Air Force Awards $220M to Raytheon for Ammunition Manufacturing Capacity Expansion

Contract Overview

Contract Amount: $22,000,000 ($22.0M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2024-10-01

End Date: 2028-10-01

Contract Duration: 1,461 days

Daily Burn Rate: $15.1K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: HACM REQUIRES AN INCREASE IN MANUFACTURING CAPACITY OF THE AUR AND HACM-SPECIFIC COMPONENTS TO ACHIEVE EXPECTED PRODUCTION RATES. THE ANTICIPATED FUTURE PRODUCTION NEED IS GREATER THAN WHAT THE HACM INDUSTRIAL BASE IS CURRENTLY ESTIMATED TO ACHIEVE.

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $22.0 million to RAYTHEON COMPANY for work described as: HACM REQUIRES AN INCREASE IN MANUFACTURING CAPACITY OF THE AUR AND HACM-SPECIFIC COMPONENTS TO ACHIEVE EXPECTED PRODUCTION RATES. THE ANTICIPATED FUTURE PRODUCTION NEED IS GREATER THAN WHAT THE HACM INDUSTRIAL BASE IS CURRENTLY ESTIMATED TO ACHIEVE. Key points: 1. Significant investment to boost production of AUR and HACM-specific components. 2. Addresses a projected shortfall in manufacturing capacity for anticipated future needs. 3. Contract awarded via full and open competition, suggesting market availability. 4. Focus on critical defense components highlights strategic importance.

Value Assessment

Rating: good

The contract type is Cost Plus Fixed Fee (CPFF), which allows for cost reimbursement plus a fixed fee. This is common for R&D or production where costs are uncertain, but requires careful oversight to manage expenses.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple capable vendors could bid. This method generally promotes competitive pricing and ensures the government receives the best value.

Taxpayer Impact: Taxpayer funds are being used to enhance domestic manufacturing capabilities for essential defense components, potentially leading to greater long-term supply chain security and cost stability.

Public Impact

Enhances national defense readiness by securing critical ammunition components. Supports the defense industrial base and manufacturing sector in Arizona. Aims to prevent future production bottlenecks and ensure timely delivery of defense materiel.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Fixed Fee contract requires diligent cost monitoring.
Potential for cost overruns if production challenges arise.
Dependence on a single prime contractor for critical capacity expansion.

Positive Signals

Full and open competition promotes value.
Addresses a clear and documented need for increased capacity.
Strategic investment in defense industrial base.

Sector Analysis

This contract falls within the Ammunition (except Small Arms) Manufacturing sector, a critical part of the defense industrial base. Spending benchmarks in this area are highly variable, depending on geopolitical factors and specific component needs.

Small Business Impact

The data indicates this contract was not set aside for small businesses and the prime contractor is Raytheon Company, a large business. There is no information provided on subcontracting opportunities for small businesses.

Oversight & Accountability

The Cost Plus Fixed Fee contract structure necessitates robust oversight from the Department of the Air Force to ensure costs are reasonable and the fixed fee is justified. Monitoring production progress and adherence to quality standards will be crucial.

Related Government Programs

Ammunition (except Small Arms) Manufacturing
Department of Defense Contracting
Department of the Air Force Programs

Risk Flags

Cost Plus Fixed Fee contract requires stringent oversight.
Potential for production delays impacting delivery schedules.
Reliance on a single large business prime contractor.
Uncertainty regarding small business subcontracting opportunities.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $22.0 million to RAYTHEON COMPANY. HACM REQUIRES AN INCREASE IN MANUFACTURING CAPACITY OF THE AUR AND HACM-SPECIFIC COMPONENTS TO ACHIEVE EXPECTED PRODUCTION RATES. THE ANTICIPATED FUTURE PRODUCTION NEED IS GREATER THAN WHAT THE HACM INDUSTRIAL BASE IS CURRENTLY ESTIMATED TO ACHIEVE.

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 $22.0 million.

What is the period of performance?

Start: 2024-10-01. End: 2028-10-01.

What is the projected cost savings or efficiency gain anticipated from this capacity expansion compared to alternative solutions?

The provided data does not specify projected cost savings or efficiency gains. The primary driver appears to be meeting anticipated future production needs and addressing a current capacity shortfall. Further analysis would be required to quantify potential long-term cost benefits or compare this investment against alternatives like sole-sourcing or phased capacity building.

What are the specific risks associated with relying on Raytheon Company for this critical manufacturing capacity increase?

Risks include potential supply chain disruptions for Raytheon's own inputs, unforeseen technical challenges in scaling production, and the possibility of cost overruns inherent in CPFF contracts. Dependence on a single entity for a critical capacity boost also presents a strategic risk if Raytheon faces internal issues or shifts priorities.

How will the effectiveness of this investment in achieving expected production rates be measured and verified?

Effectiveness will likely be measured through key performance indicators (KPIs) tied to production output, delivery timelines, and component quality. The Department of the Air Force will need to establish clear metrics and conduct regular reviews of Raytheon's progress against the contract's objectives and milestones.

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: 1

Pricing Type: COST PLUS FIXED FEE (U)

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: $90,400,376

Exercised Options: $90,400,376

Current Obligation: $22,000,000

Subaward Activity

Number of Subawards: 6

Total Subaward Amount: $2,550,625

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: FA865621DA004

IDV Type: IDC

Timeline