Raytheon Missile Systems awarded $794.6M contract for missile and space systems development in 1998

Contract Overview

Contract Amount: $255,093,924 ($255.1M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 1998-06-03

End Date: 2004-12-31

Contract Duration: 2,403 days

Daily Burn Rate: $106.2K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: 199811!1700!1121!AT711!NAVAL AIR SYSTEMS COMMAND !N0001998C0177 !A!*!* !19980603!20030602!794598573!794598573!001339159!N!1FH92!RAYTHEON MISSILE SYSTEMS COMPA!1151 E HERMANS RD !TUCSON !AZ!85706!77000!019!04!TUCSON !PIMA !ARIZONA !0001!+000035510000!N!N!000000000000!AC25!RDTE/MISSILE AND SPACE SYSTEMS-ENG/MANUF DEVEL !A2 !MISSILE AND SPACE SYSTEMS !2000!NOT DISCERNABLE OR CLASSIFIED !3761!3!*!*!*!B!A!*!D !U!U!1!001!N!1A!A!W!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 $255.1 million to RAYTHEON COMPANY for work described as: 199811!1700!1121!AT711!NAVAL AIR SYSTEMS COMMAND !N0001998C0177 !A!*!* !19980603!20030602!794598573!794598573!001339159!N!1FH92!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 (RDT&E) of missile and space systems. 2. Significant funding allocated for development, indicating a focus on advanced technology and innovation. 3. Contract duration of over 2000 days suggests a long-term commitment to the program. 4. Sole-source award raises questions about competition and potential cost efficiencies. 5. Contractor has a substantial history with the Department of Defense, implying established capabilities. 6. Geographic concentration in Arizona for contractor operations.

Value Assessment

Rating: questionable

The contract value of $794.6 million over approximately 2000 days represents a substantial investment in missile and space systems RDT&E. Without comparable sole-source contracts for similar advanced development programs, it is difficult to benchmark the value for money. The cost-plus-fixed-fee (CPFF) contract type suggests that costs were estimated and a fixed fee was added, which can lead to cost overruns if not managed tightly. The total value of $794.6M is a significant figure, and the lack of competitive bidding makes a direct price comparison challenging.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one bidder was considered. This approach is typically used when there is a lack of competition, a national security concern, or when a specific contractor possesses unique capabilities. The absence of multiple bidders limits the opportunity for price discovery and negotiation, potentially leading to higher costs for the government.

Taxpayer Impact: Sole-source awards can result in taxpayers paying a premium due to the lack of competitive pressure to reduce prices. This necessitates robust government oversight to ensure fair pricing and efficient use of funds.

Public Impact

The primary beneficiaries are the Department of Defense and its various branches requiring advanced missile and space systems. Services delivered include research, development, testing, and manufacturing of missile and space systems. Geographic impact is concentrated in Tucson, Arizona, where Raytheon Missile Systems is located. Workforce implications include employment for engineers, scientists, technicians, and support staff at Raytheon.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competition, potentially increasing costs for taxpayers.
Cost-plus-fixed-fee contract type can incentivize cost overruns if not closely monitored.
Long contract duration requires sustained oversight to ensure program objectives are met efficiently.
Lack of detailed performance metrics in the provided data makes it difficult to assess effectiveness.
Potential for contractor lock-in due to specialized nature of missile and space systems development.

Positive Signals

Award to a known defense contractor (Raytheon) suggests established expertise in the field.
Focus on RDT&E indicates investment in future defense capabilities.
Contract supports development of critical national security assets.
Long-term nature of the contract provides stability for program development and execution.

Sector Analysis

This contract falls within the Defense Industrial Base sector, specifically focusing on the research, development, manufacturing, and integration of advanced missile and space systems. This is a highly specialized and capital-intensive segment of the aerospace and defense industry, characterized by long development cycles, significant R&D investment, and stringent performance requirements. The market is often dominated by a few large prime contractors due to the complexity and scale of the programs. Comparable spending benchmarks would typically involve other major defense RDT&E contracts for complex weapon systems.

Small Business Impact

The data does not indicate any specific small business set-aside provisions for this contract. As a large sole-source award to a major defense contractor, it is unlikely to have direct subcontracting opportunities for small businesses unless specified by the prime contractor. The primary impact on the small business ecosystem would be indirect, through the overall health of the defense industrial base and potential Tier 2 or Tier 3 supply chain opportunities.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contract management agencies, such as the Defense Contract Management Agency (DCMA). Given the sole-source nature and CPFF type, rigorous oversight of cost, schedule, and performance would be critical. Transparency may be limited due to the classified or sensitive nature of missile and space systems development. Inspector General (IG) jurisdiction would apply to investigations of fraud, waste, or abuse.

Related Government Programs

Missile Systems Development
Space Systems Development
Advanced Weapons Research
Defense R&D Programs
Aerospace Manufacturing
Naval Air Systems Command Contracts

Risk Flags

Sole-source award
Cost-plus-fixed-fee contract type
Lack of detailed performance metrics
Potential for cost overruns

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $255.1 million to RAYTHEON COMPANY. 199811!1700!1121!AT711!NAVAL AIR SYSTEMS COMMAND !N0001998C0177 !A!*!* !19980603!20030602!794598573!794598573!001339159!N!1FH92!RAYTHEON MISSILE SYSTEMS COMPA!1151 E HERMANS RD !TUCSON !AZ!85706!77000!019!04!TUCSON !PIMA !ARIZONA !0001!+000035510000!N!N!000000000000!AC25!RDTE/MISSILE AND SPACE SYSTEMS-ENG/MANUF DEVEL !A2 !MISSILE AND SPACE SYSTEMS !2000!NOT DISCERNABLE OR CLASSIFIED !3761!3!*!*!*!B!A!*!D !U!U!1!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 $255.1 million.

What is the period of performance?

Start: 1998-06-03. End: 2004-12-31.

What is the track record of Raytheon Missile Systems in delivering similar missile and space systems under government contracts?

Raytheon Missile Systems, now part of RTX Corporation, has a long and extensive track record with the Department of Defense and other government agencies in developing and producing a wide array of missile systems, including air-to-air, air-to-ground, surface-to-air, and strategic missile programs. They are known for programs like the Patriot air defense system, Tomahawk cruise missile, and various advanced seeker technologies. Their history includes numerous RDT&E contracts, production contracts, and sustainment services. While specific performance metrics for this 1998 contract are not detailed here, Raytheon's overall reputation is that of a major, experienced defense contractor with significant capabilities in complex weapon system development. However, like many large defense programs, specific projects may have faced challenges related to cost, schedule, or technical performance over their lifecycles, necessitating ongoing government oversight.

How does the $794.6 million contract value compare to other missile and space systems RDT&E contracts awarded around the same period?

In 1998, a $794.6 million contract for missile and space systems RDT&E was a substantial award, reflecting the high cost and complexity associated with developing advanced defense technologies. Major defense programs, especially those involving cutting-edge research and development, often run into hundreds of millions or even billions of dollars over their lifecycles. For context, other significant RDT&E efforts in areas like fighter aircraft development, ballistic missile defense, or advanced space exploration programs also commanded similar or larger budgets. The sole-source nature of this award, however, makes direct value-for-money comparisons difficult. A competitive bid process would typically yield a clearer understanding of market pricing for comparable systems. Without access to a broader dataset of sole-source RDT&E contracts from that era, precise benchmarking is challenging, but the figure indicates a high-priority, resource-intensive program.

What are the primary risks associated with a sole-source, cost-plus-fixed-fee contract for RDT&E?

Sole-source contracts eliminate competitive pressure, which is a primary driver for cost efficiency and innovation. This means the government may not achieve the lowest possible price. The cost-plus-fixed-fee (CPFF) structure, while providing flexibility for RDT&E where costs can be uncertain, carries inherent risks. The 'cost-plus' element means the contractor is reimbursed for allowable costs incurred, plus a predetermined fixed fee representing profit. This can create a disincentive for the contractor to control costs rigorously, as higher costs (within allowable limits) do not reduce their fixed profit. The risk for the government is that costs could escalate beyond initial estimates, leading to budget overruns. Effective management and oversight are crucial to mitigate these risks, ensuring that costs are reasonable and the fixed fee remains appropriate for the effort.

How effective are sole-source awards in ensuring the timely development of critical defense technologies?

Sole-source awards can be effective in ensuring the timely development of critical defense technologies when a specific contractor possesses unique, indispensable capabilities or intellectual property, or when urgency dictates bypassing the standard competitive process due to national security imperatives. In such cases, a sole-source award can accelerate the program by avoiding lengthy solicitation, evaluation, and negotiation phases. However, this effectiveness is contingent on the contractor's demonstrated ability to execute the program efficiently and without undue delay. The lack of competition means that the government relies entirely on the chosen contractor's performance, making robust program management and oversight even more critical to prevent schedule slippage and ensure the technology is delivered as needed.

What are the historical spending patterns for missile and space systems RDT&E by the Department of Defense?

The Department of Defense (DoD) has consistently allocated significant portions of its budget to Research, Development, Test, and Evaluation (RDT&E) for missile and space systems throughout recent decades. This spending reflects the evolving nature of warfare, the need for advanced deterrence, and the strategic importance of space capabilities. Historical patterns show substantial investments in areas such as strategic missile programs (e.g., ICBMs, SLBMs), tactical missile systems (e.g., air-to-air, surface-to-air), missile defense systems, and increasingly, space-based assets for intelligence, surveillance, reconnaissance, and communication. Funding levels often fluctuate based on geopolitical threats, technological advancements, and shifting defense priorities. The period around 1998, when this contract was awarded, saw continued investment in modernizing conventional forces and developing next-generation weapon systems, including advanced missile technologies.

Competition & Pricing

Extent Competed: NOT COMPETED

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

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: NOT OBTAINED - WAIVED

Timeline