DoD Awards Raytheon $2.76B for SM-3 Block IIA Missile RDT&E, Sole-Source
Contract Overview
Contract Amount: $2,761,989,702 ($2.8B)
Contractor: Raytheon Company
Awarding Agency: Department of Defense
Start Date: 2015-07-22
End Date: 2025-12-31
Contract Duration: 3,815 days
Daily Burn Rate: $724.0K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: COST NO FEE
Sector: Defense
Official Description: SM-3 BLK IIA RDT&E GUIDED MISSILE ROUNDS
Place of Performance
Location: TUCSON, PIMA County, ARIZONA, 85756
State: Arizona Government Spending
Plain-Language Summary
Department of Defense obligated $2.76 billion to RAYTHEON COMPANY for work described as: SM-3 BLK IIA RDT&E GUIDED MISSILE ROUNDS Key points: 1. Significant investment in advanced missile defense technology. 2. Sole-source award to Raytheon raises competition concerns. 3. High R&D spending in a critical defense sector. 4. Long-term contract duration suggests ongoing development needs.
Value Assessment
Rating: questionable
The contract's Cost Plus Fixed Fee (CPFF) structure for RDT&E can lead to cost overruns if not managed tightly. Benchmarking is difficult due to the specialized nature of this advanced missile system.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This is a sole-source award, meaning competition was not sought. This limits price discovery and potentially leads to higher costs for taxpayers compared to a competitive process.
Taxpayer Impact: The lack of competition for a contract of this magnitude raises concerns about potential overspending and the efficient use of taxpayer funds.
Public Impact
Enhances national missile defense capabilities. Supports advanced technological development in the defense industry. Potential for job creation within Raytheon and its supply chain. Impacts geopolitical stability through advanced defense systems.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award limits competition.
- Cost-plus contract type can incentivize higher spending.
- Long contract duration may mask inefficiencies.
Positive Signals
- Critical technology development for national security.
- Supports a key defense contractor.
Sector Analysis
This contract falls within the Research and Development in Physical, Engineering, and Life Sciences sector, specifically for advanced missile systems. Defense R&D spending is a significant portion of the federal budget, with contracts like this representing substantial investments in technological superiority.
Small Business Impact
No information is provided regarding small business participation in this contract. Sole-source awards often have limited subcontracting opportunities for small businesses unless specifically mandated.
Oversight & Accountability
The Department of Defense, through the Defense Contract Management Agency, is responsible for oversight. However, the sole-source nature and cost-plus fee structure necessitate robust oversight to ensure cost control and performance.
Related Government Programs
- Research and Development in the Physical, Engineering, and Life Sciences (except Biotechnology)
- Department of Defense Contracting
- Defense Contract Management Agency Programs
Risk Flags
- Lack of competition.
- Potential for cost overruns.
- Limited transparency in pricing.
- Contract duration and scope creep risks.
Tags
research-and-development-in-the-physical, department-of-defense, az, definitive-contract, billion-dollar
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $2.76 billion to RAYTHEON COMPANY. SM-3 BLK IIA RDT&E GUIDED MISSILE ROUNDS
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 $2.76 billion.
What is the period of performance?
Start: 2015-07-22. End: 2025-12-31.
What is the justification for the sole-source award, and what steps are taken to ensure fair pricing without competition?
The justification for a sole-source award typically involves unique capabilities or proprietary technology. The agency should have documented this justification. To ensure fair pricing, the government often conducts extensive cost realism analyses and may negotiate profit margins rigorously, even without direct competition, to mitigate the absence of market-driven price discovery.
How is cost growth managed under this Cost Plus Fixed Fee (CPFF) contract for RDT&E?
Managing cost growth in CPFF RDT&E contracts requires stringent government oversight. This includes regular reviews of contractor cost estimates, performance metrics, and technical progress. The fixed fee provides an incentive for the contractor to control costs, but the government must actively monitor expenditures and scope to prevent uncontrolled escalation of the total contract value.
What are the key performance indicators (KPIs) for this RDT&E contract, and how is success measured?
Key performance indicators for this RDT&E contract would likely focus on technical milestones, prototype development, testing outcomes, and adherence to design specifications for the SM-3 Block IIA missile. Success is measured by the contractor's ability to achieve these defined technical objectives within the allocated budget and schedule, ultimately leading to a deployable and effective missile system.
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: GUIDED MISSLES
Competition & Pricing
Extent Competed: NOT COMPETED
Solicitation Procedures: ONLY ONE SOURCE
Solicitation ID: HQ027614R0003
Offers Received: 1
Pricing Type: COST NO FEE (S)
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: $2,821,666,613
Exercised Options: $2,821,666,613
Current Obligation: $2,761,989,702
Actual Outlays: $594,905,716
Subaward Activity
Number of Subawards: 1795
Total Subaward Amount: $5,483,841,891
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2015-07-22
Current End Date: 2025-12-31
Potential End Date: 2025-12-31 00:00:00
Last Modified: 2025-11-13
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