Raytheon Company awarded $77.5M for guided missiles, with significant prior contract value

Contract Overview

Contract Amount: $77,468,927 ($77.5M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2009-03-18

End Date: 2014-06-30

Contract Duration: 1,930 days

Daily Burn Rate: $40.1K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: GUIDED MISSILE,SURFACE ATTACK

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $77.5 million to RAYTHEON COMPANY for work described as: GUIDED MISSILE,SURFACE ATTACK Key points: 1. Contract value represents a substantial investment in advanced missile technology. 2. Competition was full and open after exclusion of sources, suggesting a deliberate procurement process. 3. The contract duration of 1930 days indicates a long-term need for these munitions. 4. The fixed-price contract type shifts performance risk to the contractor. 5. The geographic location of performance in Arizona may have implications for regional economic impact. 6. This award falls within the broader defense manufacturing sector, characterized by high technological barriers to entry.

Value Assessment

Rating: good

The total award of $77.5 million for guided missiles appears reasonable given the nature of defense procurement. While specific per-unit cost benchmarks are not provided, the contract's fixed-price nature suggests that the government has negotiated a set price for the deliverables. Benchmarking against similar surface-attack missile contracts would provide further insight into value for money, but the scale and technological sophistication of guided missiles typically command significant investment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded under 'Full and Open Competition After Exclusion of Sources.' This indicates that while the competition was intended to be open, certain sources were excluded, possibly due to specific technical requirements, security clearances, or prior performance issues. The exact number of bidders is not specified, but the 'exclusion of sources' clause suggests a potentially narrowed field compared to a purely unrestricted open competition.

Taxpayer Impact: The exclusion of certain sources, even in an otherwise open competition, could potentially limit price discovery and may mean taxpayers did not benefit from the widest possible range of competitive offers.

Public Impact

The primary beneficiaries are the Department of Defense, specifically the Air Force, receiving advanced surface-attack guided missiles. These missiles are critical for air superiority and offensive strike capabilities. Performance in Arizona may provide economic benefits and job opportunities within the state's defense industrial base. The contract supports the manufacturing workforce involved in the production of complex defense systems.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if unforeseen technical challenges arise during production.
Dependence on a single contractor (Raytheon) for a critical defense capability.
Risk associated with the exclusion of sources potentially limiting competitive pricing.

Positive Signals

Raytheon's established track record in defense contracting.
Fixed-price contract structure incentivizes contractor efficiency.
Long contract duration allows for stable production planning and potential economies of scale.

Sector Analysis

This contract falls within the Guided Missile and Space Vehicle Manufacturing sector, a highly specialized segment of the aerospace and defense industry. This sector is characterized by significant research and development investment, stringent quality control, and long production cycles. Market size is substantial, driven by global defense spending. Comparable spending benchmarks would likely involve other major defense contractors producing similar advanced munitions for various military branches.

Small Business Impact

The data indicates this contract was not set aside for small businesses (ss: false, sb: false). Therefore, there are no direct subcontracting implications specifically tied to small business set-asides for this award. However, Raytheon, as a large prime contractor, may engage small businesses as subcontractors for components or services, contributing indirectly to the small business ecosystem.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and acquisition regulations, managed by the Department of the Air Force. Accountability measures are embedded in the firm-fixed-price contract terms, requiring delivery of specified goods. Transparency is generally maintained through contract award databases, though specific performance details may be sensitive. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Guided Missile Manufacturing
Space Vehicle Manufacturing
Defense Procurement
Air Force Munitions
Surface Attack Weapons Systems

Risk Flags

Competition Limited by Source Exclusion
Potential for Cost Growth in Fixed-Price Contracts
Long-Term Program Dependency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $77.5 million to RAYTHEON COMPANY. GUIDED MISSILE,SURFACE ATTACK

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 Air Force).

What is the total obligated amount?

The obligated amount is $77.5 million.

What is the period of performance?

Start: 2009-03-18. End: 2014-06-30.

What is Raytheon's historical performance and track record with the Department of Defense, particularly on similar missile contracts?

Raytheon Company has a long and extensive history as a major defense contractor for the U.S. Department of Defense. They are a primary producer of various missile systems, including air-to-ground, air-to-air, and surface-to-surface munitions. Historically, Raytheon has been awarded numerous large-value contracts for missile production, upgrades, and associated services across different military branches. While specific performance metrics for every contract are not publicly detailed, their continued success in securing significant awards suggests a generally positive track record in meeting DoD requirements. However, like many large defense contractors, they may have faced scrutiny or performance issues on specific programs, which are often detailed in Government Accountability Office (GAO) reports or Inspector General audits if they rise to a significant level.

How does the awarded amount of $77.5 million compare to previous or similar guided missile contracts awarded by the Air Force?

The $77.5 million award for guided missiles is a substantial sum, indicative of the high cost associated with advanced defense technology. To benchmark this value effectively, one would need to compare it against contracts for similar types of surface-attack missiles, considering factors like quantity, technological sophistication, and contract duration. For instance, contracts for larger quantities or more advanced variants of missiles like the Tomahawk (though primarily a Navy weapon, it shares technological lineage) or specialized air-launched munitions could range from tens to hundreds of millions of dollars. The 'prior contract value' mentioned in the headline, if significant, would suggest this is part of a larger, ongoing program, making the $77.5 million a segment of a much larger overall investment. Without specific comparable contract data, it's difficult to definitively state if this is high or low, but it aligns with the typical scale of major missile system procurements.

What are the primary risks associated with this specific contract, considering its fixed-price nature and the 'exclusion of sources' competition type?

The primary risks associated with this contract stem from its contract type and competition structure. A firm-fixed-price (FFP) contract shifts the financial risk of cost overruns to the contractor, Raytheon. While this protects the government from unexpected cost increases, it could incentivize the contractor to cut corners on quality or schedule if they encounter unforeseen difficulties, though quality assurance measures are in place to mitigate this. The 'Full and Open Competition After Exclusion of Sources' is a more nuanced risk. While it implies competition, the exclusion of certain sources means the government may not have received bids from all potentially capable suppliers. This could lead to a less competitive pricing environment than a truly unrestricted competition, potentially resulting in a higher price for taxpayers than might otherwise have been achieved. The risk is that the excluded sources might have offered a more competitive bid or a superior technical solution.

How effective is the Department of the Air Force in managing long-term, high-value contracts for complex weapon systems like guided missiles?

The Department of the Air Force, like other major DoD components, employs a range of program management strategies and oversight mechanisms to manage long-term, high-value contracts for complex weapon systems. These include program baseline management, Earned Value Management (EVM) systems, regular program reviews, and technical oversight. The effectiveness can vary significantly depending on the specific program, the program office's expertise, and the contractor's performance. For major systems, the Air Force often utilizes dedicated program executive offices (PEOs) staffed with experienced acquisition professionals. Success is typically measured by meeting cost, schedule, and performance requirements. While many programs are delivered successfully, the history of defense acquisition is also marked by programs that have experienced significant cost growth, schedule delays, or performance shortfalls, indicating that effective management is a continuous challenge requiring robust oversight and adaptability.

What are the historical spending patterns for guided missiles and related defense articles by the Department of Defense over the last decade?

Over the last decade, spending by the Department of Defense on guided missiles and related defense articles has remained consistently high, reflecting their critical role in modern warfare and ongoing geopolitical tensions. Annual spending typically runs into the tens of billions of dollars across all services. Trends have included modernization of existing platforms, development of new capabilities (e.g., hypersonic missiles, loitering munitions), and sustainment of legacy systems. While specific figures fluctuate based on budget allocations, strategic priorities, and global threats, the demand for advanced missile technology has generally seen sustained or increasing investment. This particular contract for surface-attack missiles fits within this broader pattern of significant and ongoing investment in offensive air-launched munitions.

Industry Classification

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

Product/Service Code: GUIDED MISSLES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

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

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Federally Funded Research and Development Corp, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $77,468,927

Exercised Options: $77,468,927

Current Obligation: $77,468,927

Contract Characteristics

Cost or Pricing Data: NO

Timeline