Raytheon Company awarded $175.9M contract for guided missile and space vehicle manufacturing, with no competition

Contract Overview

Contract Amount: $175,900,591 ($175.9M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2004-03-04

End Date: 2022-05-27

Contract Duration: 6,658 days

Daily Burn Rate: $26.4K/day

Competition Type: NOT COMPETED

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 $175.9 million to RAYTHEON COMPANY for work described as: Key points: 1. Significant long-term award to a single contractor suggests potential for reduced price competition. 2. The contract spans over 18 years, indicating a sustained need for these specialized manufacturing capabilities. 3. Lack of competition raises questions about whether the government secured the best possible pricing. 4. The firm fixed-price structure aims to transfer cost risk to the contractor. 5. This award falls within the Defense Contract Management Agency's purview, highlighting its role in overseeing critical defense manufacturing. 6. The contract's duration and value point to a substantial investment in national defense capabilities.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to the lack of competitive bids and the long duration. The firm fixed-price nature provides some cost certainty, but without comparison to other offers, it's difficult to assess if the pricing represents excellent value for money. The extended period suggests a stable, albeit potentially less dynamic, pricing environment.

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 used when only one source is capable of meeting the requirement, or in cases of urgent need. The absence of multiple bidders limits the government's ability to leverage market forces to drive down costs.

Taxpayer Impact: Taxpayers may not have benefited from the cost savings that typically arise from a competitive bidding process. The government accepted the price proposed by Raytheon Company without the pressure of competing offers.

Public Impact

The primary beneficiaries are the Department of Defense, which receives critical missile and space vehicle manufacturing capabilities. This contract supports the production of advanced defense systems essential for national security. The manufacturing activities are concentrated in Arizona, implying a significant workforce and economic impact in that state. It ensures the continued availability of specialized manufacturing expertise and infrastructure for defense applications.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price discovery and potential savings.
Long contract duration (over 18 years) may reduce flexibility and opportunities for renegotiation.
Lack of transparency in the sole-source justification could obscure underlying reasons for not competing.

Positive Signals

Firm fixed-price contract shifts cost overrun risk to the contractor.
Long-term award provides stability and predictability for critical defense manufacturing.
Award to an established contractor like Raytheon suggests a high level of trust and proven capability.

Sector Analysis

This contract falls within the Guided Missile and Space Vehicle Manufacturing sector, a highly specialized segment of the aerospace and defense industry. This sector is characterized by high barriers to entry, significant R&D investment, and stringent quality requirements. Spending in this area is critical for national defense, and contracts are often long-term due to the complexity and lifecycle of the products. Comparable spending benchmarks are difficult to establish due to the unique nature of defense systems, but this award represents a substantial commitment to maintaining these vital manufacturing capabilities.

Small Business Impact

The data indicates this contract was not set aside for small businesses, nor does it explicitly mention subcontracting plans for small businesses. As a sole-source award to a large prime contractor, the direct impact on small businesses is likely limited unless Raytheon Company actively engages them in its supply chain. Further investigation into subcontracting goals and achievements would be necessary to fully assess the impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract is managed by the Defense Contract Management Agency (DCMA). The firm fixed-price structure implies that DCMA's oversight would focus on contract compliance, delivery schedules, and quality assurance rather than detailed cost auditing. Transparency regarding the specific oversight mechanisms and performance metrics is not detailed in the provided data, but standard government contracting regulations and DCMA procedures would apply.

Related Government Programs

Missile Defense Systems
Space Launch Vehicles
Aerospace Manufacturing
Defense Procurement
Strategic Weapons Systems

Risk Flags

Sole-source award
Long contract duration
Lack of competition

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $175.9 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 $175.9 million.

What is the period of performance?

Start: 2004-03-04. End: 2022-05-27.

What is Raytheon Company's track record with the Department of Defense for similar contracts?

