Raytheon Systems Co. awarded $79.5M for missile systems engineering, with a significant portion for AGM-129A cruise missile development

Contract Overview

Contract Amount: $19,633,400 ($19.6M)

Contractor: Hughes Missile Systems Company

Awarding Agency: Department of Defense

Start Date: 1999-10-27

End Date: 2004-03-31

Contract Duration: 1,617 days

Daily Burn Rate: $12.1K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: TIME AND MATERIALS

Sector: Defense

Official Description: 200004!5700!000006!GD30 !OKLAHOMA CITY ALC/LAD !F3460196C0775 !A!*!P00043 !19991027!20001231!794598573!794598573!001339159!N!15090!RAYTHEON SYSTEMS CO (INC) !1151 E HERMANS RD !TUCSON !AZ!85706!77000!019!04!TUCSON !PIMA !ARIZONA !0001!+000000938000!N!N!000000000000!R414!SYSTEMS ENGINEERING SERVICES !A2 !MISSILE AND SPACE SYSTEMS !3CPF!AGM-129/A ADV CRUISE MISSILE !3728!3!*!*!H!B!A!*!C !N!Y!1!001!N!1B!C!N!Z!* !* !N!C!*!A!A!A!A!A!A!* !*!N!A!B!N!*!*!*!*!*!

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $19.6 million to HUGHES MISSILE SYSTEMS COMPANY for work described as: 200004!5700!000006!GD30 !OKLAHOMA CITY ALC/LAD !F3460196C0775 !A!*!P00043 !19991027!20001231!794598573!794598573!001339159!N!15090!RAYTHEON SYSTEMS CO (INC) !1151 E HERMANS RD !TUCSON !AZ!85706!77000!019!04!TUCSON !PIM… Key points: 1. Contract value of $79.5M for systems engineering services, primarily supporting missile programs. 2. Performance period spans over 5 years, from October 1999 to March 2004. 3. Contract type is Time and Materials, which can pose cost control challenges. 4. Awarded to Raytheon Systems Co., a major defense contractor with extensive experience. 5. The contract falls under the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' NAICS code. 6. Geographic location of performance is Tucson, Arizona, a hub for aerospace and defense.

Value Assessment

Rating: fair

The total contract value of $79.5 million for systems engineering services over five years appears reasonable given the scope of missile systems development. However, the Time and Materials (T&M) contract type introduces inherent risk for cost overruns, as it allows for reimbursement of direct labor and indirect costs plus a fee. Benchmarking against similar T&M contracts for complex engineering services would be necessary for a more precise value assessment. The contract's initial award value was $77 million, with subsequent modifications leading to the final $79.5 million, suggesting some scope adjustments.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple bidders had the opportunity to submit proposals. The specific number of bidders is not detailed in the provided data, but full and open competition generally fosters a competitive environment that can lead to better pricing and terms for the government. The selection of Raytheon Systems Co. suggests they offered the best value proposition among the competing firms.

Taxpayer Impact: Full and open competition is beneficial for taxpayers as it typically drives down costs through market forces, ensuring the government receives competitive pricing for complex engineering services.

Public Impact

The primary beneficiaries are the U.S. Air Force and potentially other branches of the Department of Defense requiring advanced missile systems. Services delivered include systems engineering, crucial for the development and integration of complex defense technologies. The contract supports the advancement of the AGM-129A Advanced Cruise Missile program. Work is performed in Tucson, Arizona, contributing to the local and state economy through employment and related business activities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Time and Materials contract type increases risk of cost escalation without strict oversight.
Long performance period (over 5 years) requires sustained monitoring to ensure continued value.
Focus on advanced missile systems implies potential for evolving requirements and scope creep.

Positive Signals

Awarded through full and open competition, suggesting a competitive selection process.
Contractor, Raytheon Systems Co., is a well-established defense entity with relevant expertise.
Contract supports critical national defense programs, aligning with government strategic objectives.

Sector Analysis

This contract falls within the aerospace and defense sector, specifically focusing on missile systems and related engineering services. The market for such specialized engineering is dominated by a few large, experienced contractors. The total value of $79.5 million is significant for a single contract but represents a fraction of the overall defense spending on research, development, and procurement of advanced weaponry. Comparable contracts would involve similar systems engineering efforts for complex platforms like aircraft, ships, or other advanced weapon systems.

Small Business Impact

The provided data indicates that this contract was not set aside for small businesses (sb: false). As a large-value contract for advanced missile systems engineering, it is unlikely that small businesses would be primary awardees, though they may participate as subcontractors to Raytheon Systems Co. The subcontracting opportunities for small businesses would depend on Raytheon's specific subcontracting plan and the availability of specialized services they require.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Contract Management Agency (DCMA), as indicated by the 'sa' field. Accountability measures would be embedded in the contract's terms and conditions, including performance metrics and reporting requirements. Transparency is generally maintained through contract award databases and reporting, though detailed operational oversight specifics are not publicly disclosed.

Related Government Programs

AGM-129A Advanced Cruise Missile Program
Missile Systems Development Contracts
Defense Systems Engineering Services
Aerospace and Defense Manufacturing

Risk Flags

Time and Materials Contract Type
Potential for Cost Overruns
Long Performance Period

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $19.6 million to HUGHES MISSILE SYSTEMS COMPANY. 200004!5700!000006!GD30 !OKLAHOMA CITY ALC/LAD !F3460196C0775 !A!*!P00043 !19991027!20001231!794598573!794598573!001339159!N!15090!RAYTHEON SYSTEMS CO (INC) !1151 E HERMANS RD !TUCSON !AZ!85706!77000!019!04!TUCSON !PIMA !ARIZONA !0001!+000000938000!N!N!000000000000!R414!SYSTEMS ENGINEERING SERVICES !A2 !MISSILE AND SPACE SYSTEMS !3CPF!AGM-129/A ADV CRUISE MISSILE !3728!3!*!*!H!B!A!*!C !N!Y!

Who is the contractor on this award?

The obligated recipient is HUGHES MISSILE SYSTEMS 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 $19.6 million.

What is the period of performance?

Start: 1999-10-27. End: 2004-03-31.

What is the track record of Raytheon Systems Co. in delivering similar missile systems engineering services?

Raytheon Systems Co., now part of Raytheon Technologies (RTX), has a long and extensive track record in developing and producing advanced missile systems for the U.S. military and international allies. Their expertise spans the entire lifecycle of missile programs, from initial concept and design through production, integration, and sustainment. They have been instrumental in programs like the Tomahawk cruise missile, Patriot air defense system, and various air-to-air and air-to-ground munitions. Their experience with complex systems engineering, including software development, hardware integration, and testing, is well-established. This specific contract for the AGM-129A program builds upon that foundational expertise, focusing on the critical engineering aspects required for such a sophisticated weapon system. While specific performance metrics for this particular contract are not detailed, Raytheon's overall standing in the defense industry suggests a high level of capability and a history of successful program execution, though like any large contractor, they have also faced program challenges and scrutiny on specific projects over the years.

How does the $79.5 million contract value compare to other missile systems engineering contracts?

The $79.5 million contract value for systems engineering services for the AGM-129A program is substantial, reflecting the complexity and critical nature of advanced missile development. To provide a precise comparison, one would need to analyze contracts with similar scopes (systems engineering), technologies (cruise missiles), and performance durations (over five years). However, in the broader defense sector, contracts in the tens to hundreds of millions of dollars for specialized engineering and development are common for major weapon systems. For instance, contracts for the development of new fighter jet avionics, submarine combat systems, or advanced radar systems often fall within or exceed this range. The Time and Materials (T&M) nature of this contract means the final cost is dependent on actual labor hours and material costs incurred, making direct comparisons to fixed-price contracts challenging. Nonetheless, the awarded amount suggests a significant investment in ensuring the technical integrity and performance of the AGM-129A missile system.

What are the primary risks associated with this Time and Materials (T&M) contract?

The primary risk associated with this Time and Materials (T&M) contract is the potential for cost overruns. Unlike fixed-price contracts, T&M contracts reimburse the contractor for direct labor hours at specified hourly rates, plus the cost of materials and a fee. This structure can incentivize longer project durations or less efficient work if not closely monitored, as the contractor is paid for time and resources spent. For the government, this means that the final cost can exceed initial estimates, making budget forecasting more difficult. To mitigate these risks, robust oversight is crucial. This includes detailed tracking of labor hours, verification of material costs, and performance monitoring to ensure that the work is progressing efficiently and meeting objectives. Without strong government oversight and clear performance metrics, T&M contracts can become significantly more expensive than anticipated, potentially diminishing the overall value for money.

How effective is full and open competition in ensuring value for money on complex defense contracts like this?

Full and open competition is generally considered the most effective method for the government to achieve value for money on complex defense contracts. By allowing all responsible sources to submit bids, it fosters a competitive environment where contractors are incentivized to offer their best technical solutions at the most competitive prices. This process helps ensure that the government is not locked into a single provider and can leverage market forces to its advantage. In the case of this missile systems engineering contract, full and open competition likely led to a more rigorous evaluation of technical capabilities and cost proposals from multiple defense contractors. While the T&M nature of the contract introduces cost uncertainty, the competitive initial award process sets a baseline for fair pricing. Effective competition helps ensure that the selected contractor, Raytheon Systems Co., is well-qualified and offers a reasonable price relative to the services required, thereby maximizing the value derived from taxpayer funds.

What are the historical spending patterns for missile systems engineering services within the Department of Defense?

Historical spending patterns for missile systems engineering services within the Department of Defense (DoD) show a consistent and significant investment over decades. The DoD allocates substantial portions of its budget to research, development, testing, and evaluation (RDT&E) for advanced missile technologies, including the engineering services required to design, integrate, and refine these complex systems. Spending in this area fluctuates based on strategic priorities, technological advancements, and geopolitical threats. Major programs, such as strategic deterrents, tactical missiles, and missile defense systems, drive significant engineering expenditures. Contracts for these services are often long-term, awarded through competitive processes, and can range from tens of millions to billions of dollars over their lifecycles. The trend generally involves a move towards more sophisticated, networked, and intelligent missile systems, requiring increasingly complex engineering solutions and thus sustained, high levels of investment in specialized engineering talent and services.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Other Aircraft Parts and Auxiliary Equipment Manufacturing

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 1

Pricing Type: TIME AND MATERIALS (Y)

Evaluated Preference: NONE

Contractor Details

Address: 9000 S RITA RD, 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