Raytheon Company awarded $164.6M for guided missiles, with a significant portion for surface attack capabilities

Contract Overview

Contract Amount: $164,609,881 ($164.6M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2009-12-22

End Date: 2012-09-30

Contract Duration: 1,013 days

Daily Burn Rate: $162.5K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

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 $164.6 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. Focus on surface attack missiles indicates a strategic need for naval and ground-based offensive capabilities. 3. The firm-fixed-price structure aims to control costs and provide predictability. 4. Contract duration spans over three years, suggesting a sustained requirement. 5. Awarded by the Department of Defense, highlighting its critical role in national security. 6. The North American Industry Classification System (NAICS) code 336414 points to specialized manufacturing.

Value Assessment

Rating: good

The contract value of $164.6 million for guided missiles appears reasonable given the specialized nature of the technology and the supplier's expertise. Without specific benchmarks for comparable surface attack missile systems, a direct value-for-money assessment is challenging. However, the firm-fixed-price contract type suggests an effort to manage costs effectively. The duration of the contract (over three years) also implies a significant and ongoing need for these capabilities, which can sometimes lead to better pricing through economies of scale.

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 vendors. This typically occurs when a specific contractor possesses unique capabilities, proprietary technology, or is the sole provider of a critical component or system. While sole-source awards can ensure access to specialized expertise, they may also limit price competition and potentially lead to higher costs for the government compared to a fully competed contract.

Taxpayer Impact: Sole-source awards can reduce opportunities for competitive bidding, potentially resulting in less favorable pricing for taxpayers. The absence of competition means the government relies on the awarded contractor's pricing without the pressure of alternative offers.

Public Impact

The primary beneficiaries are the U.S. military branches requiring advanced surface attack guided missiles for naval and ground operations. The contract delivers critical offensive weapon systems essential for national defense and power projection. Geographic impact is primarily within the United States, with potential deployment to operational theaters worldwide. Workforce implications include skilled manufacturing jobs in the aerospace and defense sector, particularly in Arizona where the contractor is based.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially impacting cost-effectiveness.
Lack of competition may reduce transparency in pricing mechanisms.
Long-term sustainment and upgrade costs for these complex systems are not detailed in this award.

Positive Signals

Award to a known, experienced defense contractor with a track record in missile manufacturing.
Firm-fixed-price contract provides cost certainty for this specific procurement.
Focus on advanced surface attack capabilities addresses a key military requirement.

Sector Analysis

The aerospace and defense sector, specifically the guided missile manufacturing sub-sector, is characterized by high technological complexity, significant R&D investment, and stringent quality control requirements. This contract falls within the 'Guided Missile and Space Vehicle Manufacturing' industry (NAICS 336414). The market is often dominated by a few large, specialized contractors due to the barriers to entry. Spending in this area is driven by national security priorities and geopolitical factors, with government contracts forming the bulk of revenue for these firms.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Furthermore, the prime contractor, Raytheon Company, is a large aerospace and defense firm. While large prime contractors are often required to subcontract a portion of their work to small businesses, the specifics of such subcontracting plans are not detailed in this award information. The absence of a direct set-aside means opportunities for small businesses are likely through the prime contractor's subcontracting efforts rather than direct competition for the prime contract itself.

Oversight & Accountability

Oversight for this Department of Defense contract would typically be managed by the Defense Contract Management Agency (DCMA), which is responsible for ensuring contract compliance, quality, and delivery. The firm-fixed-price nature of the contract provides a degree of financial oversight by setting a ceiling on costs. Transparency is generally maintained through contract reporting mechanisms, though specific details of program performance and spending may be subject to classification depending on the nature of the guided missile system. Inspector General (IG) investigations could be initiated if any fraud, waste, or abuse is suspected.

Related Government Programs

Air-to-Ground Missiles
Anti-Ship Missiles
Surface-to-Surface Missiles
Missile Defense Systems
Naval Warfare Systems
Precision Guided Munitions

Risk Flags

Sole-source award
Potential for cost overruns
Long-term sustainment costs unclear

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $164.6 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 (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $164.6 million.

What is the period of performance?

Start: 2009-12-22. End: 2012-09-30.

What is Raytheon Company's track record with similar guided missile contracts awarded by the Department of Defense?

Raytheon Company, now part of RTX Corporation, has a long and extensive history of developing and producing guided missiles for the U.S. military and international allies. They are a primary contractor for numerous missile systems, including air-to-air, air-to-ground, and surface-to-air missiles. Their portfolio includes well-known systems like the Tomahawk cruise missile, Standard Missile family, and Patriot air defense system. Historical data indicates Raytheon consistently secures large-value contracts in this domain, reflecting their established expertise and production capabilities. Performance on these contracts varies, with some programs experiencing delays or cost overruns, while others are delivered successfully and on time. Analyzing specific past contracts for surface attack missiles would provide a more granular understanding of their performance trends, including delivery schedules, quality control, and adherence to budget.

How does the $164.6 million contract value compare to other surface attack missile procurements?

The $164.6 million contract value for guided missiles, specifically for surface attack capabilities, is a significant but not extraordinary figure within the context of major defense procurements. Surface attack missiles, such as cruise missiles or advanced anti-ship missiles, are complex and costly systems. For comparison, individual contracts for large quantities of such missiles, or for the development of entirely new platforms, can range from hundreds of millions to billions of dollars. For instance, procurements of the Tomahawk missile or development programs for next-generation systems often exceed this amount. This particular award likely represents a specific production run, sustainment effort, or a component of a larger overall program. Benchmarking requires identifying contracts for similar missile types, quantities, and contract types (e.g., firm-fixed-price) from the same or similar time periods.

What are the primary risks associated with this sole-source guided missile contract?

The primary risks associated with this sole-source guided missile contract stem from the lack of competition. Firstly, there's a risk of 'sole-source price creep,' where the absence of competitive pressure could lead to higher-than-necessary costs for the government over the contract's life. Secondly, there's a dependency risk; the government becomes reliant on Raytheon for this specific capability, potentially limiting flexibility if performance issues arise or if alternative technologies emerge. Thirdly, without competitive benchmarking, assessing the true value-for-money can be difficult. Finally, sole-source awards can sometimes mask underlying issues with program management or technical execution that might be more readily identified in a competitive environment. Ensuring robust oversight and clear performance metrics is crucial to mitigate these risks.

What is the expected program effectiveness and impact of these surface attack guided missiles?

The expected program effectiveness of these surface attack guided missiles is to provide the Department of Defense with a critical offensive capability for engaging targets from naval platforms or ground-based launchers. These weapons are designed for precision strikes against high-value land or sea targets, contributing to force projection, sea control, and land combat operations. Their effectiveness is measured by factors such as range, accuracy (circular error probable), warhead yield, survivability against countermeasures, and reliability. The impact is strategic, enhancing the U.S. military's ability to deter adversaries, respond to crises, and achieve mission objectives in complex operational environments. Successful deployment and operation of these missiles are vital for maintaining military superiority and ensuring national security.

How has federal spending on guided missiles, particularly surface attack types, trended historically?

Federal spending on guided missiles, including surface attack variants, has historically been substantial and subject to fluctuations based on geopolitical events, technological advancements, and defense budget priorities. The Department of Defense is the primary purchaser. Spending tends to increase during periods of heightened international tension or perceived threats, driving demand for advanced offensive and defensive missile systems. Technological evolution, such as the development of hypersonic missiles, stealth capabilities, and improved guidance systems, also influences spending patterns as the military seeks to maintain a technological edge. While specific figures for 'surface attack' missiles alone can be difficult to isolate from broader missile procurement data, overall spending in this category represents a significant and consistent portion of the defense budget, often in the tens of billions of dollars annually when considering all types of missiles and related programs.

Industry Classification

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

Product/Service Code: GUIDED MISSLES

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

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: $164,609,881

Exercised Options: $164,609,881

Current Obligation: $164,609,881

Contract Characteristics

Cost or Pricing Data: YES

Timeline