Raytheon Company awarded $794.6M for Tomahawk missile systems development, with R&D spending reaching $20.7M

Contract Overview

Contract Amount: $20,669,212 ($20.7M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2003-04-16

End Date: 2007-07-31

Contract Duration: 1,567 days

Daily Burn Rate: $13.2K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS AWARD FEE

Sector: Defense

Official Description: 200307!000015!1700!AT716 !NAVAL AIR SYSTEMS COMMAND !N0001902C3072 !A!N! !N!P00001 !20030416!20051231!794598573!794598573!001339159!N!RAYTHEON COMPANY !1151 EAST HERMANS ROAD !TUCSON !AZ!85706!77000!019!04!TUCSON !PIMA !ARIZONA !+000000103882!N!N!000000000000!AC25!RDTE/MISSILE AND SPACE SYSTEMS-ENG/MANUF DEVEL !A2 !MISSILE AND SPACE SYSTEMS !2CNY!BGM-109 TOMAHAWK !541710!E! !3! ! !C! ! !99990909!B! ! !A! !D!U!R!1!001!N!1A!Z!Y!Z! ! !N!C!N! ! ! !A!A!A!A!000!A!C!N! ! ! ! !1719!N00019!0001! !

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85734, UNITED STATES OF AMERICA

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $20.7 million to RAYTHEON COMPANY for work described as: 200307!000015!1700!AT716 !NAVAL AIR SYSTEMS COMMAND !N0001902C3072 !A!N! !N!P00001 !20030416!20051231!794598573!794598573!001339159!N!RAYTHEON COMPANY !1151 EAST HERMANS ROAD !TUCSON !AZ!85706!77000!019!04!TUCSON !PIMA !ARIZONA !+000000103882!N!N!000000000000!AC25!RDTE/MISSILE AN… Key points: 1. Contract awarded for Tomahawk missile systems development, indicating a significant investment in defense technology. 2. The contract's cost-plus-award-fee structure incentivizes performance while allowing for cost flexibility. 3. A long duration of 1567 days suggests a complex and lengthy development or sustainment effort. 4. The primary focus on Research, Development, Test, and Engineering (RDTE) highlights innovation in missile systems. 5. The contract was not competed, raising questions about potential cost efficiencies and market competition. 6. The total award amount of $794.6 million signifies a substantial commitment by the Department of the Navy.

Value Assessment

Rating: fair

The contract's cost-plus-award-fee (CPAF) structure can lead to cost overruns if not managed carefully. Benchmarking this specific contract's value is challenging without comparable CPAF contracts for Tomahawk missile development. The total award of $794.6 million over a 1567-day period suggests a significant investment, but the value for money depends heavily on the successful development and performance of the missile systems. The raw dollar amount for R&D is $20.7 million, which needs to be assessed against the project's scope and objectives.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award. This typically occurs when a specific contractor possesses unique capabilities, intellectual property, or is the sole provider of a critical component or service. The lack of competition means that price discovery through market forces was bypassed, potentially leading to higher costs for the government compared to a competitive procurement.

Taxpayer Impact: For taxpayers, a sole-source award means there was no opportunity to benefit from competitive bidding, which usually drives down prices. This could result in a less efficient use of public funds if alternative, more cost-effective solutions were available.

Public Impact

The primary beneficiaries are the Department of the Navy and potentially other branches of the U.S. military relying on advanced missile systems. The contract delivers services related to the research, development, engineering, and manufacturing of the BGM-109 Tomahawk missile system. The geographic impact is primarily within the United States, with Raytheon Company located in Tucson, Arizona. This contract supports a highly specialized workforce in aerospace engineering, missile systems development, and manufacturing.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to higher costs for taxpayers.
Cost-plus-award-fee contracts can incentivize cost growth if not rigorously overseen.
Long contract duration increases the risk of scope creep and evolving requirements.
Sole-source nature limits opportunities for small businesses to participate directly.

Positive Signals

Award to a known contractor (Raytheon) suggests reliance on established expertise.
Focus on R&D indicates investment in future defense capabilities.
The contract supports a critical defense asset (Tomahawk missile).

Sector Analysis

This contract falls within the Aerospace and Defense sector, specifically focusing on missile and space systems. The market for advanced missile technology is highly specialized, dominated by a few large defense contractors. Spending in this area is driven by national security priorities and technological advancements. Comparable spending benchmarks would involve other major defense contracts for weapon system development and procurement, often running into hundreds of millions or billions of dollars.

Small Business Impact

The data indicates this contract was not competed and there is no explicit mention of small business set-asides or subcontracting plans. As a sole-source award to a large prime contractor, the direct impact on small businesses is likely limited unless Raytheon actively engages them for subcontracting opportunities. The absence of set-aside provisions suggests that the primary focus was on the prime contractor's capabilities.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. The cost-plus-award-fee structure necessitates close monitoring of costs and performance to ensure the award fee is justified. Transparency may be limited due to the sole-source nature and the sensitive defense-related aspects of the work. Inspector General jurisdiction would apply to investigations of fraud, waste, or abuse.

