Raytheon awarded $125M for Joint Multiple Effects Warhead System (JMEWS) Engineering and Manufacturing Development

Contract Overview

Contract Amount: $125,005,960 ($125.0M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2020-02-27

End Date: 2026-09-30

Contract Duration: 2,407 days

Daily Burn Rate: $51.9K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Defense

Official Description: THIS CONTRACT PROCURES THE JOINT MULTIPLE EFFECTS WARHEAD SYSTEM (JMEWS) ENGINEERING AND MANUFACTURING DEVELOPMENT (EMD). THE REQUIREMENT IS FOR THE DESIGN, INTEGRATION, TESTING, AND EVALUATION OF JMEWS.

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $125.0 million to RAYTHEON COMPANY for work described as: THIS CONTRACT PROCURES THE JOINT MULTIPLE EFFECTS WARHEAD SYSTEM (JMEWS) ENGINEERING AND MANUFACTURING DEVELOPMENT (EMD). THE REQUIREMENT IS FOR THE DESIGN, INTEGRATION, TESTING, AND EVALUATION OF JMEWS. Key points: 1. Contract focuses on design, integration, testing, and evaluation of a critical defense system. 2. Sole-source award raises questions about potential price efficiencies and market alternatives. 3. Long contract duration (over 6 years) suggests a complex and lengthy development cycle. 4. Cost-plus incentive fee structure aims to balance contractor risk and performance incentives. 5. Geographic concentration in Arizona for manufacturing could have local economic impacts. 6. The program falls under the Guided Missile and Space Vehicle Manufacturing sector, indicating specialized industrial capabilities.

Value Assessment

Rating: fair

The contract value of $125 million for Engineering and Manufacturing Development (EMD) of a complex warhead system appears within a reasonable range for such specialized defense work. However, without comparable sole-source EMD contracts for similar systems, a precise value-for-money assessment is challenging. The cost-plus incentive fee (CPIF) structure is designed to incentivize performance and cost control, but the ultimate cost will depend on the contractor's efficiency and the achievement of performance targets. Benchmarking against industry standards for defense R&D and manufacturing is difficult due to the unique nature of the JMEWS.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning Raytheon Company was the only bidder considered. This approach is typically justified when a specific contractor possesses unique capabilities, proprietary technology, or when urgency and national security considerations preclude a competitive process. The lack of competition means that price discovery through market forces was not utilized, potentially leading to higher costs than if multiple vendors had competed.

Taxpayer Impact: For taxpayers, a sole-source award means there is a reduced opportunity to benefit from competitive pricing, potentially resulting in a higher overall expenditure for the JMEWS program.

Public Impact

The primary beneficiaries are the Department of Defense, specifically the Department of the Navy, which will receive the advanced JMEWS. The contract will deliver engineering, design, integration, testing, and evaluation services for the JMEWS. The geographic impact is concentrated in Arizona, where Raytheon will conduct much of the work, potentially creating or sustaining jobs in that region. Workforce implications include the need for specialized engineers, technicians, and manufacturing personnel within Raytheon and its supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure on pricing.
Cost-plus incentive fee contracts can sometimes lead to cost overruns if not managed tightly.
Long contract duration increases the risk of scope creep or evolving requirements.
Lack of public detail on performance metrics makes it hard to assess efficiency.
Dependence on a single contractor for critical defense technology.

Positive Signals

Raytheon is a well-established defense contractor with significant experience in missile systems.
The CPIF contract structure includes incentives for performance, aiming for better outcomes.
The contract is for Engineering and Manufacturing Development, a critical phase for ensuring system viability.
The program addresses a specific military requirement for advanced warhead capabilities.
The contract duration allows for thorough development and testing.

Sector Analysis

The contract falls within the Guided Missile and Space Vehicle Manufacturing industry, a highly specialized and capital-intensive sector within the broader aerospace and defense market. This sector is characterized by long development cycles, significant R&D investment, and close relationships with government agencies. The total addressable market for such specialized defense components is substantial, driven by national security needs and ongoing military modernization efforts. Comparable spending benchmarks are difficult to establish due to the unique nature of the JMEWS and the sole-source award.

Small Business Impact

This contract does not appear to include a small business set-aside. Given the sole-source nature and the specialized requirements of developing a warhead system, it is unlikely that small businesses would be primary contractors. However, Raytheon may engage small businesses as subcontractors for specific components or services, contributing to the small business ecosystem indirectly. The extent of small business subcontracting is not detailed in the provided data.

Oversight & Accountability

Oversight for this contract will primarily be conducted by the Department of the Navy's contracting and program management offices. The cost-plus incentive fee structure implies performance monitoring against defined metrics and cost targets. Transparency is limited due to the sole-source nature and the classified aspects often associated with defense weapon systems. Inspector General jurisdiction would apply to investigations of fraud, waste, or abuse related to the contract.

Related Government Programs

Missile Systems Development
Warhead Technology
Advanced Munitions
Defense Engineering Services
Naval Weapons Systems

Risk Flags

Sole-source award
Cost-plus contract type
Long contract duration
Defense sector specificity

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $125.0 million to RAYTHEON COMPANY. THIS CONTRACT PROCURES THE JOINT MULTIPLE EFFECTS WARHEAD SYSTEM (JMEWS) ENGINEERING AND MANUFACTURING DEVELOPMENT (EMD). THE REQUIREMENT IS FOR THE DESIGN, INTEGRATION, TESTING, AND EVALUATION OF JMEWS.

Who is the contractor on this award?

The obligated recipient is RAYTHEON COMPANY.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Navy).

What is the total obligated amount?

The obligated amount is $125.0 million.

What is the period of performance?

Start: 2020-02-27. End: 2026-09-30.

What is Raytheon's track record with similar sole-source defense development contracts?

Raytheon Company has a long and extensive history of securing sole-source contracts for complex defense systems, including missile development and advanced munitions. Their track record often involves significant R&D investment and close collaboration with military branches. While specific details on past sole-source EMD contracts for warhead systems are not publicly itemized, Raytheon's overall performance in delivering major defense programs is generally well-documented, though subject to the usual scrutiny regarding cost and schedule adherence. Their experience suggests a capability to manage complex development cycles, but the lack of competition in sole-source awards necessitates robust internal controls and government oversight to ensure value.

How does the $125 million value compare to similar JMEWS development efforts?

Direct comparisons for the Joint Multiple Effects Warhead System (JMEWS) Engineering and Manufacturing Development (EMD) are challenging due to its unique nature and the sole-source award. However, EMD phases for advanced weapon systems can range from tens to hundreds of millions of dollars, depending on complexity, technological innovation required, and the number of prototypes and tests involved. Given that JMEWS aims for multi-effect capabilities, the $125 million figure appears to be within the expected range for developing such a sophisticated munition. Without access to classified program details or specific benchmarks for comparable sole-source EMD contracts, a definitive value-for-money assessment relative to alternatives is difficult.

What are the primary risks associated with this sole-source, cost-plus incentive fee contract?

The primary risks associated with this sole-source, cost-plus incentive fee (CPIF) contract include: 1) Lack of Competitive Pricing: The sole-source nature means taxpayers may not benefit from the most competitive price achievable through open competition. 2) Cost Overruns: While CPIF aims to control costs through incentives, poorly defined performance metrics or unforeseen technical challenges can still lead to costs exceeding initial estimates. 3) Contractor Performance: The success hinges heavily on Raytheon's ability to meet technical specifications and performance targets within the allocated timeframe and budget. 4) Scope Creep: The long duration (over 6 years) increases the risk of evolving requirements or scope expansion, which can drive up costs. 5) Limited Transparency: The classified nature of defense programs and sole-source awards can reduce public and even some governmental oversight effectiveness.

How effective is the cost-plus incentive fee structure likely to be for this program?

The Cost-Plus Incentive Fee (CPIF) structure is designed to encourage the contractor (Raytheon) to perform efficiently and meet specific targets, such as cost, schedule, and performance. For the JMEWS EMD, this means Raytheon earns a higher profit if they stay under target cost and achieve superior performance, and a lower profit if they exceed cost targets or underperform. Its effectiveness depends heavily on how well the target costs, performance metrics, and incentive sharing arrangements are defined and negotiated. If these are well-aligned with program goals and realistic, CPIF can be a valuable tool for managing complex, high-risk development efforts. However, if targets are too lenient or performance metrics are poorly defined, it may not provide sufficient motivation for cost savings or optimal performance.

What are the historical spending patterns for guided missile and space vehicle manufacturing by the Department of the Navy?

Historical spending patterns for guided missile and space vehicle manufacturing by the Department of the Navy (DoN) show consistent, significant investment driven by national security requirements. The DoN is a major procurer of advanced munitions, missile systems, and related technologies. Spending in this category typically fluctuates based on modernization programs, geopolitical threats, and specific platform needs (e.g., aircraft carriers, submarines, destroyers). While precise figures for 'guided missile and space vehicle manufacturing' can vary based on classification and reporting, the overall trend indicates substantial and sustained outlays, often involving large, multi-year contracts for research, development, testing, and production. This specific JMEWS contract represents a component of that broader, ongoing investment.

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: N0001918R0031

Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE (V)

Evaluated Preference: NONE

Contractor Details

Parent Company: Rockwell Collins Australia PTY Limited

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: $125,005,960

Exercised Options: $125,005,960

Current Obligation: $125,005,960

Actual Outlays: $14,543,390

Subaward Activity

Number of Subawards: 93

Total Subaward Amount: $157,497,250

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline