Raytheon Company awarded $19.7M contract for ammunition, with 25+ months of sustainment

Contract Overview

Contract Amount: $19,712,002 ($19.7M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2025-03-28

End Date: 2027-09-07

Contract Duration: 893 days

Daily Burn Rate: $22.1K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: SIP 25+

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $19.7 million to RAYTHEON COMPANY for work described as: SIP 25+ Key points: 1. Contract awarded to a single, established defense contractor, indicating potential for limited competition. 2. The contract type (Cost Plus Fixed Fee) can sometimes lead to higher costs if not closely managed. 3. A significant duration of 893 days suggests a long-term need for these munitions. 4. The contract is for ammunition manufacturing, a critical component of defense readiness. 5. Performance is located in Arizona, potentially impacting the local economy and workforce. 6. The absence of small business set-asides suggests this contract may not directly benefit smaller enterprises.

Value Assessment

Rating: fair

The contract's value of $19.7 million is moderate for defense procurement. Without specific benchmarks for this type of ammunition, a precise value-for-money assessment is challenging. The Cost Plus Fixed Fee (CPFF) contract type carries inherent risks of cost overruns if not rigorously overseen, potentially impacting the overall value. Comparing this to similar ammunition contracts would provide better insight into pricing efficiency.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award. This typically occurs when a specific capability or technology is only available from one source, or for urgent needs. The lack of competition means there was no opportunity for price discovery through a bidding process, which could lead to higher costs for the government.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive bidding. Without multiple offers, the government cannot be assured it received the best possible price.

Public Impact

The Department of Defense benefits from a sustained supply of critical ammunition. This contract supports the manufacturing and delivery of ammunition, essential for military operations. The geographic impact is primarily in Arizona, where the contract will be performed. Workforce implications include potential job creation or retention within the defense manufacturing sector in Arizona.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially increasing costs for taxpayers.
Cost Plus Fixed Fee contract type can incentivize higher spending if not managed effectively.
Lack of transparency in the procurement process due to non-competitive nature.

Positive Signals

Ensures a critical supply of ammunition for national defense needs.
Award to a known entity (Raytheon) suggests a level of established capability and reliability.
Long contract duration indicates a stable, long-term requirement being met.

Sector Analysis

The defense industry is a significant sector of federal spending, with ammunition manufacturing being a crucial sub-segment. This contract falls within the broader category of defense procurement, specifically focusing on munitions. The market for defense contracting is often characterized by specialized capabilities and long-standing relationships between government agencies and prime contractors. Comparable spending benchmarks for similar ammunition types and quantities would be necessary for a more precise sector analysis.

Small Business Impact

This contract does not appear to include a small business set-aside, nor is there an indication of subcontracting requirements for small businesses. Consequently, the direct impact on the small business ecosystem is likely minimal. The award to a large prime contractor suggests that opportunities for small businesses would primarily be through subcontracts, if Raytheon chooses to engage them.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Air Force's contracting and program management offices. The Cost Plus Fixed Fee structure necessitates rigorous financial oversight to ensure costs are reasonable and allocable. Inspector General investigations could be initiated if any fraud, waste, or abuse is suspected. Transparency may be limited due to the sole-source nature of the award.

Related Government Programs

Department of Defense Ammunition Procurement
Air Force Weapon Systems Support
Defense Manufacturing Contracts
Cost-Plus Contracting

Risk Flags

Sole-source award may limit price competition.
Cost Plus Fixed Fee contract type carries inherent risk of cost overruns.
Lack of small business participation noted.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $19.7 million to RAYTHEON COMPANY. SIP 25+

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 $19.7 million.

What is the period of performance?

Start: 2025-03-28. End: 2027-09-07.

What is Raytheon Company's track record with similar ammunition manufacturing contracts for the Department of Defense?

Raytheon Company, now part of RTX, has a long and extensive history of manufacturing various types of munitions and defense systems for the U.S. military. They are a major defense contractor with significant experience in producing missiles, guided bombs, and other ordnance. Their track record with similar ammunition contracts would likely show a pattern of fulfilling large-scale production requirements, often involving complex supply chains and stringent quality control. Historical performance data, including on-time delivery rates, quality metrics, and any past contract disputes or overruns, would be crucial for a comprehensive assessment. Given their established position, it's probable they have successfully executed numerous contracts of comparable scope and complexity, though specific details would require deeper analysis of past performance reports and contract histories.

How does the $19.7 million contract value compare to historical spending on similar ammunition types?

Assessing the $19.7 million contract value requires comparison against historical spending for the specific type of ammunition being procured. Without knowing the exact designation of the ammunition (e.g., artillery shells, specific missile warheads, etc.), a precise comparison is difficult. However, for context, the Department of Defense procures billions of dollars worth of munitions annually. A $19.7 million award for a specific type of ammunition over approximately two years (based on the end date) suggests a moderate-sized procurement. If this is for a standard, high-volume munition, the price per unit might be benchmarked against previous contracts. If it's for a more specialized or advanced munition, the value could be considered reasonable. A detailed analysis would involve identifying the specific munition and examining its unit cost trends over the past several years.

What are the primary risks associated with a sole-source, Cost Plus Fixed Fee contract for ammunition?

The primary risks associated with a sole-source, Cost Plus Fixed Fee (CPFF) contract for ammunition are twofold. Firstly, the sole-source nature eliminates competitive pressure, meaning the government cannot be certain it is receiving the lowest possible price. This lack of competition can lead to inflated costs. Secondly, the CPFF structure, while providing flexibility, shifts much of the financial risk to the government. The contractor is reimbursed for allowable costs plus a fixed fee representing profit. If costs escalate due to unforeseen issues, inefficiencies, or scope creep, the government bears the burden. Effective oversight, stringent cost controls, and clear performance metrics are essential to mitigate these risks and ensure value for taxpayer money. Without robust management, CPFF contracts can become significantly more expensive than initially projected.

What is the expected program effectiveness and impact of this ammunition supply?

The expected program effectiveness hinges on the reliable and timely delivery of the specified ammunition to meet the Department of the Air Force's operational requirements. This contract ensures a critical supply chain component is maintained, directly supporting readiness and mission capabilities. The impact is primarily on military effectiveness, enabling training exercises and potential combat operations. The long-term sustainment (25+ months) suggests this ammunition is integral to ongoing strategic needs. Program effectiveness will be measured by the quality, quantity, and on-time delivery of the munitions, ensuring they meet all technical specifications and performance standards required by the end-users.

How does this contract align with broader trends in defense spending on munitions?

This contract aligns with the broader trend of sustained, significant defense spending on munitions, which is a perennial priority for the U.S. military. As geopolitical tensions fluctuate, investment in ammunition production and modernization remains critical for maintaining strategic advantage and readiness. The trend often involves balancing the procurement of high-volume legacy munitions with investment in advanced, precision-guided munitions. This specific award, being a sole-source CPFF for ammunition manufacturing, reflects the government's approach to securing essential supplies, sometimes prioritizing established relationships and capabilities over aggressive price competition, especially for critical or specialized items. It underscores the ongoing need for robust domestic defense industrial base capacity.

Industry Classification

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

Product/Service Code: RESEARCH AND DEVELOPMENT › C – National Defense R&D Services

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

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: $57,789,071

Exercised Options: $19,712,002

Current Obligation: $19,712,002

Subaward Activity

Number of Subawards: 1

Total Subaward Amount: $289,617

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: FA867219D0001

IDV Type: IDC

Timeline