Related Government Programs

Tomahawk Weapon System
Missile Defense Programs
Naval Aviation Systems
Advanced Weapons Development
Department of Defense Research and Development

Risk Flags

Sole-source award may limit cost savings.
Cost-plus-award-fee structure requires diligent oversight to control costs.
Long contract duration increases risk exposure.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $20.7 million to RAYTHEON COMPANY. 200307!000015!1700!AT716 !NAVAL AIR SYSTEMS COMMAND !N0001902C3072 !A!N! !N!P00001 !20030416!20051231!794598573!794598573!001339159!N!RAYTHEON COMPANY !1151 EAST HERMANS ROAD !TUCSON !AZ!85706!77000!019!04!TUCSON !PIMA !ARIZONA !+000000103882!N!N!000000000000!AC25!RDTE/MISSILE AND SPACE SYSTEMS-ENG/MANUF DEVEL !A2 !MISSILE AND SPACE SYSTEMS !2CNY!BGM-109 TOMAHAWK !541710!E! !3! ! !C! ! !99990909!B! ! !A! !D!U!R!1!001!N!1A!Z!Y!Z! ! !N!C!N! ! ! !A!A!A!A!000!A!C!N! ! ! ! !1719!N00019!0001! !

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 Navy).

What is the total obligated amount?

The obligated amount is $20.7 million.

What is the period of performance?

Start: 2003-04-16. End: 2007-07-31.

What is the historical spending trend for the Tomahawk missile program under Raytheon Company?

Analyzing historical spending for the Tomahawk missile program under Raytheon requires access to broader contract data beyond this single award. This specific contract, awarded in 2003 for a period ending in 2007, represents a portion of the overall program cost. To understand trends, one would need to examine prior and subsequent contracts for Tomahawk development, production, and sustainment awarded to Raytheon or its predecessors. Factors influencing spending include technological upgrades, production rates, operational deployments, and changes in defense strategy. Without a comprehensive dataset, it's difficult to establish a definitive historical spending trend solely from this information.

How does the per-unit cost of the Tomahawk missile compare to similar missile systems?

Determining the per-unit cost of the Tomahawk missile from this contract is not feasible. This award is for Research, Development, Test, and Engineering (RDTE), not for the production of a specific number of units at a fixed price. RDTE contracts often involve significant upfront investment in design, prototyping, and testing, making direct per-unit cost comparisons misleading. The actual per-unit production cost would be determined in separate procurement contracts. To compare, one would need data from production contracts for the Tomahawk and similar missiles (e.g., cruise missiles, air-to-ground missiles) from different manufacturers, factoring in their respective capabilities, range, payload, and technological sophistication.

What are the key performance metrics and award criteria for the 'award fee' component of this contract?

The specific performance metrics and award criteria for the 'award fee' component of this Cost Plus Award Fee (CPAF) contract are not detailed in the provided data. Typically, for defense R&D contracts, award fees are tied to achieving specific technical milestones, adhering to development schedules, managing costs effectively within defined parameters, and demonstrating superior performance in areas like system reliability or integration. The Department of the Navy would have established a detailed Performance Requirements Document (PRD) outlining these criteria. Raytheon would then be evaluated against these metrics, and a portion of the potential award fee would be granted based on the level of achievement, incentivizing them to exceed minimum requirements.

What is the assessed risk level associated with this contract, and what mitigation strategies are in place?

The provided data does not explicitly state a risk level assessment or detail mitigation strategies for this contract. However, several factors suggest potential risks. The sole-source nature carries a risk of higher costs and potential vendor lock-in. The CPAF structure, while incentivizing, also carries a risk of cost escalation if not managed tightly. The long duration (1567 days) increases the risk of requirement changes, technological obsolescence, or contractor performance issues over time. Mitigation strategies would typically involve robust government oversight, regular performance reviews, clear definition of contract milestones, and potentially incorporating incentives for risk reduction within the award fee structure. The Department of the Navy's program office would be responsible for identifying and managing these risks.

What is the significance of the NAICS code 541710 (Research and Development in the Physical, Engineering, and Life Sciences) for this contract?

The NAICS code 541710 signifies that the primary purpose of this contract is to conduct research and development activities within the physical, engineering, and life sciences. For this specific contract awarded to Raytheon Company, it confirms that the work involves scientific and technical services aimed at advancing the capabilities of the BGM-109 Tomahawk missile system. This includes activities like basic research, applied research, experimental development, and possibly prototype development. It distinguishes this contract from purely manufacturing or service contracts, highlighting the focus on innovation, design, and technological improvement rather than mass production.

Industry Classification

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

Product/Service Code: RESEARCH AND DEVELOPMENT › C – National Defense R&D Services

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS AWARD FEE (R)

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

Contract Characteristics

Cost or Pricing Data: YES

Timeline