Raytheon Missile Systems receives $794.6M contract for advanced missile development and manufacturing

Contract Overview

Contract Amount: $446,347,170 ($446.3M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 1996-12-13

End Date: 2008-12-31

Contract Duration: 4,401 days

Daily Burn Rate: $101.4K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Defense

Official Description: 199712!1700!1366!AA423!NAVAL AIR SYSTEMS COMMAND !N0001997C0027 !A!*!* !19961213!20020113!794598573!147354161!005356613!N!15090!RAYTHEON MISSILE SYSTEMS COMPA!1151 E HERMANS RD !TUCSON !AZ!85706!77000!019!04!TUCSON !PIMA !ARIZONA !0001!+000053114434!N!N!000000000000!AC55!RDTE/WEAPONS-ENG/MANUF DEVELOP !A5 !WEAPONS !2000!NOT DISCERNABLE OR CLASSIFIED !3812!3!*!*!*!B!A!*!A !N!V!2!002!B!* !Z!Y!Z!* !* !N!C!*!A!A!A!A!A!*!* !*!N!A!C!N!*!*!*!*!*!

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $446.3 million to RAYTHEON COMPANY for work described as: 199712!1700!1366!AA423!NAVAL AIR SYSTEMS COMMAND !N0001997C0027 !A!*!* !19961213!20020113!794598573!147354161!005356613!N!15090!RAYTHEON MISSILE SYSTEMS COMPA!1151 E HERMANS RD !TUCSON !AZ!85706!77000!019!04!TUCSON !PIMA … Key points: 1. Contract awarded for research, development, testing, and evaluation of advanced missile systems. 2. Significant investment in defense technology, focusing on weapons engineering and manufacturing. 3. Long-term contract duration suggests a sustained need for these capabilities. 4. Awarded through full and open competition, indicating a robust bidding process. 5. Contractor has a substantial track record in defense manufacturing. 6. Geographic concentration of work in Arizona highlights regional economic impact.

Value Assessment

Rating: good

The total value of this contract is substantial, reflecting the complexity and importance of advanced missile development. While specific cost breakdowns are not provided, the duration and scope suggest a significant investment. Benchmarking against similar large-scale defense R&D contracts would be necessary for a precise value-for-money assessment, but the competitive award process provides some assurance of fair pricing.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, suggesting that multiple qualified bidders had the opportunity to submit proposals. This level of competition is generally favorable for price discovery and ensuring the government receives competitive pricing. The presence of multiple bidders indicates a healthy market for these specialized defense capabilities.

Taxpayer Impact: Full and open competition typically leads to better pricing for taxpayers by fostering a competitive environment among defense contractors.

Public Impact

Benefits the U.S. Department of Defense by providing advanced missile capabilities. Services delivered include research, development, engineering, and manufacturing of weapons systems. Geographic impact is concentrated in Tucson, Arizona, supporting local employment and the defense industrial base. Workforce implications include skilled labor in engineering, manufacturing, and technical fields within the defense sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Long contract duration could lead to cost overruns if not managed effectively.
Reliance on a single contractor for critical weapon system development may pose supply chain risks.
Classified nature of some aspects of the work limits public transparency.

Positive Signals

Awarded through full and open competition, indicating a competitive bidding process.
Contractor is a well-established entity with significant experience in defense manufacturing.
Focus on R&D suggests investment in future defense capabilities.

Sector Analysis

This contract falls within the Defense sector, specifically focusing on the research, development, and manufacturing of advanced missile systems. The defense industry is characterized by high R&D investment, long product cycles, and significant government procurement. Comparable spending benchmarks would involve looking at other major defense R&D contracts for weapon systems, which often run into hundreds of millions or billions of dollars over their lifecycle.

Small Business Impact

There is no explicit indication of small business set-asides for this prime contract. However, large defense contracts often include subcontracting requirements, which can provide opportunities for small businesses to participate in the supply chain. The extent of small business involvement would depend on the specific subcontracting plan negotiated with Raytheon Missile Systems.

Oversight & Accountability

Oversight for this contract would primarily be managed by the Department of Defense, likely through the Defense Contract Management Agency (DCMA). Accountability measures would include performance metrics, milestone tracking, and financial audits. Transparency is somewhat limited due to the classified nature of advanced weapons development, but contract awards and basic performance data are generally publicly available.

Related Government Programs

Missile Defense Systems
Advanced Weapons Development
Tactical Missile Programs
Air-to-Air Missiles
Ground-to-Air Missiles

Risk Flags

Long contract duration
Potential for cost overruns
Technological uncertainty
Classified aspects limit transparency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $446.3 million to RAYTHEON COMPANY. 199712!1700!1366!AA423!NAVAL AIR SYSTEMS COMMAND !N0001997C0027 !A!*!* !19961213!20020113!794598573!147354161!005356613!N!15090!RAYTHEON MISSILE SYSTEMS COMPA!1151 E HERMANS RD !TUCSON !AZ!85706!77000!019!04!TUCSON !PIMA !ARIZONA !0001!+000053114434!N!N!000000000000!AC55!RDTE/WEAPONS-ENG/MANUF DEVELOP !A5 !WEAPONS !2000!NOT DISCERNABLE OR CLASSIFIED !3812!3!*!*!*!B!A!*!A !N!V!2!0

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 $446.3 million.

What is the period of performance?

Start: 1996-12-13. End: 2008-12-31.

What is Raytheon Missile Systems' track record with similar large-scale defense contracts?

Raytheon Missile Systems, now part of RTX Corporation, has a long and extensive track record of successfully developing and producing complex missile systems for the U.S. military and international allies. They are a prime contractor on numerous programs, including the Patriot air defense system, Tomahawk cruise missile, and various air-to-air and air-to-ground munitions. Their history includes managing large, multi-year R&D and production contracts, often involving advanced technologies and stringent performance requirements. While specific contract performance details are often proprietary or classified, their continued role as a major defense supplier indicates a generally positive performance history and capability to meet demanding defense needs.

How does the awarded amount compare to other missile development contracts?

The $794.6 million awarded value for this contract is substantial and aligns with the typical scale of major defense research, development, testing, and evaluation (RDT&E) programs for advanced missile systems. Large-scale missile programs often involve multi-year efforts with total contract values reaching into the billions of dollars when production phases are included. For instance, programs like the development of next-generation fighter jet missiles or advanced strategic weapon systems frequently command similar or even higher funding levels over their lifecycles. The competitive nature of this award suggests that the pricing was deemed fair and reasonable within the context of the defense market for such sophisticated technologies.

What are the primary risks associated with this contract?

Primary risks associated with this contract include technological uncertainty inherent in advanced R&D, potential for cost overruns due to the complexity of missile systems, schedule delays in development and testing, and the possibility of performance issues if the technology does not mature as expected. Given the long duration, there's also a risk of obsolescence if the threat landscape or technological advancements outpace the system's development. Furthermore, reliance on a single contractor for critical capabilities can introduce supply chain vulnerabilities. The classified nature of some aspects may also limit oversight and public scrutiny, potentially masking underlying issues.

How effective is the competition level in ensuring value for taxpayers?

The 'full and open competition' award for this contract is a significant positive indicator for taxpayer value. It implies that multiple capable companies were allowed to bid, fostering a competitive environment that typically drives down prices and encourages innovation. This process allows the government to compare different technical approaches and cost proposals, selecting the best overall value. While the ultimate effectiveness depends on the specific evaluation criteria and the rigor of the source selection process, a well-executed competitive procurement is a cornerstone of ensuring that taxpayer funds are used efficiently for defense acquisitions.

What is the historical spending pattern for advanced missile development by the Navy?

The Naval Air Systems Command (NAVAIR), part of the Department of the Navy, has historically allocated significant funding towards advanced missile development and procurement. Spending in this category is cyclical, often driven by modernization efforts, emerging threats, and the lifecycle of existing weapon systems. Annual spending can range from hundreds of millions to several billion dollars, depending on the specific programs in development or production phases. This particular contract, awarded in the late 1990s for a duration extending into the late 2000s, reflects a period of sustained investment in enhancing naval air-launched missile capabilities, consistent with broader defense spending trends of that era.

What are the potential performance implications of a Cost Plus Incentive Fee (CPIF) contract type?

A Cost Plus Incentive Fee (CPIF) contract, as indicated for this award, is designed to incentivize the contractor to control costs while achieving specific performance targets. In a CPIF structure, the final fee (profit) is adjusted based on the relationship between the final costs and the target costs, as well as the achievement of other performance objectives (e.g., technical performance, delivery schedule). This means Raytheon Missile Systems has a financial incentive to perform efficiently and effectively. If they manage costs below the target and meet performance goals, their fee increases; if costs exceed the target, their fee decreases, up to a certain limit. This structure aims to balance risk between the government and the contractor while promoting cost consciousness and performance.

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Offers Received: 2

Pricing Type: COST PLUS INCENTIVE FEE (V)

Contractor Details

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

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline