Raytheon Company awarded $82M contract for Beryllium Mining Capacity, impacting guided missile manufacturing

Contract Overview

Contract Amount: $82,089,127 ($82.1M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2025-09-22

End Date: 2028-09-21

Contract Duration: 1,095 days

Daily Burn Rate: $75.0K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: SM-3 BERYLLIUM MINING CAPACITY

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $82.1 million to RAYTHEON COMPANY for work described as: SM-3 BERYLLIUM MINING CAPACITY Key points: 1. Contract supports critical materials for defense manufacturing, ensuring supply chain resilience. 2. Sole-source award raises questions about price discovery and potential for cost overruns. 3. Long-term contract duration (5 years) suggests strategic importance but requires ongoing oversight. 4. Geographic concentration in Arizona highlights regional economic impact and potential supply chain risks. 5. Focus on specialized materials indicates a niche but vital role within the defense industrial base.

Value Assessment

Rating: fair

The contract's value of $82 million over five years for beryllium mining capacity is difficult to benchmark without specific cost breakdowns. As a sole-source award for a specialized material, direct comparisons to similar contracts are limited. The cost-plus-fixed-fee structure necessitates close monitoring to ensure costs remain reasonable and that the fixed fee adequately compensates the contractor for the effort without excessive profit. Further analysis of the contractor's historical performance on similar cost-plus contracts would be beneficial.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning there was no open competition. This approach is typically justified when only one responsible source can provide the required supplies or services. However, the lack of competition limits the government's ability to explore alternative solutions or negotiate the most favorable pricing. It suggests a unique capability or a critical, time-sensitive need that precluded a competitive process.

Taxpayer Impact: Sole-source awards can potentially lead to higher costs for taxpayers as the government does not benefit from competitive bidding to drive down prices. It also reduces transparency in the procurement process.

Public Impact

The primary beneficiaries are defense contractors requiring specialized beryllium for missile production. Services delivered include the mining and processing of beryllium, a critical raw material. Geographic impact is concentrated in Arizona, where the mining operations are located. Workforce implications include potential job creation in specialized mining and processing roles within Arizona.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source nature limits competitive pressure on pricing.
Cost-plus-fixed-fee contract requires diligent oversight to manage costs.
Long contract duration may obscure potential for more efficient alternatives over time.
Reliance on a single source for a critical material poses supply chain risk.
Geographic concentration of operations increases vulnerability to regional disruptions.

Positive Signals

Secures a critical raw material essential for advanced defense systems.
Long-term commitment provides stability for the contractor and ensures supply.
Focus on specialized material supports unique technological requirements.
Contracting with an established entity like Raytheon suggests a degree of reliability.

Sector Analysis

The defense industrial base relies on a complex network of specialized suppliers for critical raw materials. Beryllium is a lightweight, high-strength metal vital for aerospace and defense applications, particularly in missile systems due to its thermal and structural properties. The market for such specialized materials is often concentrated among a few key players, making sole-source or limited competition awards more common. This contract fits within the broader 'Guided Missile and Space Vehicle Manufacturing' sector, ensuring the availability of a key input.

Small Business Impact

This contract does not appear to involve small business set-asides, as indicated by 'sb': false. Given the specialized nature of beryllium mining and processing, it is unlikely that small businesses would be primary contractors for such a large-scale operation. Subcontracting opportunities for small businesses might exist in supporting roles, such as logistics or specialized equipment maintenance, but the primary awardee is a large corporation. The direct impact on the small business ecosystem appears minimal for this specific contract.

Oversight & Accountability

Oversight for this cost-plus-fixed-fee contract will likely fall under the purview of the Missile Defense Agency and potentially the Department of Defense's Inspector General. Accountability measures will focus on ensuring that costs incurred are reasonable and allocable to the contract, and that the fixed fee is earned. Transparency may be limited due to the sole-source nature, but contract performance reviews and financial audits are standard oversight mechanisms.

Related Government Programs

Guided Missile Manufacturing
Aerospace Materials Procurement
Defense Supply Chain Management
Critical Minerals for Defense

Risk Flags

Sole Source Award
Cost-Plus-Fixed-Fee Contract
Critical Material Dependency
Geographic Concentration Risk
Long-Term Contract Duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $82.1 million to RAYTHEON COMPANY. SM-3 BERYLLIUM MINING CAPACITY

Who is the contractor on this award?

The obligated recipient is RAYTHEON COMPANY.

Which agency awarded this contract?

Awarding agency: Department of Defense (Missile Defense Agency).

What is the total obligated amount?

The obligated amount is $82.1 million.

What is the period of performance?

Start: 2025-09-22. End: 2028-09-21.

What is Raytheon Company's track record with sole-source, cost-plus-fixed-fee contracts for specialized materials?

Raytheon Company, as a major defense contractor, has extensive experience with various contract types, including sole-source and cost-plus-fixed-fee (CPFF) arrangements. CPFF contracts are common for research and development or when costs are uncertain, allowing the contractor to recover allowable costs plus a fixed fee representing profit. While CPFF can provide flexibility, it requires robust government oversight to prevent cost escalation. Raytheon's historical performance on similar contracts would need to be reviewed to assess their efficiency and cost control in managing such agreements. Past performance evaluations and audit reports from the DoD would provide crucial insights into their ability to deliver within expected cost parameters and meet performance objectives under these specific contract structures.

How does the $82 million value compare to historical spending on beryllium mining capacity for defense?

Direct historical spending comparisons for 'SM-3 BERYLLIUM MINING CAPACITY' are challenging without more granular data. The provided data indicates a total contract value of $82,089,127 with a duration of 1095 days (approximately 3 years, though the end date suggests closer to 5 years). This figure represents a significant investment in a specialized capability. To benchmark this value, one would need to analyze historical contract awards for beryllium extraction, processing, or related materials within the defense sector over the past decade. Factors such as inflation, technological advancements, and shifts in demand for specific missile systems would influence year-over-year comparisons. Without access to a comprehensive database of past contracts specifically for this niche, assessing whether $82 million is high, low, or average is difficult.

What are the primary risks associated with a sole-source award for critical defense materials?

The primary risks associated with a sole-source award for critical defense materials like beryllium include potential price inflation due to lack of competition, reduced incentive for the contractor to innovate or improve efficiency, and a heightened vulnerability in the supply chain. Without competitive pressure, the government may pay a premium. Furthermore, if the sole-source provider experiences operational issues, production delays, or goes out of business, the defense programs relying on this material could face significant disruptions. This also limits the government's ability to explore alternative materials or suppliers that might offer better value or performance characteristics.

How effective is the cost-plus-fixed-fee (CPFF) contract structure in ensuring value for money for this type of specialized mining operation?

The effectiveness of the CPFF structure for ensuring value for money in specialized mining operations is mixed and heavily dependent on oversight. CPFF allows the contractor to recoup all allowable costs plus a predetermined fixed fee. This structure is beneficial when the scope of work or costs are uncertain, as is often the case in mining. However, it provides less incentive for the contractor to control costs compared to fixed-price contracts, as the profit (fixed fee) is constant regardless of the final cost. Value for money is therefore contingent on rigorous government monitoring of costs, effective negotiation of the fee, and clear performance metrics. Without strong oversight, there's a risk of cost overruns that are passed on to the government.

What are the implications of the contract's 5-year duration (ending 2028) on long-term strategic planning and potential obsolescence?

A 5-year duration for a contract supporting critical materials like beryllium suggests a long-term strategic commitment by the Missile Defense Agency to ensure supply chain stability for key programs. This duration provides predictability for the contractor, potentially encouraging investment in capacity and technology. However, it also carries implications. Over five years, technological advancements in missile systems or alternative materials could emerge, potentially making the current reliance on this specific beryllium source less optimal or even obsolete. Strategic planning must consider this potential for technological shifts. Furthermore, a long duration without periodic re-evaluation or competitive phasing could lock the government into a potentially suboptimal arrangement if market conditions or technological needs change significantly.

What is the significance of the contract being for 'SM-3 BERYLLIUM MINING CAPACITY' rather than finished components?

The contract's focus on 'SM-3 BERYLLIUM MINING CAPACITY' signifies that the government is investing in the upstream, foundational element of the supply chain. Instead of procuring finished components, the Department of Defense is ensuring the availability and potentially the expansion of the raw material source itself. This is a strategic move to secure a critical input material essential for the production of SM-3 missiles (and potentially other defense systems). It addresses potential bottlenecks at the very beginning of the manufacturing process, recognizing that without sufficient raw beryllium, downstream production is impossible. This approach suggests a proactive effort to bolster the defense industrial base by securing essential resources.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Guided Missile and Space Vehicle Manufacturing

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: Rockwell Collins Australia PTY Limited

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: $82,089,127

Exercised Options: $82,089,127

Current Obligation: $82,089,127

Subaward Activity

Number of Subawards: 1

Total Subaward Amount: $25,969,931

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: HQ085121D0001

IDV Type: IDC

Timeline