DoD's $293M Raytheon Contract for Guided Missiles: A Long-Term, Non-Competed Award

Contract Overview

Contract Amount: $293,271,912 ($293.3M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2002-10-03

End Date: 2020-12-31

Contract Duration: 6,664 days

Daily Burn Rate: $44.0K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIXED PRICE INCENTIVE

Sector: Defense

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $293.3 million to RAYTHEON COMPANY for work described as: Key points: 1. Significant long-term award to a major defense contractor. 2. Lack of competition raises questions about price discovery. 3. Fixed Price Incentive contract type aims to balance cost and performance. 4. Potential for cost overruns exists despite incentive structure.

Value Assessment

Rating: fair

The $293M award over 18 years suggests a high per-unit cost, though specific unit pricing is not provided. Without comparable contracts or detailed cost breakdowns, assessing value for money is challenging.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

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

Taxpayer Impact: The absence of competition may result in inflated prices, impacting taxpayer funds negatively over the contract's long duration.

Public Impact

Taxpayers may be paying a premium due to the lack of competitive bidding. Long contract duration (over 18 years) ties up significant resources. Reliance on a single contractor for critical missile systems poses a strategic risk.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition
Long contract duration
Potential for cost overruns

Positive Signals

Award to established defense contractor
Fixed Price Incentive contract type

Sector Analysis

This contract falls within the Defense sector, specifically guided missile manufacturing. Spending in this area is critical for national security but often involves high costs and limited competition due to specialized requirements.

Small Business Impact

The data indicates this is a large prime contract awarded to Raytheon Company, with no indication of small business subcontracting participation. Further analysis would be needed to determine if small businesses were involved.

Oversight & Accountability

The long duration and sole-source nature of this contract warrant robust oversight to ensure cost control and performance. The Department of Defense and its agencies are responsible for monitoring this award.

Related Government Programs

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

Risk Flags

Lack of competition may lead to inflated costs.
Long contract duration increases long-term financial exposure.
Potential for cost overruns despite FPI structure.
Sole-source award limits market-based price discovery.
No clear indication of small business participation.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $293.3 million to RAYTHEON COMPANY. See the official description on USAspending.

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 $293.3 million.

What is the period of performance?

Start: 2002-10-03. End: 2020-12-31.

What was the rationale for awarding this contract sole-source instead of competing it?

Sole-source awards are typically justified when only one responsible source can provide the required supplies or services, often due to unique capabilities, proprietary technology, or urgent national security needs. Without specific documentation, the exact justification for this Raytheon contract remains unclear, but it likely relates to specialized missile technology or existing platform integration.

How does the Fixed Price Incentive (FPI) structure mitigate cost risks for this long-term missile contract?

The FPI contract type establishes a target cost, target profit, and a ceiling price. It incentivizes the contractor to control costs by sharing savings below the target cost and sharing cost overruns up to the ceiling price. For this long-term contract, it aims to align Raytheon's profit with cost efficiency, though the extended duration could still present challenges in accurately forecasting and controlling costs.

What is the potential long-term financial exposure for taxpayers given the contract's duration and lack of competition?

The $293 million obligation over nearly 19 years, awarded without competition, represents a significant and potentially escalating financial commitment. The lack of competitive pressure could allow costs to drift upwards over time, even with the FPI structure. Taxpayers bear the risk of paying above-market rates for these critical defense assets throughout the contract's life.

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

Offers Received: 1

Pricing Type: FIXED PRICE INCENTIVE (L)

Contractor Details

Parent Company: RTX Corp (UEI: 001344142)

Address: 1151 EAST HERMANS ROAD, TUCSON, AZ, 85706

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline