DoD Awards $42.6M for Advanced Medium Range Air-to-Air Missile EMD to Raytheon Company

Contract Overview

Contract Amount: $42,577,228 ($42.6M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2017-09-05

End Date: 2024-01-30

Contract Duration: 2,338 days

Daily Burn Rate: $18.2K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Defense

Official Description: IGF::OT::IGF ADVANCED MEDIUM RANGE AIR TO AIR MISSILE- SIP 3 EMD

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $42.6 million to RAYTHEON COMPANY for work described as: IGF::OT::IGF ADVANCED MEDIUM RANGE AIR TO AIR MISSILE- SIP 3 EMD Key points: 1. Significant investment in advanced missile technology. 2. Sole-source award to Raytheon Company, a major defense contractor. 3. Potential for cost overruns given the Cost Plus Incentive Fee contract type. 4. Focus on defense sector, specifically guided missile manufacturing.

Value Assessment

Rating: fair

The contract is a Cost Plus Incentive Fee type, which can lead to higher costs than fixed-price contracts if not managed carefully. Benchmarking against similar missile development contracts is difficult without more detailed cost breakdowns.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award. This limits price discovery and potentially increases costs for taxpayers as competition is absent.

Taxpayer Impact: The absence of competition in this sole-source award may result in higher costs for taxpayers compared to a competitively bid contract.

Public Impact

Enhances U.S. air combat capabilities with advanced missile technology. Supports a major defense contractor and its supply chain. Potential for long-term strategic advantage in air-to-air engagements.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competition.
Cost Plus Incentive Fee contract type carries inherent cost risk.
Long contract duration (2338 days) increases exposure to cost escalation.

Positive Signals

Award supports critical defense capability.
Raytheon is an established prime contractor with relevant expertise.

Sector Analysis

This contract falls within the Defense sector, specifically the Guided Missile and Space Vehicle Manufacturing industry. Spending in this area is critical for national security, but often involves high R&D costs and limited competition.

Small Business Impact

No information is provided regarding small business participation in this contract. As a sole-source award to a large prime contractor, direct small business involvement may be limited unless subcontracted.

Oversight & Accountability

The contract is managed by the Department of Defense through the Defense Contract Management Agency. Oversight will be crucial to manage costs and ensure performance under the Cost Plus Incentive Fee structure.

Related Government Programs

Guided Missile and Space Vehicle Manufacturing
Department of Defense Contracting
Defense Contract Management Agency Programs

Risk Flags

Sole-source award
Cost Plus Incentive Fee contract type
Long contract duration
Lack of transparency on price justification
Potential for cost overruns

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $42.6 million to RAYTHEON COMPANY. IGF::OT::IGF ADVANCED MEDIUM RANGE AIR TO AIR MISSILE- SIP 3 EMD

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 $42.6 million.

What is the period of performance?

Start: 2017-09-05. End: 2024-01-30.

What is the projected cost growth potential for this Cost Plus Incentive Fee contract, and what mechanisms are in place to control it?

Cost Plus Incentive Fee contracts allow for shared cost savings and overruns between the government and contractor, incentivizing efficiency. However, without specific incentive targets and ceiling prices defined, the potential for cost growth is significant. Robust oversight by the DCMA is essential to monitor expenditures, review contractor performance, and ensure adherence to program objectives to mitigate uncontrolled cost escalation.

Given the sole-source nature of this award, how was the initial price determined to ensure fair and reasonable pricing?

In sole-source procurements, the government typically relies on various methods to establish fair and reasonable pricing, such as historical pricing data from similar contracts, cost proposals submitted by the contractor, and independent government cost estimates. The Defense Contract Management Agency (DCMA) would likely conduct a thorough review of Raytheon's cost and pricing data to validate the proposed price before award.

What are the key performance metrics and milestones for this EMD phase, and how will their achievement be measured to justify the incentive fees?

The EMD (Engineering and Manufacturing Development) phase for advanced missile systems typically involves rigorous testing, design validation, and prototype development. Key performance metrics would likely include missile range, accuracy, reliability, and integration with existing platforms. Incentive fees are usually tied to achieving specific, measurable milestones ahead of schedule, under budget, or exceeding performance targets, requiring clear contractual definitions and objective verification by the government.

Industry Classification

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

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

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE (V)

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: $43,339,824

Exercised Options: $43,339,824

Current Obligation: $42,577,228

Actual Outlays: $743,278

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline