DoD Awards Raytheon $2.36B for SM-3 Block IIA AURS Through 2031

Contract Overview

Contract Amount: $2,361,971,005 ($2.4B)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2024-07-25

End Date: 2031-02-28

Contract Duration: 2,409 days

Daily Burn Rate: $980.5K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIXED PRICE INCENTIVE

Sector: Defense

Official Description: FY 23-25 SM-3 BLOCK IIA AURS

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $2.36 billion to RAYTHEON COMPANY for work described as: FY 23-25 SM-3 BLOCK IIA AURS Key points: 1. Significant investment in advanced missile defense capabilities. 2. Sole-source award to Raytheon, limiting competitive pricing pressure. 3. Long contract duration (2031) presents potential for cost overruns. 4. Focus on guided missile manufacturing highlights critical defense sector spending.

Value Assessment

Rating: questionable

The fixed-price incentive contract type aims to control costs, but the lack of competition and long duration raise concerns about overall value. Benchmarking against similar advanced missile system contracts is difficult due to the sole-source nature.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award to Raytheon. This significantly limits price discovery and potentially leads to higher costs for taxpayers compared to a competitive process.

Taxpayer Impact: The lack of competition for this substantial contract likely results in a higher cost to taxpayers than if multiple vendors had vied for the work.

Public Impact

Enhances national missile defense capabilities. Supports advanced technological development in the defense industry. Ensures continued production of a critical defense asset. Potential for job creation within Raytheon and its supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 75 / 10

Warning Flags

Sole-source award
Long contract duration
Lack of transparency in pricing

Positive Signals

Critical defense capability
Advanced technology development
Long-term production commitment

Sector Analysis

This contract falls within the defense sector, specifically guided missile and space vehicle manufacturing. Spending in this area is crucial for national security, but often involves high costs due to specialized technology and limited suppliers.

Small Business Impact

The contract is awarded to Raytheon Company, a large prime contractor. There is no explicit mention of small business participation in this sole-source award, suggesting limited direct benefit to small businesses through this specific contract.

Oversight & Accountability

The Department of Defense, through the Defense Contract Management Agency, is overseeing this contract. The fixed-price incentive structure implies some level of performance and cost oversight, but the sole-source nature warrants close monitoring.

Related Government Programs

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

Risk Flags

Lack of competition
Potential for cost overruns
Long contract duration
Limited transparency on pricing
No explicit small business set-aside

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $2.36 billion to RAYTHEON COMPANY. FY 23-25 SM-3 BLOCK IIA AURS

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 $2.36 billion.

What is the period of performance?

Start: 2024-07-25. End: 2031-02-28.

What is the projected cost per missile unit under this contract, and how does it compare to previous procurements or industry benchmarks?

The provided data does not specify a per-unit cost. The total award amount is $2.36 billion over approximately 2409 days. Without a breakdown of units or a competitive benchmark, assessing the per-unit cost's value is challenging. Further analysis would require access to detailed cost breakdowns and comparisons with similar missile systems.

What are the specific risks associated with a sole-source, fixed-price incentive contract for advanced missile systems, and how are they being mitigated?

Key risks include inflated pricing due to lack of competition, potential for scope creep, and contractor complacency. Mitigation strategies might involve stringent government oversight, detailed performance metrics, and clear incentive structures tied to cost savings and performance targets, though these are not detailed in the provided data.

How effective is the fixed-price incentive contract structure in ensuring the government receives the best value for taxpayer dollars on this sole-source award?

The effectiveness is questionable. While the incentive structure aims to align contractor and government interests on cost and performance, the absence of competition inherently limits the government's leverage. The government relies heavily on its negotiation and oversight capabilities to secure value, which is more challenging without competing offers.

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

Solicitation ID: HQ085123R0001

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: $2,948,638,505

Exercised Options: $2,948,638,505

Current Obligation: $2,361,971,005

Actual Outlays: $9,821,672

Subaward Activity

Number of Subawards: 13

Total Subaward Amount: $1,525,504

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline