Raytheon Company awarded $20.6M for AMRAAM development lab management and maintenance by the Air Force

Contract Overview

Contract Amount: $20,608,603 ($20.6M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2024-07-15

End Date: 2026-02-07

Contract Duration: 572 days

Daily Burn Rate: $36.0K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: ADVANCED MEDIUM RANGE AIR-TO-AIR MISSILE DEVELOPMENT LAB MANAGEMENT AND MAITENANCE

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $20.6 million to RAYTHEON COMPANY for work described as: ADVANCED MEDIUM RANGE AIR-TO-AIR MISSILE DEVELOPMENT LAB MANAGEMENT AND MAITENANCE Key points: 1. Contract focuses on specialized lab management and maintenance for advanced missile systems. 2. Sole-source award suggests limited market availability or specific contractor expertise. 3. Performance period extends over 1.5 years, indicating a need for sustained support. 4. Cost-plus-fixed-fee structure allows for cost reimbursement plus a fixed profit. 5. The contract is a delivery order under a larger indefinite-delivery/indefinite-quantity (IDIQ) vehicle. 6. Geographic location in Arizona points to specific facility requirements. 7. No small business set-aside was applied to this specific award.

Value Assessment

Rating: fair

The contract's value of $20.6 million for lab management and maintenance appears reasonable given the specialized nature of supporting advanced missile development. However, without direct comparisons to similar sole-source contracts for comparable lab services, a definitive value-for-money assessment is challenging. The cost-plus-fixed-fee (CPFF) pricing structure means the government pays for actual costs plus a negotiated profit, which can lead to cost overruns if not carefully managed. Benchmarking against industry standards for specialized technical support services would be necessary for a more precise evaluation.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, indicating that the Department of the Air Force determined that only Raytheon Company could provide the required services. This could be due to proprietary technology, unique expertise, or existing infrastructure related to the Advanced Medium-Range Air-to-Air Missile (AMRAAM) program. The lack of competition means that price discovery through market forces was not utilized, potentially leading to higher costs than if multiple bidders had competed.

Taxpayer Impact: Sole-source awards limit taxpayer benefit by bypassing competitive bidding, which typically drives down prices. This means taxpayers may not be getting the best possible price for these essential lab services.

Public Impact

The primary beneficiaries are the Department of the Air Force and the AMRAAM program, ensuring the continued operational readiness and development of critical air-to-air missile capabilities. Services delivered include laboratory management, maintenance, and potentially technical support for testing and development activities. The geographic impact is concentrated in Arizona, where the contractor's facilities are located. Workforce implications include the continued employment of specialized technical personnel at Raytheon's Arizona facility.

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 carries inherent risk of cost overruns if not closely monitored.
Lack of transparency in the sole-source justification could obscure potential alternatives.
Dependence on a single contractor for critical lab services raises long-term strategic risks.

Positive Signals

Award to an established defense contractor with a track record in missile systems.
Contract ensures continuity of essential support for a key defense program (AMRAAM).
Delivery order structure allows for phased funding and management of services.
Specific focus on lab management and maintenance suggests dedicated resources for program needs.

Sector Analysis

This contract falls within the Defense Industrial Base sector, specifically supporting the development and sustainment of advanced weapon systems. The market for specialized missile development and testing services is highly concentrated, often dominated by a few large defense contractors like Raytheon. Spending in this area is driven by national security requirements and technological advancements in aerospace and defense. Comparable spending benchmarks would typically involve analyzing other contracts for similar technical support and laboratory services within the Department of Defense.

Small Business Impact

This contract was not set aside for small businesses, nor does it appear to have specific subcontracting requirements for small businesses mentioned in the provided data. The award to a large prime contractor like Raytheon suggests that the primary focus is on specialized capabilities that may not be readily available from smaller firms. This could limit opportunities for small businesses to participate directly in this specific contract, although they may be involved in the broader AMRAAM supply chain.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of the Air Force contracting and program management offices. As a cost-plus-fixed-fee contract, rigorous financial oversight is crucial to monitor incurred costs and ensure they align with the fixed fee. Transparency is limited due to the sole-source nature, but contract performance reviews and audits would be standard accountability measures. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Advanced Medium-Range Air-to-Air Missile (AMRAAM) Program
Department of Defense Research and Development Contracts
Aerospace and Defense Laboratory Services
Missile Systems Development and Maintenance

Risk Flags

Sole-source award
Cost-plus-fixed-fee pricing
Potential for cost overruns
Limited competition

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $20.6 million to RAYTHEON COMPANY. ADVANCED MEDIUM RANGE AIR-TO-AIR MISSILE DEVELOPMENT LAB MANAGEMENT AND MAITENANCE

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 $20.6 million.

What is the period of performance?

Start: 2024-07-15. End: 2026-02-07.

What is Raytheon Company's track record with the AMRAAM program and similar missile development contracts?

Raytheon Company, now part of RTX Corporation, has a long-standing and significant track record with the Advanced Medium-Range Air-to-Air Missile (AMRAAM) program, having been the prime contractor for its development and production for decades. Their expertise extends to various aspects of missile systems, including guidance, control, propulsion, and testing. They have consistently been awarded major contracts for AMRAAM sustainment, upgrades, and international sales. This extensive history suggests a deep understanding of the program's technical requirements and a proven ability to manage complex development and maintenance activities. Their broader portfolio includes numerous other advanced missile and aerospace programs, reinforcing their position as a key player in this specialized defense sector.

How does the $20.6 million contract value compare to historical spending on AMRAAM lab management and maintenance?

The $20.6 million contract value represents a specific delivery order for lab management and maintenance over approximately 1.5 years. To compare this to historical spending, one would need to analyze the total lifecycle costs associated with AMRAAM development and sustainment, specifically isolating expenditures on laboratory operations and maintenance. Historical data would likely show significant, multi-year investments in these areas, potentially in the tens or hundreds of millions of dollars cumulatively over the program's life. This $20.6 million figure should be viewed as a component of that larger, ongoing investment, rather than an isolated total cost. Without access to detailed historical contract databases for this specific service category within the AMRAAM program, a precise year-over-year comparison is difficult.

What are the primary risks associated with this sole-source, cost-plus-fixed-fee contract?

The primary risks associated with this sole-source, cost-plus-fixed-fee (CPFF) contract are twofold. Firstly, the sole-source nature eliminates competitive pressure, which can lead to less favorable pricing for the government and potentially higher costs than if multiple bidders had vied for the contract. This lack of competition also reduces the incentive for the contractor to innovate on cost-efficiency. Secondly, the CPFF structure, while allowing for flexibility in managing unforeseen technical challenges, carries the inherent risk of cost escalation. The government bears the risk of actual costs incurred by the contractor, plus a fixed profit. If the contractor's cost management is poor or if unforeseen technical issues arise that significantly increase expenses, the total contract cost could exceed initial estimates, impacting the overall program budget. Robust oversight and clear performance metrics are essential to mitigate these risks.

How effective is the current lab management and maintenance likely to be given Raytheon's role?

Given Raytheon's established role as the prime contractor for the AMRAAM program and its extensive experience in missile systems development and sustainment, the effectiveness of the lab management and maintenance is likely to be high. Their deep institutional knowledge of the AMRAAM system, coupled with specialized facilities and personnel dedicated to its support, suggests a high degree of operational capability. The continuity provided by awarding this contract to Raytheon ensures that the critical infrastructure and expertise required for testing, development, and ongoing support remain in place without disruption. While effectiveness is ultimately measured by performance metrics within the contract, Raytheon's historical performance and specialized focus provide a strong foundation for effective service delivery.

What are the implications of this contract being a delivery order under an IDIQ contract?

This contract being a delivery order under an Indefinite-Delivery/Indefinite-Quantity (IDIQ) contract signifies that it is one of potentially many task orders that can be issued against a broader, pre-negotiated contract vehicle. The IDIQ structure allows the government to procure a range of services or supplies over a period, with specific quantities and delivery schedules defined by individual delivery orders. For this specific contract, it means the $20.6 million is allocated for a defined period (2024-2026) and scope (lab management/maintenance for AMRAAM). The IDIQ framework provides flexibility for the Air Force to adapt to evolving needs within the AMRAAM program, while the delivery order ensures specific funding and timelines are established for this particular requirement. It also implies that the underlying IDIQ contract likely underwent a competitive process, even if this specific delivery order is sole-source.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Testing Laboratories and Services

Product/Service Code: TECHNICAL REPRESENTATIVE SVCS. › TECHNICAL REPRESENTATIVE 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: 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: $20,608,603

Exercised Options: $20,608,603

Current Obligation: $20,608,603

Subaward Activity

Number of Subawards: 4

Total Subaward Amount: $367,345

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA867521D0030

IDV Type: IDC

Timeline