DoD awards Raytheon $330M for Guided Missile Manufacturing, a 15-year firm-fixed-price contract

Contract Overview

Contract Amount: $329,962,427 ($330.0M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2004-04-26

End Date: 2017-03-29

Contract Duration: 4,720 days

Daily Burn Rate: $69.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $330.0 million to RAYTHEON COMPANY for work described as: Key points: 1. Significant long-term award to a major defense contractor. 2. Firm-fixed-price contract offers cost certainty for the government. 3. Potential for cost overruns exists despite fixed price. 4. Sector is critical for national defense capabilities.

Value Assessment

Rating: good

The contract value of $330M over 15 years suggests a substantial, ongoing need for guided missile systems. Benchmarking against similar long-term, complex defense manufacturing contracts would be necessary for a precise value assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating a competitive bidding process. This method is expected to drive price discovery and ensure fair market value for the government.

Taxpayer Impact: The competitive award aims to secure the best possible price for taxpayers over the contract's long duration.

Public Impact

Ensures continued availability of critical defense assets. Supports advanced manufacturing and technological development in the defense sector. Impacts national security readiness and strategic deterrence capabilities.

Waste & Efficiency Indicators

Waste Risk Score: 100 / 10

Warning Flags

Long contract duration increases risk of obsolescence or changing requirements.
Reliance on a single contractor for critical systems.
Potential for scope creep or change orders impacting final cost.

Positive Signals

Firm-fixed-price contract provides cost predictability.
Full and open competition suggests competitive pricing.
Long-term award ensures supply chain stability for essential munitions.

Sector Analysis

This contract falls within the Guided Missile and Space Vehicle Manufacturing sector, a critical component of the defense industrial base. Spending in this area is driven by national security needs and technological advancements.

Small Business Impact

The data does not indicate any specific set-asides for small businesses. Large prime contractors like Raytheon often subcontract portions of their work, which can provide opportunities for small businesses.

Oversight & Accountability

The Department of Defense, through the Defense Contract Management Agency, is responsible for oversight. The long duration necessitates ongoing monitoring for performance, quality, and adherence to contract terms.

Related Government Programs

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

Risk Flags

Long contract duration (15 years)
Potential for technological obsolescence
Reliance on a single prime contractor
Complexity of guided missile systems

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $330.0 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 $330.0 million.

What is the period of performance?

Start: 2004-04-26. End: 2017-03-29.

What is the historical performance of Raytheon Company on similar large-scale defense contracts?

Raytheon Company has a long history of performance on large-scale defense contracts, including missile systems. Analyzing past performance metrics, such as on-time delivery, quality control, and budget adherence, would provide insight into their reliability for this specific contract. Past performance is a key indicator of future success and can inform risk assessments.

How does the awarded amount compare to the estimated cost of similar missile system procurements?

The awarded amount of $330 million over 15 years, while substantial, needs to be benchmarked against the cost of comparable guided missile systems procured by other agencies or nations. Factors like technological sophistication, quantity, and specific performance requirements influence cost. A comparative analysis would reveal if the government secured a competitive price.

What are the potential risks associated with a 15-year firm-fixed-price contract for advanced missile technology?

A 15-year firm-fixed-price contract for advanced missile technology carries risks of technological obsolescence, as requirements may evolve significantly over such a long period. There's also a risk of the contractor facing unforeseen cost increases that could strain profitability or lead to quality compromises if not managed diligently. Government oversight is crucial to mitigate these risks.

Industry Classification

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

Product/Service Code: GUIDED MISSLES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Contractor Details

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

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $401,133,778

Exercised Options: $401,133,778

Current Obligation: $329,962,427

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline