Raytheon awarded $63.5M for HARM missile refurbishment, a sole-source contract for critical defense assets

Contract Overview

Contract Amount: $63,482,442 ($63.5M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2024-02-07

End Date: 2025-09-30

Contract Duration: 601 days

Daily Burn Rate: $105.6K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: AGM-88B HIGH SPEED ANTI-RADIATION MISSILE (HARM) REFURBISHMENT FOR ACCRUING REPLACEMENT/EXCHANGE-IN KIND (REIK)

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $63.5 million to RAYTHEON COMPANY for work described as: AGM-88B HIGH SPEED ANTI-RADIATION MISSILE (HARM) REFURBISHMENT FOR ACCRUING REPLACEMENT/EXCHANGE-IN KIND (REIK) Key points: 1. The contract focuses on refurbishing AGM-88B missiles, ensuring operational readiness of a key anti-radiation weapon system. 2. As a sole-source award, there's a reduced opportunity for competitive pricing and potential for higher costs. 3. The duration of 601 days suggests a sustained need for maintenance and refurbishment of these specialized munitions. 4. The contract is managed by the Defense Contract Management Agency, indicating oversight of a significant defense procurement. 5. The absence of small business set-asides means limited direct opportunities for smaller firms in this specific award. 6. This contract supports the Department of Defense's strategic inventory management and readiness objectives.

Value Assessment

Rating: fair

Benchmarking the value of this sole-source contract is challenging without competitive bids. The firm fixed-price structure provides some cost certainty for the government. However, the lack of competition raises concerns about whether the government is achieving the best possible price for the refurbishment services. Without comparable contract data or market analysis, it's difficult to definitively assess value for money, but the sole-source nature inherently limits price discovery.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one contractor, Raytheon Company, was solicited. This approach is typically used when a specific contractor possesses unique capabilities, proprietary technology, or is the sole provider of a necessary good or service. The lack of competition means that the government did not benefit from a bidding process that could drive down prices through market forces.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive bidding. Without multiple offers, there is less pressure on the contractor to offer the most cost-effective solution, potentially leading to higher overall expenditure for the refurbishment of these critical missiles.

Public Impact

The primary beneficiaries are the U.S. Air Force and Navy, who utilize the AGM-88B HARM missile system for air-to-ground attack capabilities. The services delivered include the refurbishment of existing AGM-88B missiles, extending their service life and ensuring operational effectiveness. The geographic impact is national, supporting military readiness across various theaters of operation. Workforce implications include the employment of skilled technicians and engineers at Raytheon's facilities involved in the refurbishment process.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing, potentially increasing costs for taxpayers.
Lack of transparency in pricing due to no competitive bidding process.
Dependence on a single contractor for critical missile refurbishment.

Positive Signals

Firm fixed-price contract provides cost certainty for the government.
Refurbishment extends the life of existing assets, potentially more cost-effective than new procurement.
Contract ensures the operational readiness of a key defense asset.

Sector Analysis

The defense industry, specifically the guided missile and aerospace manufacturing sector, is characterized by high barriers to entry, significant R&D investment, and a concentrated supplier base. Raytheon Company is a major player in this market. This contract for the refurbishment of AGM-88B HARM missiles fits within the broader category of defense sustainment and modernization, ensuring the continued availability of legacy weapon systems. Spending in this sector is often driven by geopolitical factors and the need to maintain technological superiority.

Small Business Impact

This contract does not appear to include a small business set-aside. Given the specialized nature of missile refurbishment and the sole-source award to a large prime contractor, opportunities for small businesses are likely limited to subcontracting roles. The prime contractor's subcontracting plan, if any, would determine the extent of small business participation. Without specific subcontracting data, the direct impact on the small business ecosystem for this particular award is minimal.

Oversight & Accountability

The Department of Defense Contract Management Agency is responsible for overseeing this contract. Oversight mechanisms would typically include monitoring contract performance, ensuring compliance with terms and conditions, and verifying deliverables. Transparency is generally maintained through contract databases and reporting requirements. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

AGM-88 HARM Missile System
Air-to-Ground Munitions
Defense Logistics Agency (DLA) Support
Missile Maintenance and Repair Services
Department of Defense Weapon System Sustainment

Risk Flags

Sole-source award
Lack of competitive bidding
Potential for cost overruns
Dependency on a single contractor

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $63.5 million to RAYTHEON COMPANY. AGM-88B HIGH SPEED ANTI-RADIATION MISSILE (HARM) REFURBISHMENT FOR ACCRUING REPLACEMENT/EXCHANGE-IN KIND (REIK)

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 $63.5 million.

What is the period of performance?

Start: 2024-02-07. End: 2025-09-30.

What is the historical spending trend for AGM-88B HARM missile refurbishment contracts awarded to Raytheon Company?

Analyzing historical spending for AGM-88B HARM missile refurbishment contracts awarded to Raytheon Company requires access to detailed federal procurement databases. While this specific award is for approximately $63.5 million, understanding the trend involves looking at previous awards for similar refurbishment services over several fiscal years. Factors such as the number of missiles refurbished, the scope of work (e.g., depot-level maintenance, component replacement), and the contract type (firm fixed-price, cost-plus) would influence the total dollar amounts. A trend analysis might reveal increasing or decreasing investment in maintaining this specific missile variant, potentially indicating a shift towards newer systems or a sustained reliance on the HARM. Without specific historical data points for this exact service, it's difficult to provide a precise trend, but such analysis is crucial for long-term budget planning and assessing the overall investment in legacy weapon system sustainment.

How does the per-unit refurbishment cost for the AGM-88B HARM missile compare to similar missile systems or previous refurbishment efforts?

Determining the per-unit refurbishment cost for the AGM-88B HARM missile is challenging without specific data on the number of units to be refurbished under this $63.5 million contract. However, if we assume a hypothetical number of units, we could derive a per-unit cost. For instance, if 100 missiles are refurbished, the cost per missile would be approximately $635,000. Comparing this to similar missile systems or previous efforts requires access to proprietary or classified cost data, which is not publicly available. Generally, the cost of refurbishing complex munitions like the HARM can vary significantly based on the extent of work required, the age of the components, and the specific technological upgrades incorporated. Benchmarking against other anti-radiation missiles or even different types of guided munitions would provide context, but such comparisons are often difficult due to unique system complexities and varying sustainment strategies across different weapon platforms.

What are the key performance indicators (KPIs) used to evaluate Raytheon's performance on this HARM missile refurbishment contract?

Key Performance Indicators (KPIs) for a contract like the AGM-88B HARM missile refurbishment typically focus on ensuring the timely delivery of high-quality, operational missiles. Common KPIs would likely include: 1. On-Time Delivery: Measuring the percentage of refurbished missiles delivered by the contractually agreed-upon dates. 2. Quality Acceptance Rate: The percentage of refurbished missiles that pass all required inspections and testing without defects. 3. Technical Performance: Ensuring the refurbished missiles meet all specified performance requirements and operational parameters. 4. Cost Control: While this is a firm fixed-price contract, adherence to budget and efficient use of resources can still be monitored. 5. Compliance: Adherence to all safety, environmental, and security regulations during the refurbishment process. These KPIs help the government ensure that Raytheon is meeting its contractual obligations and delivering reliable, mission-capable assets.

What is the strategic importance of the AGM-88B HARM missile to current U.S. military operations, and how does this contract support that importance?

The AGM-88B High-speed Anti-Radiation Missile (HARM) is a crucial component of the U.S. Air Force and Navy's electronic warfare capabilities. Its primary function is to detect, target, and destroy enemy radar systems, including surface-to-air missile (SAM) sites and early warning radars. This capability is vital for suppressing enemy air defenses, allowing friendly aircraft to operate more safely and effectively in contested airspace. This refurbishment contract directly supports that strategic importance by ensuring that a sufficient inventory of operational HARM missiles remains available. By extending the service life of existing missiles, the Department of Defense can maintain its offensive electronic warfare posture without the immediate need for costly new procurement, thus ensuring readiness for potential conflicts and ongoing operational requirements.

Are there any known risks associated with the sole-source nature of this contract, beyond potential cost implications?

Beyond potential cost implications, the sole-source nature of this contract carries several other risks. Firstly, it creates a dependency on Raytheon Company for the sustainment of the AGM-88B HARM missile. If Raytheon experiences production issues, financial instability, or decides to exit this particular market segment, it could severely disrupt the supply of refurbished missiles, impacting military readiness. Secondly, a sole-source award can stifle innovation. Without the pressure of competition, there may be less incentive for the contractor to invest in process improvements or explore more cost-effective refurbishment techniques. Lastly, it can limit the government's flexibility in adapting to future technological advancements or changing threat landscapes, as the existing infrastructure and expertise are tied to a single provider.

Industry Classification

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

Product/Service Code: GUIDED MISSLES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: FA852018R0006

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Rockwell Collins Australia PTY Limited

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: $63,482,442

Exercised Options: $63,482,442

Current Obligation: $63,482,442

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA852019D0002

IDV Type: IDC

Timeline