Raytheon Company, now part of RTX Corporation, has a long and extensive history of contracting with the Department of Defense, particularly in areas related to missiles, defense systems, and aerospace. They are a major defense contractor known for producing a wide array of sophisticated weaponry and technology. Their track record includes numerous large-scale, complex contracts, often involving advanced manufacturing and research and development. While specific performance metrics for past contracts are not detailed here, their continued success in securing significant awards from the DoD suggests a generally positive performance history and a strong capability to meet demanding defense requirements. However, like any large contractor, they may have faced scrutiny or performance issues on specific programs over their history.

How does the $175.9 million value compare to other contracts for guided missile and space vehicle manufacturing?

The $175.9 million value for this contract is substantial, reflecting the high cost and complexity associated with guided missile and space vehicle manufacturing. However, within the broader defense sector, this figure can range significantly. Major programs for advanced missile systems or space vehicle development can easily run into billions of dollars over their lifecycle. This particular award, spanning over 18 years, suggests a steady, long-term procurement rather than a single, massive development project. When compared to other sole-source or competitively awarded contracts in this niche, $175.9 million represents a significant but not unprecedented investment. The lack of competition makes direct value-for-money comparisons difficult, but the duration implies a consistent need and commitment from the DoD.

What are the primary risks associated with a sole-source contract of this magnitude and duration?

The primary risks associated with a sole-source contract of this magnitude and duration include potential overpricing due to the absence of competitive pressure, reduced innovation from the contractor (as there's less incentive to outperform competitors), and a lack of flexibility for the government to adapt to changing technological landscapes or strategic needs. There's also a risk of vendor lock-in, where the government becomes heavily reliant on a single provider, making future transitions costly and difficult. Furthermore, without competitive benchmarking, it's harder to ensure the government is receiving the best available technology and value over the long term. The extended duration amplifies these risks, as market conditions and technological advancements can shift significantly over 18 years.

What does the 'DEFINITIVE CONTRACT' type imply about the government's commitment and flexibility?

A 'DEFINITIVE CONTRACT' is a standard, fully negotiated contract that specifies all terms and conditions, including price, quantity, and delivery schedules. In this context, it signifies a firm commitment by the government to purchase goods or services from Raytheon Company under the agreed-upon terms. It implies a lower degree of flexibility compared to other contract types like indefinite-delivery/indefinite-quantity (IDIQ) contracts, which allow for more variable ordering. For a sole-source award of this duration, a definitive contract provides the contractor with the certainty needed for long-term planning and investment in manufacturing capabilities, while also locking in the government to specific terms. This structure is often used for established needs where requirements are well-defined.

How does the contract's duration (6658 days) impact its overall value and risk profile?

The contract duration of 6658 days, approximately 18.2 years, significantly impacts both the value and risk profile. From a value perspective, it allows for economies of scale and potentially lower per-unit costs over time due to sustained production. It also provides the contractor with the stability to invest in specialized facilities and workforce. However, this long duration increases risk. Market conditions, technological obsolescence, and geopolitical priorities can change dramatically over nearly two decades, potentially making the contracted goods or services less relevant or more expensive than alternatives that might emerge. The government's commitment is locked in, reducing its ability to pivot to newer technologies or more cost-effective solutions if they arise during the contract period. This extended commitment necessitates robust initial planning and justification.

What is the significance of the North American Industry Classification System (NAICS) code 336414 for Guided Missile and Space Vehicle Manufacturing?

NAICS code 336414 specifically identifies establishments primarily engaged in manufacturing guided missiles and space vehicles, and/or their principal missile or space vehicle parts. This includes components like engines, airframes, and guidance systems. For the Department of Defense, contracting under this code signifies a focus on acquiring highly specialized, technologically advanced defense assets critical for national security. The nature of this industry involves complex engineering, rigorous testing, and adherence to strict quality and security standards. Companies operating under this code typically possess unique capabilities and significant R&D investments, often making them the sole or primary source for certain defense systems, which can explain why contracts in this sector are sometimes awarded on a sole-source basis.

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

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: RTX Corp

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

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $106,610

Exercised Options: $106,610

Current Obligation: $175,900,591

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline