Raytheon Company awarded $44.9M for PAVEWAY II production, including computer and air foil groups

Contract Overview

Contract Amount: $44,868,665 ($44.9M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2017-09-12

End Date: 2019-09-11

Contract Duration: 729 days

Daily Burn Rate: $61.5K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: PAVEWAY II PRODUCTION UNITS, TO INCLUDE COMPUTER CONTROL GROUPS AND AIR FOIL GROUPS -10, -12, AND -16.

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $44.9 million to RAYTHEON COMPANY for work described as: PAVEWAY II PRODUCTION UNITS, TO INCLUDE COMPUTER CONTROL GROUPS AND AIR FOIL GROUPS -10, -12, AND -16. Key points: 1. Contract value of $44.9M for PAVEWAY II production components. 2. Awarded to Raytheon Company, a major defense contractor. 3. Delivery order under an existing contract, indicating potential for follow-on work. 4. Firm Fixed Price contract type suggests price certainty for the government. 5. Contract duration of 729 days. 6. No small business set-aside, indicating potential for large business prime performance.

Value Assessment

Rating: good

The contract value of $44.9M for PAVEWAY II production components appears reasonable given the nature of defense manufacturing. Benchmarking against similar production runs for complex electronic and mechanical assemblies would provide a more precise value-for-money assessment. The firm fixed price structure helps mitigate cost overruns for the government, but the specific profit margins within the fixed price are not publicly detailed.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, suggesting that multiple vendors had the opportunity to bid. The presence of two bids (no: 2) indicates a moderate level of competition for this specific delivery order. While not a large number of bidders, it suggests that the market is not entirely concentrated and that Raytheon was selected from a pool of qualified offerors.

Taxpayer Impact: Full and open competition, even with a limited number of bidders, generally leads to better price discovery and potentially lower costs for taxpayers compared to sole-source awards.

Public Impact

The Department of the Air Force is the primary beneficiary, receiving critical components for the PAVEWAY II system. This contract supports the production of essential hardware for a widely used precision-guided munitions system. The contract is being performed in Arizona, contributing to the local economy and workforce in that state. The production of these components likely supports a skilled manufacturing and engineering workforce within Raytheon.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition (2 bidders) may not have driven the absolute lowest price.
Reliance on a single prime contractor for production could create future dependency.
Firm Fixed Price contracts can sometimes disincentivize cost-saving innovations by the contractor if not structured with performance incentives.

Positive Signals

Awarded through full and open competition, ensuring a broad opportunity for qualified vendors.
Firm Fixed Price contract provides cost certainty for the government.
Delivery order structure suggests an established relationship and potentially streamlined execution.
Performance in Arizona may indicate a stable, experienced manufacturing base.

Sector Analysis

The PAVEWAY II system is a key component in the defense sector, specifically within munitions manufacturing. This contract falls under the broader category of defense electronics and weapon systems production. The market for such specialized components is typically dominated by a few large defense contractors with the necessary technical expertise and security clearances. Spending in this area is driven by military readiness requirements and the ongoing need for advanced munitions.

Small Business Impact

This contract was not set aside for small businesses, and there is no indication of small business subcontracting requirements in the provided data. This suggests that the prime contract was awarded to a large business, and any subcontracting opportunities would be at the discretion of Raytheon. The impact on the small business ecosystem is likely minimal for this specific award, as it does not appear to be designed to foster small business participation.

Oversight & Accountability

As a delivery order under an existing contract, oversight is likely managed through the contracting officer's representative (COR) and the contracting activity within the Department of the Air Force. Transparency is provided through contract award databases like FPDS. Accountability is maintained through the firm fixed price terms and the potential for future contract modifications or disputes. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Precision-Guided Munitions Production
Air Force Weapon Systems Procurement
Defense Electronics Manufacturing
Raytheon Company Contracts
PAVEWAY Series Munitions

Risk Flags

Limited Competition
Potential for Cost Overruns (inherent risk in FFP for complex items)
Supply Chain Dependencies

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $44.9 million to RAYTHEON COMPANY. PAVEWAY II PRODUCTION UNITS, TO INCLUDE COMPUTER CONTROL GROUPS AND AIR FOIL GROUPS -10, -12, AND -16.

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 $44.9 million.

What is the period of performance?

Start: 2017-09-12. End: 2019-09-11.

What is the historical spending trend for PAVEWAY II production components awarded by the Department of Defense?

Analyzing historical spending for PAVEWAY II production components requires a deep dive into contract databases over several fiscal years. While this specific award is for $44.9M, understanding the trend involves looking at the total obligated amounts, number of contracts, and average award values for similar items. For instance, if spending has been consistently high, it indicates sustained demand for the system. Conversely, a declining trend might suggest obsolescence or a shift to newer technologies. Without access to a comprehensive historical dataset for this specific component line, it's difficult to provide precise figures. However, the PAVEWAY system has been a long-standing and critical part of the Air Force's arsenal, suggesting a generally stable to increasing demand, punctuated by specific production runs like this one.

How does the number of bidders (2) on this contract compare to similar defense production contracts?

A competition with two bidders, as seen in this PAVEWAY II production contract, is not uncommon in the defense sector, particularly for specialized systems where the number of qualified manufacturers is limited. However, it represents a moderate level of competition. Many large-scale defense procurements, especially for complex weapon systems or components with high barriers to entry (e.g., specialized manufacturing capabilities, security clearances, existing production lines), might see only a handful of bidders, sometimes even just one if it's a sole-source situation. Conversely, simpler or more commoditized defense items could attract a dozen or more bids. Therefore, two bidders suggest that while the competition was not wide open, it was sufficient to avoid a sole-source scenario, likely providing some leverage for the government in price negotiation.

What are the potential risks associated with a firm fixed price contract for munitions components?

Firm Fixed Price (FFP) contracts are generally favored by the government for their cost certainty. However, for complex munitions components, there are potential risks. One primary risk is that the contractor, Raytheon in this case, might be incentivized to cut corners on quality or testing to maximize profit if the fixed price was set too low or if profit margins are tight. While quality control is inherent in defense contracts, the pressure to meet a fixed price can exacerbate this. Another risk is that unforeseen production challenges or material cost increases could significantly erode the contractor's profit, potentially leading to requests for contract changes or, in extreme cases, impacting delivery schedules or contractor stability. The government also loses the opportunity to share in any cost savings if the contractor becomes exceptionally efficient.

What is Raytheon Company's track record with PAVEWAY II or similar munitions systems?

Raytheon Company has a long and extensive track record as a prime contractor for numerous defense systems, including the PAVEWAY series of munitions. They are a major defense industrial base supplier known for producing a wide array of missiles, bombs, and guidance kits. Their involvement with PAVEWAY II production is consistent with their established capabilities in this domain. Historically, Raytheon has demonstrated the ability to deliver complex defense hardware, often under challenging production schedules and specifications. While specific performance metrics for every contract are not always public, their continued selection for significant production runs like this one suggests a generally positive performance history and a strong relationship with the Department of Defense for these types of systems.

How does this contract's value compare to the overall annual spending on ammunition (except small arms) by the Department of the Air Force?

The National Defense Industrial Association (NDIA) and other defense industry analysis groups provide insights into overall spending categories. The 'Ammunition (except Small Arms)' category is a significant portion of the Air Force's budget. A single contract of $44.9M for PAVEWAY II production components, while substantial, represents a fraction of the total annual spending within this broad category. For context, the Air Force's total budget often runs into the tens or hundreds of billions of dollars, with significant allocations for aircraft, personnel, and operations. Ammunition procurement is a critical but distinct line item. This $44.9M award is likely one of many contracts supporting various types of munitions, indicating that while important, it is part of a larger, more diverse spending portfolio for the Air Force's ordnance needs.

Industry Classification

NAICS: Manufacturing › Other Fabricated Metal Product Manufacturing › Ammunition (except Small Arms) Manufacturing

Product/Service Code: AMMUNITION AND EXPLOSIVES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: RTX Corp

Address: 1151 E HERMANS RD, TUCSON, AZ, 85756

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $44,868,665

Exercised Options: $44,868,665

Current Obligation: $44,868,665

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: FA821311D0008

IDV Type: IDC

Timeline