DoD awards Raytheon $60.8M for missile and space vehicle manufacturing, citing obsolescence concerns

Contract Overview

Contract Amount: $60,762,939 ($60.8M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2025-04-28

End Date: 2027-08-31

Contract Duration: 855 days

Daily Burn Rate: $71.1K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: LIFE OF TYPE OBSOLESCENCE BUY - WAVE 12A

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $60.8 million to RAYTHEON COMPANY for work described as: LIFE OF TYPE OBSOLESCENCE BUY - WAVE 12A Key points: 1. Contract awarded to Raytheon Company for guided missile and space vehicle manufacturing. 2. Significant portion of contract value allocated to address obsolescence issues. 3. Contract duration spans over two years, indicating a sustained need. 4. Awarded by the Department of the Air Force, a key defense branch. 5. Fixed-price contract type suggests cost certainty for the government. 6. Sole-source award raises questions about competition and potential cost savings. 7. The contract is for a 'LIFE OF TYPE OBSOLESCENCE BUY', highlighting a specific procurement strategy.

Value Assessment

Rating: fair

The contract value of $60.8 million for a two-year period for missile and space vehicle manufacturing appears substantial. Without specific benchmarks for similar obsolescence buys or detailed cost breakdowns, it is difficult to definitively assess value for money. The fixed-price nature provides some cost control, but the lack of competition is a significant factor that could lead to higher prices than a competed award. Further analysis of the specific components and services required would be necessary for a more precise valuation.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, Raytheon Company, was solicited. This approach is typically used when there is a unique capability or urgent need that cannot be met by other sources. The lack of competition means that the government did not benefit from a bidding process that could drive down prices through market forces. This raises concerns about whether the government secured the best possible price and terms.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive bidding. Without alternative offers, it's harder to ensure that the awarded price reflects the lowest reasonable cost for the required goods and services.

Public Impact

The primary beneficiaries are the Department of Defense and specifically the Department of the Air Force, ensuring the continued operational readiness of critical missile and space vehicle systems. The contract supports the manufacturing and sustainment of guided missiles and space vehicles, crucial for national defense capabilities. The geographic impact is primarily within Arizona, where Raytheon Company's operations are located, potentially supporting local jobs and the regional economy. Workforce implications include the potential for sustained employment for engineers, technicians, and manufacturing personnel involved in these specialized defense programs.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price discovery and potentially increases costs for taxpayers.
Obsolescence buys can sometimes be reactive rather than proactive, potentially indicating past planning gaps.
Reliance on a single contractor for critical components can create long-term dependency and reduce future flexibility.

Positive Signals

Addresses critical obsolescence issues, ensuring the continued functionality of vital defense assets.
Fixed-price contract provides cost certainty for the government over the contract period.
Award to an established contractor like Raytheon suggests a level of confidence in their ability to deliver.

Sector Analysis

This contract falls within the Guided Missile and Space Vehicle Manufacturing sector, a highly specialized and critical segment of the aerospace and defense industry. This sector is characterized by high barriers to entry, significant R&D investment, and stringent quality control requirements. Spending in this area is driven by national security needs and technological advancements. Comparable spending benchmarks are difficult to establish without more specific details on the systems involved, but the defense sector consistently represents a large portion of federal discretionary spending.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (sb: false) and the prime contractor is Raytheon Company, a large aerospace and defense firm. There is no explicit information on subcontracting plans for small businesses within this award notice. Therefore, the direct impact on the small business ecosystem is likely minimal unless Raytheon actively engages small businesses in its subcontracting efforts. Further investigation into subcontracting goals would be needed to assess broader small business implications.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Air Force's contracting and program management offices. Accountability measures are inherent in the fixed-price contract type, which obligates Raytheon to deliver specified goods and services. Transparency is limited by the sole-source nature of the award, but contract details are typically reported in federal procurement databases. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Missile Manufacturing
Space Vehicle Production
Defense Procurement
Aerospace Industry Contracts
Obsolescence Management Programs
Air Force Weapon Systems

Risk Flags

Sole-source award
Potential for higher costs due to lack of competition
Limited transparency on specific obsolescence issues addressed

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $60.8 million to RAYTHEON COMPANY. LIFE OF TYPE OBSOLESCENCE BUY - WAVE 12A

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 $60.8 million.

What is the period of performance?

Start: 2025-04-28. End: 2027-08-31.

What specific obsolescence issues are being addressed by this contract, and what is the projected impact on system readiness?

The contract is designated as a 'LIFE OF TYPE OBSOLESCENCE BUY - WAVE 12A', indicating it addresses components or systems that are nearing the end of their supportable life. Specific obsolescence issues are not detailed in the provided data, but typically involve the unavailability of replacement parts, outdated technology, or diminishing manufacturing sources for critical elements of guided missiles and space vehicles. Addressing these issues is crucial for maintaining the operational readiness and effectiveness of these defense assets, preventing mission failures, and ensuring long-term sustainment. Without further details on the specific systems and components, the precise impact on readiness cannot be quantified, but the award signifies a proactive effort to mitigate risks associated with aging equipment.

How does the $60.8 million contract value compare to historical spending on similar obsolescence buys for missile and space vehicles?

Direct comparison of the $60.8 million contract value to historical spending on similar obsolescence buys is challenging without access to detailed historical procurement data specific to 'LIFE OF TYPE OBSOLESCENCE BUY - WAVE 12A' or comparable programs. However, the value represents a significant investment in sustainment and modernization. Obsolescence management is a continuous and often costly process in defense procurement due to the long lifecycles of weapon systems and rapid technological change. The 'WAVE 12A' designation suggests this is part of a larger, ongoing strategy, implying that cumulative spending across multiple waves could be substantial. The sole-source nature of this award means that price comparisons with competed contracts are not directly applicable, but the amount itself indicates a substantial requirement.

What are the risks associated with a sole-source award for critical defense components like missile and space vehicles?

The primary risk associated with a sole-source award for critical defense components is the potential for inflated costs due to the lack of competitive pressure. Without competing bids, the government may not achieve the best possible pricing or terms. Another risk is vendor lock-in, where the government becomes overly reliant on a single supplier, potentially limiting future flexibility and negotiation power. Furthermore, a sole-source award can reduce transparency in the procurement process and may not always guarantee the most innovative solutions available in the market. While justified in cases of unique capabilities or urgent needs, it necessitates robust oversight to ensure fair pricing and adequate performance.

What is Raytheon Company's track record in delivering on contracts for missile and space vehicle manufacturing, particularly those addressing obsolescence?

Raytheon Company is a major defense contractor with extensive experience in the design, development, and manufacturing of missile and space systems. They have a long history of delivering complex defense technologies to the U.S. military and allied nations. While specific performance data for this particular 'LIFE OF TYPE OBSOLESCENCE BUY - WAVE 12A' is not provided, Raytheon's general track record in this sector is well-established. They are known for their capabilities in areas such as guided missiles, air defense systems, and space technologies. Performance on previous contracts, including those related to sustainment and modernization, would typically be monitored by the Department of the Air Force through contract performance metrics and past performance evaluations, which likely informed the decision to award this sole-source contract.

How does the fixed-price contract type mitigate financial risks for the government in this specific procurement?

The Firm Fixed Price (FFP) contract type is generally advantageous for the government as it shifts the majority of the financial risk to the contractor, Raytheon Company. Under an FFP contract, the price is set and not subject to adjustment based on the contractor's cost experience. This provides the government with cost certainty, meaning the total expenditure for the defined scope of work is known upfront. Raytheon is incentivized to manage its costs efficiently to maintain profitability. This is particularly beneficial for procurements where the scope of work is well-defined, such as addressing specific obsolescence issues with known components or systems, reducing the likelihood of cost overruns impacting the government's budget.

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 COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

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: $124,006,000

Exercised Options: $124,006,000

Current Obligation: $60,762,939

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline