Raytheon Company awarded $55.4M for AGM-65E2 LASER MAVERICK GCS, a definitive contract

Contract Overview

Contract Amount: $55,428,806 ($55.4M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2014-09-03

End Date: 2017-04-30

Contract Duration: 970 days

Daily Burn Rate: $57.1K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: AGM-65E2 LASER MAVERICK GCS

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $55.4 million to RAYTHEON COMPANY for work described as: AGM-65E2 LASER MAVERICK GCS Key points: 1. Contract awarded for guided missile manufacturing, indicating a need for advanced defense capabilities. 2. The contract's firm fixed price structure aims to provide cost certainty for the government. 3. A single award suggests potential limitations in market competition for this specific missile system. 4. The duration of the contract (970 days) implies a sustained requirement for these munitions. 5. Manufacturing is located in Arizona, potentially impacting the regional defense industrial base. 6. The absence of small business set-asides means opportunities for smaller firms may be limited.

Value Assessment

Rating: fair

The contract value of $55.4 million for AGM-65E2 LASER MAVERICK GCS is a significant investment. Without direct comparable contract data for this specific missile variant and quantity, a precise value-for-money assessment is challenging. However, the firm fixed-price nature of the award suggests an attempt to control costs. Benchmarking against similar missile systems or previous procurements of the Maverick series would be necessary for a more definitive value assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. This approach is typically used when only one responsible source is available or when urgency dictates a direct award. The lack of competition means the government did not benefit from a bidding process that could drive down prices through market forces. The specific justification for the sole-source award would need further investigation to understand why alternatives were not considered.

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 bid.

Public Impact

The primary beneficiaries are the Department of Defense, specifically units requiring the AGM-65E2 LASER MAVERICK GCS for tactical air-to-ground operations. The contract delivers advanced guided missile systems essential for modern air combat capabilities. The geographic impact is centered in Arizona, where the manufacturing and potentially related supply chains are located. Workforce implications include skilled labor in guided missile manufacturing and related technical fields within the defense sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing benefits for taxpayers.
Lack of transparency in the justification for sole-source procurement.
Potential for cost overruns if market research for alternatives was insufficient.
Dependence on a single contractor for a critical defense asset.

Positive Signals

Firm fixed-price contract provides cost certainty for the government.
Award to an established defense contractor (Raytheon) suggests a degree of reliability.
Contract addresses a specific, likely validated, military requirement for guided munitions.

Sector Analysis

The defense sector, particularly guided missile manufacturing, is characterized by high technological barriers to entry and significant R&D investment. Contracts like this are crucial for maintaining national security and technological superiority. The market is dominated by a few large, specialized contractors. Spending in this area is driven by evolving threats and military modernization programs. Comparable spending benchmarks would involve looking at other major missile system procurements within the DoD.

Small Business Impact

This contract was not awarded as a small business set-aside, nor does it indicate any subcontracting requirements specifically for small businesses. This suggests that the primary contractor, Raytheon, is expected to fulfill the contract requirements directly or through its established supply chains, which may or may not involve significant small business participation. The absence of set-asides means direct opportunities for small businesses to compete for this specific contract are unlikely.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and program management structures, potentially involving the Defense Contract Management Agency (DCMA) for contract administration. Accountability measures are inherent in the firm fixed-price contract type, which places cost risk on the contractor. Transparency regarding the sole-source justification and performance metrics would be key areas for assessment, though specific IG jurisdiction would depend on the nature of any issues arising.

Related Government Programs

AGM-114 Hellfire Missile
AIM-9 Sidewinder Missile
JDAM (Joint Direct Attack Munition)
Advanced Precision Kill Weapon System (APKWS)

Risk Flags

Sole-source award may indicate limited competition.
Contract duration is substantial, requiring long-term planning.
No small business set-aside noted.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $55.4 million to RAYTHEON COMPANY. AGM-65E2 LASER MAVERICK GCS

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 $55.4 million.

What is the period of performance?

Start: 2014-09-03. End: 2017-04-30.

What is Raytheon Company's track record with similar missile system contracts awarded by the Department of Defense?

Raytheon Company, now part of RTX, has a long and extensive history of producing various missile systems for the U.S. military and allied nations. They are a primary contractor for numerous air-to-air, air-to-ground, and surface-to-air missile systems, including the Patriot missile defense system, the Tomahawk cruise missile, and various Sidewinder variants. Their track record with the Maverick series itself is significant, as they have been the incumbent manufacturer for many iterations. Performance data on past contracts, including on-time delivery, quality, and cost performance, would be available through government contract databases and performance reporting systems, though specific details for individual contracts are often proprietary or require specific access.

How does the awarded price of $55.4 million compare to the unit cost or total value of previous Maverick missile procurements?

Direct comparison of the $55.4 million award for the AGM-65E2 LASER MAVERICK GCS to previous Maverick procurements is challenging without specific unit quantities and detailed historical pricing data. Missile costs can fluctuate significantly based on production volume, technological upgrades, inflation, and contract type. The Maverick series has been in production for decades, with various models and upgrades. To assess value, one would need to compare the per-unit cost derived from this contract (if quantity is known) against the per-unit cost of comparable previous lots or variants, adjusted for inflation and any technological differences. The firm fixed-price nature of this award aims to cap the total cost, but the underlying unit price efficiency requires detailed benchmarking.

What are the primary risks associated with a sole-source award for a critical defense asset like the AGM-65E2 LASER MAVERICK GCS?

The primary risks associated with a sole-source award for a critical defense asset include a lack of price competition, potentially leading to higher costs for the government and taxpayers. There's also a risk of reduced innovation and efficiency, as the sole contractor faces less pressure to improve processes or technology. Dependence on a single supplier can create supply chain vulnerabilities and make the government susceptible to price increases or production disruptions if the contractor faces issues. Furthermore, without competitive benchmarking, it can be harder to ensure the government is receiving the best possible value and that the technology remains cutting-edge compared to potential alternatives.

What is the expected program effectiveness or impact of procuring the AGM-65E2 LASER MAVERICK GCS under this contract?

The AGM-65E2 LASER MAVERICK GCS is a precision-guided munition designed for air-to-ground attack, capable of engaging a variety of targets with laser guidance. Its effectiveness lies in its ability to provide close air support and engage targets accurately, minimizing collateral damage. Procuring these missiles under this contract ensures that aircrews are equipped with a proven and reliable weapon system for tactical engagements. The program's effectiveness is measured by its contribution to mission success rates, target neutralization, and overall air power projection capabilities for the Department of Defense. Continued procurement sustains the availability of these critical assets for ongoing military operations and readiness.

What are the historical spending patterns for the Maverick missile family by the Department of Defense?

Historical spending on the Maverick missile family by the Department of Defense has been substantial over several decades, reflecting its long service life and continuous upgrades. The DoD has procured various versions of the Maverick (e.g., AGM-65A/B/D/F/G/H/K) through numerous contracts, often awarded to Raytheon and its predecessors. Annual spending has varied significantly based on operational tempo, modernization programs, and specific conflict requirements. While precise aggregate historical spending figures require extensive data aggregation, it is evident that the Maverick program represents a significant and ongoing investment in tactical air-launched munitions, likely totaling billions of dollars over its lifecycle.

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: N0001913R0118

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 1151 E HERMANS RD, TUCSON, AZ, 85756

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: $55,428,806

Exercised Options: $55,428,806

Current Obligation: $55,428,806

Subaward Activity

Number of Subawards: 18

Total Subaward Amount: $23,325,716

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline