DoD Awards Raytheon $2.5B for AMRAAM Production Lot 37, Extending Missile Capabilities Through 2030

Contract Overview

Contract Amount: $2,512,789,038 ($2.5B)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2023-06-20

End Date: 2030-12-30

Contract Duration: 2,750 days

Daily Burn Rate: $913.7K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIXED PRICE INCENTIVE

Sector: Defense

Official Description: ADVANCED MEDIUM RANGE AIR TO AIR MISSILE (AMRAAM) PRODUCTION LOT 37

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $2.51 billion to RAYTHEON COMPANY for work described as: ADVANCED MEDIUM RANGE AIR TO AIR MISSILE (AMRAAM) PRODUCTION LOT 37 Key points: 1. Significant investment in advanced air-to-air missile production, ensuring continued U.S. air superiority. 2. Sole-source award to Raytheon Company raises questions about competitive pricing and potential cost efficiencies. 3. Long-term contract (through 2030) indicates a sustained need for AMRAAM capabilities. 4. Focus on guided missile manufacturing highlights a critical defense sector.

Value Assessment

Rating: questionable

The contract value of $2.51 billion for AMRAAM Production Lot 37 is substantial. Without competitive bidding, it's difficult to assess if this price represents fair market value compared to potential alternatives or previous production runs.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning competition was not sought. This limits price discovery and may lead to higher costs for taxpayers compared to a fully competed procurement.

Taxpayer Impact: The sole-source nature of this award means taxpayers may be paying a premium for these missiles, as competitive pressures that typically drive down costs are absent.

Public Impact

Ensures continued availability of a key defensive weapon system for the U.S. Air Force. Supports advanced aerospace manufacturing capabilities within the United States. Potential for long-term strategic advantage in air combat capabilities. Funding allocated for a critical component of national defense infrastructure.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition
High contract value
Long contract duration
Sole-source award

Positive Signals

Essential defense capability
Sustained production
Advanced technology

Sector Analysis

This contract falls within the Guided Missile and Space Vehicle Manufacturing sector, a critical component of the defense industrial base. Spending in this area is directly tied to national security priorities and technological advancement in weaponry.

Small Business Impact

The contract is awarded to Raytheon Company, a large defense contractor. There is no explicit indication of subcontracting opportunities for small businesses within the provided data, suggesting limited direct impact on this segment.

Oversight & Accountability

The Department of Defense is responsible for overseeing this contract. The sole-source nature warrants close scrutiny to ensure cost reasonableness and performance, with potential for congressional oversight given the significant value.

Related Government Programs

Guided Missile and Space Vehicle Manufacturing
Department of Defense Contracting
Department of the Air Force Programs

Risk Flags

Lack of competitive bidding may result in inflated costs.
Sole-source award limits transparency and accountability in pricing.
Long contract duration increases exposure to potential cost overruns or changing requirements.
Dependence on a single supplier for a critical defense asset.
Potential for contractor to leverage sole-source position for unfavorable terms.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $2.51 billion to RAYTHEON COMPANY. ADVANCED MEDIUM RANGE AIR TO AIR MISSILE (AMRAAM) PRODUCTION LOT 37

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 $2.51 billion.

What is the period of performance?

Start: 2023-06-20. End: 2030-12-30.

What is the historical cost performance of AMRAAM production under previous contracts, and how does this Lot 37 pricing compare?

Historical cost data for AMRAAM production is crucial for evaluating the value of this $2.51 billion contract. Without access to previous lot pricing, cost trends, and any efficiency gains or losses, it's challenging to determine if Lot 37 represents a fair price. A comparative analysis against prior production runs, considering inflation and any technological upgrades, would be necessary to assess cost-effectiveness and identify potential areas for negotiation in future sole-source awards.

What specific justifications were provided for awarding this contract on a sole-source basis, and were alternatives considered?

The justification for a sole-source award typically centers on unique capabilities, proprietary technology, or the absence of viable alternative sources. For the AMRAAM, this might relate to its specific performance characteristics or integration with existing platforms. A thorough review of the justification documentation is needed to confirm that no reasonable competitive alternatives were overlooked and that the decision was based on demonstrable necessity rather than convenience.

How will the performance and effectiveness of the AMRAAM missiles produced under Lot 37 be measured and validated to ensure taxpayer value?

Performance validation for AMRAAM missiles under Lot 37 will likely involve rigorous testing protocols, including live-fire exercises and component-level inspections, as stipulated in the contract's technical requirements. The 'FIXED PRICE INCENTIVE' (FPI) contract type suggests that both the government and contractor have shared financial incentives tied to achieving specific performance targets and cost goals. Success will be measured against these predefined metrics, ensuring the missiles meet operational needs while managing program costs.

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: FIXED PRICE INCENTIVE (L)

Evaluated Preference: NONE

Contractor Details

Parent Company: RTX Corp

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: $2,512,789,038

Exercised Options: $2,512,789,038

Current Obligation: $2,512,789,038

Actual Outlays: $33,459

Subaward Activity

Number of Subawards: 459

Total Subaward Amount: $669,134,115

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline