Raytheon awarded $164M for AGM-154C-1 JSOW missiles, a sole-source definitive contract

Contract Overview

Contract Amount: $164,190,909 ($164.2M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2013-06-05

End Date: 2018-03-31

Contract Duration: 1,760 days

Daily Burn Rate: $93.3K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: AGM-154C-1 (AIP) JSOW ALL UP ROUND (AUR)

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $164.2 million to RAYTHEON COMPANY for work described as: AGM-154C-1 (AIP) JSOW ALL UP ROUND (AUR) Key points: 1. Contract awarded for guided missile manufacturing, indicating a need for advanced munitions. 2. The firm fixed price contract type suggests predictable costs for the government. 3. A long duration of 1760 days points to a sustained requirement for these missiles. 4. The contract was not competed, raising questions about potential cost savings. 5. The primary contractor, Raytheon Company, is a major defense manufacturer. 6. This award falls under the Guided Missile and Space Vehicle Manufacturing sector.

Value Assessment

Rating: fair

The total award of $164.19 million for AGM-154C-1 (AIP) JSOW ALL UP ROUND (AUR) missiles represents a significant investment. Without direct comparable contract data for this specific variant and quantity, it is challenging to definitively benchmark the value for money. However, the firm fixed price contract type generally aims to provide cost certainty. The base value of $93.29 million for 93290 units suggests a per-unit cost of approximately $1,000, which needs further context against production costs and technological sophistication.

Cost Per Unit: Approximately $1,000 per unit (based on base value and units), requires further benchmarking.

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not open to competition from other potential suppliers. This approach is typically used when a specific contractor possesses unique capabilities, intellectual property, or when there is an urgent need that cannot be met through a competitive process. The lack of competition means that the government did not benefit from the price discovery mechanisms inherent in a bidding process.

Taxpayer Impact: Sole-source awards can potentially lead to higher prices for taxpayers as there is less pressure on the contractor to offer the most competitive rate.

Public Impact

The primary beneficiaries are the U.S. Department of Defense, specifically units requiring advanced air-to-ground munitions. The contract delivers AGM-154C-1 (AIP) JSOW missiles, which are precision-guided weapons. The geographic impact is primarily within the United States, with manufacturing likely occurring in Arizona where the contractor is based. Workforce implications include employment at Raytheon Company and its supply chain partners involved in missile production.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may result in suboptimal pricing for taxpayers.
Sole-source nature limits opportunities for emerging defense contractors.
Long contract duration could mask potential inefficiencies if not actively managed.

Positive Signals

Firm fixed price contract provides cost predictability.
Award to a major defense contractor suggests established production capabilities.
Specific missile variant indicates a need for advanced, specialized weaponry.

Sector Analysis

The defense industry, particularly the guided missile and space vehicle manufacturing sector, is characterized by high barriers to entry, significant R&D investment, and long product development cycles. This contract for AGM-154C-1 JSOW missiles fits within this specialized segment. Comparable spending benchmarks would involve analyzing other awards for similar precision-guided munitions, which often run into hundreds of millions of dollars due to complexity and advanced technology.

Small Business Impact

This contract was not set aside for small businesses, nor does it appear to have specific subcontracting requirements mentioned in the provided data. As a sole-source award to a large prime contractor, the direct impact on the small business ecosystem is likely minimal unless Raytheon actively engages small businesses within its supply chain for components or specialized services.

Oversight & Accountability

Oversight for this contract would typically fall under the purview of the Department of Defense's contract management agencies, such as the Defense Contract Management Agency (DCMA). Accountability measures are embedded within the firm fixed price contract terms, requiring delivery of specified goods. Transparency is limited due to the sole-source nature, but contract award data is publicly available. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

AGM-154 Joint Standoff Weapon Program
Air-to-Ground Munitions Procurement
Defense Contract Awards
Guided Missile Manufacturing

Risk Flags

Sole-source award
Long contract duration
Lack of explicit small business subcontracting goals

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $164.2 million to RAYTHEON COMPANY. AGM-154C-1 (AIP) JSOW ALL UP ROUND (AUR)

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 $164.2 million.

What is the period of performance?

Start: 2013-06-05. End: 2018-03-31.

What is the specific operational capability and intended use of the AGM-154C-1 (AIP) JSOW ALL UP ROUND (AUR)?

The AGM-154C-1 (AIP) JSOW (Joint Standoff Weapon) is an advanced, all-weather, unguided air-to-ground missile designed for precision strikes against a wide range of targets, including hardened structures, air defenses, and ships. The 'AIP' designation likely refers to an 'All-weather Improved Penetrator' capability, enhancing its effectiveness in adverse weather conditions and against armored targets. The 'ALL UP ROUND' (AUR) signifies that the missile is fully assembled and ready for immediate deployment. Its standoff capability allows aircraft to launch the missile from a safe distance, reducing exposure to enemy fire. This weapon system is a critical component for modern air forces seeking to achieve air superiority and conduct precision strikes with reduced collateral damage.

How does the firm fixed price (FFP) contract type influence cost management for this sole-source award?

A Firm Fixed Price (FFP) contract is designed to provide the government with cost certainty, as the price is set regardless of the contractor's actual costs. For this sole-source award of AGM-154C-1 JSOW missiles, the FFP structure means Raytheon Company bears the primary risk of cost overruns. This incentivizes the contractor to manage its production costs efficiently to maximize profit. While FFP is generally favorable for cost control, the absence of competition in a sole-source scenario means the initial price negotiation is critical. The government must ensure the negotiated price adequately reflects market conditions and reasonable profit margins, as there's no competitive pressure to drive the price down.

What are the implications of a sole-source award for taxpayer value in defense procurement?

Sole-source awards, like the one for the AGM-154C-1 JSOW missiles, can have mixed implications for taxpayer value. On one hand, they can be necessary when only one contractor possesses the required technology, security clearances, or production capacity, potentially avoiding costly delays associated with competition. However, the absence of competitive bidding removes a key mechanism for price discovery and cost reduction. This can lead to higher prices than might be achieved in a competitive environment, as the contractor faces less pressure to be efficient or offer the lowest possible price. Robust negotiation, market research, and independent cost estimates by the government are crucial to mitigate potential overspending and ensure fair value when sole-sourcing.

What is Raytheon Company's track record in producing advanced missile systems?

Raytheon Company, now part of RTX Corporation, has a long and extensive track record as a major defense contractor specializing in advanced missile systems. They are a primary developer and manufacturer of numerous well-known platforms, including the Patriot air defense missile system, the Tomahawk cruise missile, and various air-to-air and air-to-ground munitions. Their experience spans decades, encompassing research, development, testing, and large-scale production. The company possesses significant expertise in guidance systems, warheads, propulsion, and integration with various aircraft platforms. Awards like this for the JSOW missile are consistent with their established role and capabilities in the defense sector, indicating a high level of technical proficiency and production capacity.

How does the contract duration of 1760 days impact program management and cost oversight?

A contract duration of 1760 days (approximately 4.8 years) for the production of AGM-154C-1 JSOW missiles suggests a sustained, long-term requirement for this munition. From a program management perspective, this extended timeline allows for more predictable production planning and potentially economies of scale. However, it also necessitates ongoing oversight to ensure performance remains on track and costs are managed effectively throughout the period. For the government, it means continuous engagement with the contractor to monitor progress, address any technical challenges, and ensure adherence to the firm fixed price terms. The long duration also increases the risk of obsolescence or the emergence of superior alternative technologies during the contract period, requiring proactive program reviews.

What are the potential risks associated with the manufacturing of guided missiles like the JSOW?

The manufacturing of guided missiles like the AGM-154C-1 JSOW involves several inherent risks. These include technical risks related to the complexity of guidance systems, propulsion, and warhead integration, which can lead to production delays or performance issues. Supply chain risks are also significant, as specialized components may have long lead times or be subject to geopolitical disruptions. Quality control is paramount; any defect could have severe consequences during deployment. Furthermore, cost risks exist, particularly if raw material prices fluctuate or unforeseen manufacturing challenges arise, although the FFP contract shifts much of this risk to the contractor. Finally, security risks related to intellectual property and sensitive technologies must be managed rigorously.

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

Solicitation ID: N0001912R0051

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 19859 HWY 80, FOREST, MS, 39074

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $164,190,909

Exercised Options: $164,190,909

Current Obligation: $164,190,909

Subaward Activity

Number of Subawards: 1

Total Subaward Amount: $104,163

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline