commitment. Finally, a prolonged sole-source arrangement can reduce market competition for future upgrades or replacements, potentially leading to higher prices down the line.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Guided Missile and Space Vehicle Manufacturing

Product/Service Code: RESEARCH AND DEVELOPMENT › C – National Defense R&D Services

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS AWARD FEE (R)

Evaluated Preference: NONE

Contractor Details

Parent Company: Raytheon Company (UEI: 001339159)

Address: 1151 E HERMANS RD BLDG 80, TUCSON, AZ, 90

Business Categories: Category Business, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Contract Characteristics

Cost or Pricing Data: NO

Timeline