DoD awards Raytheon $329M for AIM-9X training missiles, raising questions on value and competition

Contract Overview

Contract Amount: $329,400,725 ($329.4M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2006-12-08

End Date: 2015-09-30

Contract Duration: 3,218 days

Daily Burn Rate: $102.4K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: FY07 (LOT 7) AIM-9X CAPTIVE AIR TRAINING MISSILES AND CONTAINERS FOR FMS

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $329.4 million to RAYTHEON COMPANY for work described as: FY07 (LOT 7) AIM-9X CAPTIVE AIR TRAINING MISSILES AND CONTAINERS FOR FMS Key points: 1. Contract value of $329M over 9 years suggests significant investment in missile training. 2. Sole-source award raises concerns about potential overpricing and lack of competitive pressure. 3. Long contract duration may indicate a stable, long-term need for these specific training assets. 4. Focus on training missiles highlights the importance of realistic simulation for combat readiness. 5. Geographic concentration in Arizona for manufacturing could have local economic impacts. 6. The 'captive' nature of training missiles implies a specific, non-combat application.

Value Assessment

Rating: questionable

Benchmarking the value of training missiles is challenging without specific performance metrics or comparable training systems. The $329 million awarded over nearly nine years averages to approximately $36.6 million annually. Given the sole-source nature, it's difficult to assess if this represents competitive pricing. Without data on the unit cost of these training missiles compared to similar training solutions or actual combat missiles, a definitive value-for-money assessment is hindered. The long duration suggests a sustained need, but the lack of competition prevents a clear determination of optimal pricing.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded as a sole-source contract after exclusion of sources. This indicates that only one vendor, Raytheon Company, was considered capable of fulfilling the requirement. The lack of competition means that the government did not benefit from a bidding process that could have driven down prices or spurred innovation from multiple suppliers. This approach is typically justified when a unique capability or proprietary technology is required, but it limits the government's ability to secure the best possible price.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive bidding. Without alternative offers, the government has less leverage to negotiate favorable terms and pricing, potentially leading to higher overall expenditure for these training assets.

Public Impact

The U.S. Department of Defense benefits through enhanced training capabilities for its aircrews. The contract delivers specialized captive air training missiles and containers essential for realistic flight simulations. The primary geographic impact is in Arizona, where Raytheon Company is located for manufacturing. The contract supports jobs within the defense manufacturing sector, specifically in guided missile production.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potentially increases costs for taxpayers.
Lack of transparency in the justification for sole-sourcing makes it difficult to verify necessity.
Long contract duration without clear performance benchmarks raises concerns about sustained value.
Reliance on a single supplier could create future dependency and limit strategic sourcing options.

Positive Signals

Ensures availability of critical training assets for air combat readiness.
Provides a stable, long-term supply of specialized training missiles.
Supports a key defense contractor and associated manufacturing jobs.
The 'captive' nature implies a focus on safe and cost-effective training scenarios.

Sector Analysis

The defense industry, particularly the segment focused on missile manufacturing, is characterized by high barriers to entry, significant R&D investment, and long product development cycles. Contracts like this for training munitions are crucial for maintaining pilot proficiency and testing operational procedures without expending live ordnance. The market is often dominated by a few large prime contractors, with specialized components sourced from a wider supply chain. Spending on training assets is a significant portion of overall defense budgets, reflecting the continuous need for realistic simulation.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. The prime contractor, Raytheon Company, is a large aerospace and defense firm. While large prime contractors are often required to subcontract a portion of their work to small businesses, the specific subcontracting plan for this contract is not detailed here. The absence of a direct set-aside means that small businesses would likely participate as subcontractors rather than direct awardees, potentially limiting their direct revenue from this specific contract.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contract management structures, likely involving the Defense Contract Management Agency (DCMA) given the 'sa' field. Accountability measures would be tied to the terms and conditions of the firm-fixed-price definitive contract, ensuring delivery of specified training missiles and containers. Transparency is limited by the sole-source nature of the award, but contract award data is publicly available. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

AIM-9X Sidewinder Missile Program
Air-to-Air Missile Training Systems
Foreign Military Sales (FMS) Munitions
Defense Logistics Agency (DLA) Munitions Procurement
Naval Air Systems Command (NAVAIR) Training Programs

Risk Flags

Sole-source justification requires rigorous review.
Potential for price escalation due to lack of competition.
Long contract duration may mask inefficiencies.
Limited public data on performance metrics.
Dependency on a single supplier.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $329.4 million to RAYTHEON COMPANY. FY07 (LOT 7) AIM-9X CAPTIVE AIR TRAINING MISSILES AND CONTAINERS FOR FMS

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 $329.4 million.

What is the period of performance?

Start: 2006-12-08. End: 2015-09-30.

What is the historical spending trend for AIM-9X captive training missiles?

Historical spending data for this specific contract indicates a total award of $329,400,724.71 from December 8, 2006, to September 30, 2015. This represents an average annual spend of approximately $36.6 million over the contract's duration. Without access to prior contracts for the same or similar training missiles, it's difficult to establish a precise historical trend. However, the substantial value suggests a consistent and significant requirement for these training assets over the contract period. Further analysis would require examining historical procurement data for AIM-9X variants and comparable training munitions across different fiscal years and agencies.

How does the unit cost of these training missiles compare to market rates or similar training systems?

Determining the precise unit cost for these AIM-9X captive training missiles is not feasible with the provided data, as the contract is a definitive contract with a total value, not a per-unit price. Furthermore, the sole-source nature of the award prevents direct comparison with competitive bids. Training missiles, especially specialized ones like the AIM-9X captive variant, are likely to have a higher unit cost than standard training munitions due to their specific design and integration requirements. Without access to Raytheon's pricing structure or data on comparable training systems from other manufacturers, a robust market rate comparison cannot be made. The absence of competition inherently limits the ability to benchmark value effectively.

What are the specific risks associated with a sole-source award for critical training assets?

The primary risk associated with a sole-source award for critical training assets like the AIM-9X captive missiles is the potential for inflated pricing due to a lack of competitive pressure. The government may end up paying more than necessary because there are no alternative suppliers vying for the contract. Another significant risk is vendor lock-in; the government becomes dependent on a single supplier, potentially limiting future flexibility in sourcing and technology upgrades. This dependency can also reduce the incentive for the sole-source provider to innovate or improve efficiency. Furthermore, if the sole-source contractor faces production issues or financial instability, it could disrupt the supply chain for these essential training assets, impacting military readiness.

What is Raytheon Company's track record with similar defense contracts?

Raytheon Company (now RTX) has an extensive and long-standing track record as a major defense contractor, particularly in missile systems. They are the original developer and manufacturer of the AIM-9X Sidewinder missile family, including training variants. Their history includes numerous large-scale contracts with the Department of Defense and allied nations for various missile systems, radar technology, and aerospace components. While this specific contract was sole-sourced, Raytheon frequently competes for and wins large defense contracts through competitive bidding processes. Their extensive experience in this domain suggests a high level of technical capability and production capacity, though the sole-source nature of this particular award warrants scrutiny regarding pricing and justification.

How does this contract contribute to the overall readiness and training objectives of the U.S. Air Force or Navy?

This contract directly supports the readiness and training objectives of the U.S. Air Force and Navy by providing essential captive air training missiles for the AIM-9X Sidewinder system. These training missiles allow pilots and weapon system operators to practice target acquisition, missile employment procedures, and flight profiles in a realistic manner without expending live ordnance. This is crucial for maintaining proficiency in air-to-air combat scenarios, which are vital for national security. The 'captive' nature implies they are inert or have limited functionality, making them safer and more cost-effective for extensive training sorties. Consistent availability of these training assets ensures that aircrews can hone their skills, contributing directly to the overall combat effectiveness of U.S. air power.

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 AFTER EXCLUSION OF SOURCES

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: N0001906R0100

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: RTX Corp (UEI: 001344142)

Address: 1151 E HERMANS RD, TUCSON, AZ, 85706

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $347,902,860

Exercised Options: $332,680,222

Current Obligation: $329,400,725

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline