Missile Defense Agency awards $46.4M contract for Next Generation Aegis Missile development

Contract Overview

Contract Amount: $46,363,226 ($46.4M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2011-04-07

End Date: 2015-05-31

Contract Duration: 1,515 days

Daily Burn Rate: $30.6K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 4

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: THE MISSILE DEFENSE AGENCY (MDA) WILL ACQUIRE THE NEXT GENERATION INTERCEPTOR FOR FIELDING IN 2020 AS AN ELEMENT OF THE BALLISTIC MISSILE DEFENSE SYSTEM (BMDS). THE NEXT GENERATION AEGIS MISSILE (NGAM) WILL BE DESIGNED TO PROVIDE EARLY INTERCEPT CAPABILITY AGAINST SOME SHORT RANGE BALLISTIC MISSILES (SRBM), ALL MEDIUM RANGE BALLISTIC MISSILES (MRBM), ALL INTERMEDIATE RANGE BALLISTIC MISSILES (IRBM) AND NON-ADVANCED INTERCONTINENTAL BALLISTIC MISSILES (ICBM) LAUNCHED FROM THE REGION WHERE AEGIS WEAPON SYSTEMS (AWS) (INCLUDING THE AEGIS BMD 5.1 AND MK 41 VERTICAL LAUNCHING SYSTEM (VLS)) ARE LOCATED. THE FIRST PHASE OF THIS ACQUISITION IS THE CONCEPT DEFINITION AND PROGRAM PLANNING PHASE BEGINNING IN 2011, TO BE FOLLOWED BY COMPETITIVE PRODUCT DEVELOPMENT PHASE IN FY13. THE PURPOSE OF THE CONCEPT DEFINITION AND PROGRAM PLANNING CONTRACTS ARE TO: 1) DEFINE DESIGN OBJECTIVES, 2) PRESENT TRADES TO MEET THAT CAPABILITY, AND 3) OPTIMIZE TRADES TO MINIMIZE COST, SCHEDULE, AND TECHNICAL RISKS. THE GOVERNMENT CONTEMPLATES THE COMPETITIVE AWARD OF UP TO THREE COST-PLUS FIXED-FEE (CPFF) CONTRACTS RESULTING FROM THIS SOLICITATION, BUT RESERVES THE RIGHT TO MAKE FEWER THAN THREE AWARDS, MORE THAN THREE AWARDS, OR NO AWARD AT ALL.

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $46.4 million to RAYTHEON COMPANY for work described as: THE MISSILE DEFENSE AGENCY (MDA) WILL ACQUIRE THE NEXT GENERATION INTERCEPTOR FOR FIELDING IN 2020 AS AN ELEMENT OF THE BALLISTIC MISSILE DEFENSE SYSTEM (BMDS). THE NEXT GENERATION AEGIS MISSILE (NGAM) WILL BE DESIGNED TO PROVIDE EARLY INTERCEPT CAPABILITY AGAINST SOME SHORT RANG… Key points: 1. Contract focuses on research and development for a new missile defense capability. 2. The acquisition aims to counter a range of ballistic missile threats. 3. Development is phased, with concept definition starting in 2011 and product development in FY13. 4. The contract is a Cost Plus Fixed Fee type, indicating potential for cost overruns. 5. Raytheon Company is the awarded contractor. 6. The contract duration is 1515 days, ending in May 2015. 7. This effort is part of the broader Ballistic Missile Defense System. 8. The contract is not set aside for small businesses.

Value Assessment

Rating: fair

The contract value of $46.4 million for a concept and development phase of a complex missile system appears reasonable given the scope. However, without specific benchmarks for similar R&D efforts in advanced missile technology, a precise value-for-money assessment is challenging. The Cost Plus Fixed Fee (CPFF) contract type introduces inherent risk, as costs can exceed initial estimates, though the fixed fee provides some contractor incentive. Further analysis would require comparing the proposed development approach and projected costs against industry standards for similar technological advancements.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, suggesting that multiple companies had the opportunity to bid. This competitive process is generally expected to drive better pricing and innovation. The number of bidders is not specified in the provided data, which limits a deeper analysis of the competition's intensity. However, the 'full and open' designation is a positive indicator for taxpayer value.

Taxpayer Impact: Full and open competition typically leads to more competitive pricing, potentially saving taxpayer dollars compared to sole-source or limited competition awards.

Public Impact

The primary beneficiaries are the U.S. military and national security, through enhanced missile defense capabilities. The services delivered include research, design, and development of the Next Generation Aegis Missile. The geographic impact is national, contributing to the overall Ballistic Missile Defense System. Workforce implications include employment for engineers, scientists, and technical personnel involved in advanced defense R&D.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Fixed Fee contract type can lead to cost overruns if not managed tightly.
The development timeline is ambitious, potentially leading to schedule slips.
The complexity of the technology introduces technical risks.
Reliance on a single contractor for this critical development phase.

Positive Signals

Awarded under full and open competition, promoting a competitive environment.
Focus on developing a critical national security capability.
Phased approach allows for review and adjustment at key milestones.
Contractor (Raytheon) has significant experience in defense systems.

Sector Analysis

This contract falls within the Defense sector, specifically focusing on Research and Development (R&D) for advanced missile systems. The market for missile defense technology is highly specialized, characterized by significant R&D investment, long development cycles, and a limited number of prime contractors with the requisite expertise. Spending in this area is driven by evolving geopolitical threats and the need for continuous technological advancement to maintain a strategic advantage. Comparable spending benchmarks would likely be found within other major defense acquisition programs for advanced weapon systems.

Small Business Impact

The data indicates this contract was not set aside for small businesses (ss: false, sb: false). This suggests that the prime contract was awarded to a large defense contractor, Raytheon Company. While there are no direct subcontracting implications specified, large prime contractors are often required to have small business subcontracting plans. The absence of a small business set-aside means that opportunities for direct prime contracting for small businesses in this specific R&D effort are limited.

Oversight & Accountability

Oversight for this contract would primarily be conducted by the Department of Defense, likely through the Defense Contract Management Agency (DCMA), as indicated by the 'sa' field. Accountability measures would be embedded in the contract terms, including performance milestones and financial reporting requirements. Transparency is generally maintained through contract awards databases and public reporting on defense spending, although specific R&D details may be sensitive. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Ballistic Missile Defense System (BMDS)
Aegis Weapon System (AWS)
MK 41 Vertical Launching System (VLS)
Missile Defense Agency (MDA) Research and Development Programs

Risk Flags

Cost Plus Fixed Fee contract type
Development of advanced, complex technology
Potential for schedule delays in R&D
Evolving threat landscape requiring system adaptation

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $46.4 million to RAYTHEON COMPANY. THE MISSILE DEFENSE AGENCY (MDA) WILL ACQUIRE THE NEXT GENERATION INTERCEPTOR FOR FIELDING IN 2020 AS AN ELEMENT OF THE BALLISTIC MISSILE DEFENSE SYSTEM (BMDS). THE NEXT GENERATION AEGIS MISSILE (NGAM) WILL BE DESIGNED TO PROVIDE EARLY INTERCEPT CAPABILITY AGAINST SOME SHORT RANGE BALLISTIC MISSILES (SRBM), ALL MEDIUM RANGE BALLISTIC MISSILES (MRBM), ALL INTERMEDIATE RANGE BALLISTIC MISSILES (IRBM) AND NON-ADVANCED INTERCONTINENTAL BALLISTIC MISSILES (ICBM) LAUNCHED FROM THE REGION WHERE AEGIS W

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 $46.4 million.

What is the period of performance?

Start: 2011-04-07. End: 2015-05-31.

What is Raytheon Company's track record with similar missile development contracts?

Raytheon Company has a long and extensive track record in developing advanced missile systems and defense technologies for the U.S. military and international partners. They are a major player in the defense industry, with significant experience in areas such as air and missile defense, radar systems, and command and control. Their portfolio includes programs like the Standard Missile family, Patriot air defense system, and various offensive missile systems. This experience suggests a strong capability to undertake complex R&D projects like the Next Generation Aegis Missile. However, like any large defense contractor, they have also faced scrutiny and challenges on various programs regarding cost, schedule, and performance, necessitating robust government oversight.

How does the $46.4 million development cost compare to similar advanced missile R&D efforts?

Directly comparing the $46.4 million cost for the concept and program planning phase of the Next Generation Aegis Missile (NGAM) to similar efforts is challenging without access to proprietary program data and detailed cost breakdowns. However, R&D for advanced weapon systems, particularly those involving complex integration and cutting-edge technology like missile defense, is inherently expensive. This figure represents an initial investment for a critical capability. Factors influencing cost include the novelty of the technology, the required testing and simulation, the expertise of the personnel involved, and the specific threat environment it aims to counter. Broader defense R&D budgets often run into billions for major system developments, making this initial phase cost appear relatively contained, but it is only a fraction of the total program lifecycle cost.

What are the primary risks associated with the development of the Next Generation Aegis Missile?

The primary risks associated with the development of the Next Generation Aegis Missile (NGAM) are multifaceted. Technologically, integrating new interceptor capabilities with existing Aegis Weapon Systems (AWS) and ensuring effectiveness against a spectrum of ballistic missile threats (SRBM, MRBM, IRBM, non-advanced ICBM) presents significant engineering challenges. Schedule risks are present due to the ambitious timeline and the inherent uncertainties in R&D, potentially leading to delays. Cost risks are amplified by the Cost Plus Fixed Fee (CPFF) contract type, which offers less cost certainty than fixed-price contracts. Furthermore, the evolving nature of missile threats requires continuous adaptation, adding complexity. Finally, operational risks include ensuring the system's reliability, maintainability, and successful integration into the broader Ballistic Missile Defense System (BMDS).

How effective is the Next Generation Aegis Missile expected to be based on its design goals?

Based on its design goals, the Next Generation Aegis Missile (NGAM) is intended to provide a crucial early intercept capability against a wide range of ballistic missile threats. Its design aims to counter Short Range Ballistic Missiles (SRBM), Medium Range Ballistic Missiles (MRBM), Intermediate Range Ballistic Missiles (IRBM), and non-advanced Intercontinental Ballistic Missiles (ICBM) launched from regions covered by Aegis Weapon Systems. The 'early intercept' capability suggests a focus on engaging threats closer to their launch point, potentially increasing the overall effectiveness and survivability of the Ballistic Missile Defense System (BMDS). The success of this effectiveness hinges on the successful completion of the R&D phases and the system's ability to perform as designed in real-world scenarios, which will be validated through rigorous testing and evaluation.

Historical spending patterns for Aegis missile development programs, including upgrades and new variants, have been substantial, reflecting the critical nature of naval air and missile defense. The Ae

Historical spending patterns for Aegis missile development programs, including upgrades and new variants, have been substantial, reflecting the critical nature of naval air and missile defense. The Aegis system itself has seen decades of investment, with numerous upgrades and associated missile developments. Specific programs like the Standard Missile (SM) series, which includes variants for ballistic missile defense (e.g., SM-3), have incurred billions of dollars in R&D and procurement costs over their lifecycles. The Missile Defense Agency (MDA) budget, in general, represents a significant portion of the Department of Defense's spending, driven by the perceived threat landscape. While the $46.4 million for the NGAM concept phase is a specific figure for this contract, it should be viewed within the context of a much larger, ongoing investment in comprehensive missile defense capabilities.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Scientific Research and Development Services › Research and Development in the Physical, Engineering, and Life Sciences (except Biotechnology)

Product/Service Code: AMMUNITION AND EXPLOSIVES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: HQ014710R0027

Offers Received: 4

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

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: $49,014,724

Exercised Options: $49,014,724

Current Obligation: $46,363,226

Subaward Activity

Number of Subawards: 49

Total Subaward Amount: $6,521,099

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline