Department of the Army awards $11.6M Javelin missile contract to Raytheon/Lockheed Martin JV, a sole-source procurement

Contract Overview

Contract Amount: $11,649,989 ($11.6M)

Contractor: Raytheon/Lockheed Martin Javelin JV

Awarding Agency: Department of Defense

Start Date: 2001-06-28

End Date: 2003-07-31

Contract Duration: 763 days

Daily Burn Rate: $15.3K/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, 85734

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $11.6 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 incentivize contractor performance but also carries inherent cost risks. 2. The Javelin missile system is a critical defense asset, indicating a high level of national security importance for this procurement. 3. The sole-source nature of this award warrants scrutiny regarding the absence of competitive bidding and potential impacts on pricing. 4. The contract duration of approximately 763 days suggests a significant, ongoing need for the Javelin system's sustainment or production. 5. The procurement is managed by the Defense Contract Management Agency (DCMA), indicating established oversight for this defense-related acquisition.

Value Assessment

Rating: fair

As a sole-source award for a specialized defense system, direct price comparisons are challenging. The cost-plus award fee structure allows for contractor reimbursement of allowable costs plus a fee that may be adjusted based on performance. While this can drive efficiency, it also means the final cost is not fixed upfront. Benchmarking value would require detailed cost breakdowns and comparison to historical Javelin production or similar advanced missile system contracts, which are not publicly available in this dataset.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple potential suppliers. This typically occurs when a specific contractor possesses unique capabilities, intellectual property, or when urgency dictates a direct award. The lack of competition limits the government's ability to leverage market forces to achieve the lowest possible price and may indicate a reliance on a single source for this critical defense technology.

Taxpayer Impact: Taxpayers may face higher costs due to the absence of competitive pressure. Without competing bids, there is less assurance that the price reflects the most economical option available in the market.

Public Impact

The primary beneficiaries are the U.S. Army warfighters who receive advanced anti-tank missile capabilities. The contract supports the production and sustainment of the Javelin weapon system, a key component of ground combat readiness. The geographic impact is primarily within Arizona, where the contractor is located, potentially supporting local jobs and the defense industrial base. Workforce implications include employment for engineers, technicians, and manufacturing personnel involved in the production and support of the Javelin system.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source procurement limits price competition, potentially leading to higher costs for taxpayers.
Cost-plus award fee contracts can lead to cost overruns if not rigorously managed.
Reliance on a single source for critical defense technology poses supply chain risks.
Limited public data on performance metrics makes it difficult to assess the true value for money.

Positive Signals

The Javelin system is a proven and highly effective weapon, ensuring critical warfighting capability.
The award fee structure incentivizes contractor performance, potentially leading to higher quality and timely delivery.
The contractor is a joint venture of established defense giants (Raytheon and Lockheed Martin), suggesting strong technical expertise and production capacity.
The contract is managed by the DCMA, indicating established oversight processes are in place.

Sector Analysis

The Javelin Joint Venture operates within the defense manufacturing sector, specifically focusing on guided missile and space vehicle manufacturing. This is a highly specialized and technologically advanced segment of the aerospace and defense industry, characterized by significant R&D investment, long product development cycles, and substantial government procurement. The market is dominated by a few large, established defense contractors due to the high barriers to entry. Spending in this sector is driven by national security requirements and geopolitical factors.

Small Business Impact

This contract does not appear to involve a small business set-aside, as indicated by the 'sb' field being false. The prime contractor is a joint venture of two large corporations. While large prime contractors are often required to subcontract a portion of their work to small businesses, the specific subcontracting plan and its impact on the small business ecosystem are not detailed in the provided data. Without this information, it's difficult to assess the extent to which small businesses will benefit from this particular award.

Oversight & Accountability

Oversight for this contract is provided by the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor performance and compliance. The contract type (Cost Plus Award Fee) necessitates close monitoring of costs and performance against established criteria to manage the award fee. Transparency is limited due to the sole-source nature and the proprietary cost data associated with defense contracts. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Guided Missile Manufacturing
Defense Procurement
Army Weapon Systems
Joint Ventures in Defense

Risk Flags

Sole-source procurement
Cost-plus contract type
Lack of detailed performance metrics in public data

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $11.6 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 $11.6 million.

What is the period of performance?

Start: 2001-06-28. End: 2003-07-31.

What is the historical spending trend for the Javelin missile system under this contractor or similar contracts?

Analyzing historical spending trends for the Javelin missile system is crucial for understanding long-term investment and identifying potential cost escalation. While this specific contract data shows an award of approximately $11.6 million with a duration of 763 days (roughly two years), it represents a snapshot. To assess trends, one would need to examine prior contracts awarded to the Javelin Joint Venture (Raytheon/Lockheed Martin) for the same system, looking at the total value, contract types (e.g., fixed-price, cost-plus), and duration over several years. Comparing these figures against inflation rates and the number of units procured would reveal whether costs per unit are increasing, decreasing, or remaining stable. Furthermore, benchmarking against spending on comparable anti-tank missile systems from other nations or alternative technologies could provide context on the overall market dynamics and the relative cost-effectiveness of the Javelin program.

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

The Cost-Plus Award Fee (CPAF) contract type used for this Javelin procurement is designed to provide flexibility and incentivize performance, but it presents different cost control dynamics compared to other common defense contract types. In a CPAF contract, the contractor is reimbursed for all allowable costs incurred, plus a base fee and an award fee. The award fee is contingent upon the government's assessment of the contractor's performance against pre-defined criteria. This structure aims to motivate contractors to exceed minimum performance standards. However, compared to Firm-Fixed-Price (FFP) contracts, CPAF offers less upfront cost certainty for the government, as the final price is not fixed. FFP contracts place the cost risk primarily on the contractor, encouraging them to manage costs tightly to maximize profit. Incentive Fee contracts (CPIF) are similar to CPAF but often have more formulaic fee adjustments based on cost and performance targets. For complex, high-technology systems like the Javelin, where requirements might evolve or technical challenges are significant, CPAF can be advantageous for ensuring quality and timely delivery. However, it requires robust government oversight to manage the award fee determination and prevent potential cost overruns, making it potentially less cost-effective than FFP if performance targets are not well-defined or if oversight is weak.

What are the specific performance metrics used to determine the 'award fee' in this contract, and how are they measured?

The provided data does not specify the exact performance metrics used to determine the award fee for this particular Javelin missile contract. In a Cost-Plus Award Fee (CPAF) structure, these metrics are typically defined in the contract's Statement of Work (SOW) and are crucial for the government's evaluation of contractor performance. Common metrics in defense procurement can include on-time delivery of milestones, adherence to quality standards (e.g., defect rates, reliability), technical performance achievements (e.g., exceeding specified system capabilities), responsiveness to government requests, and effective program management. The government's contracting officer or a designated representative typically assesses the contractor's performance against these metrics periodically (e.g., monthly or quarterly) and assigns a rating, which then determines the amount of the award fee earned. Without access to the contract details, it's impossible to know the precise criteria and measurement methodologies applied in this case, which are essential for understanding how taxpayer funds are being used to incentivize specific outcomes.

Given the sole-source nature, what mechanisms are in place to ensure the contractor remains competitive and efficient over the contract's lifecycle?

Even in sole-source procurements, several mechanisms are intended to ensure contractor competitiveness and efficiency. Firstly, the Cost-Plus Award Fee (CPAF) structure itself includes an 'award' component tied to performance, incentivizing the contractor to perform well to maximize their fee. Secondly, the government typically conducts thorough cost and technical analyses to establish a "should cost" or "will cost" estimate, providing a benchmark against which the contractor's proposed costs are evaluated. Price negotiation, even with a sole source, still occurs based on these analyses. Furthermore, the government may require the contractor to provide detailed cost breakdowns and justifications. Long-term, the threat of future competition, even if not immediate, can encourage efficiency. If the government anticipates needing more systems later, they may structure follow-on contracts to encourage competitive pricing or explore alternative solutions. Finally, robust program management and oversight by agencies like the DCMA are critical for monitoring progress, identifying potential inefficiencies, and ensuring the contractor meets contractual obligations.

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

The Javelin is a critical component of the U.S. Army's anti-armor capabilities, designed as a "fire-and-forget" shoulder-launched missile system effective against a wide range of armored threats, including tanks and fortifications. Its strategic importance lies in providing infantry and light units with a portable, highly effective means to neutralize enemy armor, thereby enhancing battlefield survivability and tactical flexibility. This contract, awarded to the Javelin Joint Venture (Raytheon/Lockheed Martin), directly supports the Army's strategy by ensuring the continued production, sustainment, and potentially modernization of this vital weapon system. By procuring Javelin missiles and associated support, the Army maintains its readiness to counter armored threats in various operational environments, fulfilling a core mission requirement. The sole-source nature suggests a continued reliance on this specific, proven technology to meet immediate and projected defense needs.

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

Solicitation ID: DAAH0101R0106

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, Federally Funded Research and Development Corp, Manufacturer of Goods, Not Designated a Small Business, Partnership or Limited Liability Partnership, Special Designations, U.S.-Owned Business

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