Raytheon Company awarded $321M contract for missile and space vehicle manufacturing, spanning over a decade

Contract Overview

Contract Amount: $321,101,402 ($321.1M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2012-12-27

End Date: 2024-10-31

Contract Duration: 4,326 days

Daily Burn Rate: $74.2K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: ESSMS FOR FY13, FY14 AND FY15 ALONG WITH SPARES AND CONTAINERS

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $321.1 million to RAYTHEON COMPANY for work described as: ESSMS FOR FY13, FY14 AND FY15 ALONG WITH SPARES AND CONTAINERS Key points: 1. Contract value of $321.1M over 12 years suggests significant long-term investment in missile and space vehicle manufacturing. 2. Sole-source award raises questions about potential lack of competitive pressure on pricing and innovation. 3. Long contract duration (4326 days) may indicate a stable, ongoing need for these specialized manufacturing capabilities. 4. The contract's focus on guided missile and space vehicle manufacturing places it within a critical defense sector. 5. Fixed pricing structure aims to provide cost certainty for the Department of Defense. 6. The absence of small business set-asides suggests the primary contractor is a large entity, with potential subcontracting opportunities.

Value Assessment

Rating: fair

The total contract value of $321.1 million over approximately 12 years averages to about $26.7 million per year. Without specific benchmarks for guided missile and space vehicle manufacturing contracts of this nature, it is difficult to definitively assess value for money. However, the long duration and sole-source nature warrant scrutiny to ensure pricing remains competitive and reflects true costs.

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 vendor possesses the necessary capabilities, technology, or security clearances. The lack of competition means that the Department of the Navy did not benefit from the price discovery and innovation that typically arises from a competitive bidding process.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive bidding. Without alternative offers, there is less assurance that the price reflects the lowest possible cost for these specialized manufacturing services.

Public Impact

The primary beneficiaries are the Department of the Navy and potentially other branches of the Department of Defense requiring advanced missile and space vehicle components. The contract delivers essential manufacturing services for guided missiles and space vehicles, crucial for national defense capabilities. The contract is associated with Arizona (ST: AZ, SN: ARIZONA), indicating a significant presence of this manufacturing activity within the state. The contract likely supports a specialized workforce in advanced manufacturing, engineering, and related technical fields within Raytheon Company.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially impacting cost-effectiveness.
Long contract duration could lead to price escalation if not managed carefully.
Lack of transparency in the sole-source justification requires further review.
Potential for contractor lock-in due to specialized nature of the work.
Limited visibility into subcontracting opportunities for small businesses.

Positive Signals

Long-term commitment ensures stable supply of critical defense components.
Fixed-price contract provides cost predictability for the government.
Award to a known entity (Raytheon) suggests reliance on established expertise.
Contract duration aligns with the lifecycle of complex defense systems.
Focus on advanced manufacturing supports technological superiority.

Sector Analysis

The guided missile and space vehicle manufacturing sector is a highly specialized and critical segment of the aerospace and defense industry. It involves complex engineering, advanced materials, and stringent quality control. Companies operating in this space often have significant R&D investments and long-standing relationships with government agencies. Spending in this area is driven by national security requirements and technological advancements. Comparable spending benchmarks are difficult to establish due to the proprietary nature of many defense contracts and the unique specifications of missile and space systems.

Small Business Impact

This contract does not appear to have a small business set-aside (SS: false, SB: false). As a sole-source award to Raytheon Company, a large defense contractor, the primary focus is likely on the prime contractor's capabilities. While Raytheon may engage in subcontracting with small businesses, the contract structure itself does not mandate specific set-aside goals. Further analysis would be needed to determine the extent of small business participation through subcontracting.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. As a definitive contract, it is subject to standard federal procurement regulations and oversight. The long duration may necessitate periodic reviews to ensure continued adherence to terms and pricing. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse. Transparency is limited by the sole-source nature, but contract award details are publicly available.

Related Government Programs

Guided Missile Manufacturing
Space Vehicle Manufacturing
Defense Procurement
Aerospace Manufacturing
Raytheon Company Contracts
Department of the Navy Contracts

Risk Flags

Sole-source award
Long contract duration
Lack of competition

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $321.1 million to RAYTHEON COMPANY. ESSMS FOR FY13, FY14 AND FY15 ALONG WITH SPARES AND CONTAINERS

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 $321.1 million.

What is the period of performance?

Start: 2012-12-27. End: 2024-10-31.

What is the historical spending pattern for guided missile and space vehicle manufacturing by the Department of the Navy with Raytheon Company?

Historical spending data for guided missile and space vehicle manufacturing by the Department of the Navy with Raytheon Company prior to this specific $321.1 million contract (awarded 2012-12-27, ending 2024-10-31) is not directly provided in the given data. However, the contract's long duration (over 12 years) and sole-source nature suggest a sustained and potentially significant historical relationship. To understand the full pattern, one would need to examine previous contracts for similar services, including their values, durations, and competitive nature. This would reveal trends in investment, potential shifts in technology, and the evolution of pricing strategies over time. Without access to that broader contract history, this single award represents a substantial, long-term commitment.

How does the average annual value of this contract compare to other similar defense manufacturing contracts?

The average annual value of this contract is approximately $26.7 million ($321.1 million / 12 years). Comparing this to other similar defense manufacturing contracts requires access to a broader database of defense procurements, specifically those for guided missile and space vehicle manufacturing. Such comparisons are challenging because contract scopes, technologies, quantities, and specific requirements vary significantly. However, for a long-term, sole-source contract involving complex defense systems, this annual value might be considered moderate to substantial, depending on the specific nature of the deliverables. A comprehensive benchmark analysis would involve identifying contracts with comparable Product Service Codes (PSC) and agencies, then normalizing for contract duration and scope.

What are the specific risks associated with a sole-source award for such a critical defense capability?

The primary risks associated with a sole-source award for critical defense capabilities like missile and space vehicle manufacturing include: 1. **Reduced Price Competition:** Without multiple bidders, the government may not achieve the lowest possible price, potentially leading to higher costs for taxpayers. 2. **Limited Innovation:** A lack of competition can disincentivize the contractor from pursuing innovative solutions or cost-saving measures, as there is no competitive pressure to do so. 3. **Contractor Lock-in:** The government may become overly reliant on a single supplier, making it difficult and costly to switch providers even if performance or pricing becomes unsatisfactory. 4. **Potential for Complacency:** The absence of competitive threats can sometimes lead to a decline in responsiveness or a reduction in proactive problem-solving by the contractor. 5. **Transparency Concerns:** Sole-source justifications can sometimes obscure the true reasons for not competing, raising questions about fairness and efficiency in procurement.

What is Raytheon Company's track record in fulfilling long-term, high-value defense manufacturing contracts?

Raytheon Company (now RTX) has a long and extensive track record in fulfilling high-value defense manufacturing contracts, including those for missiles and aerospace systems. As a major defense contractor, it has consistently been awarded significant contracts by the Department of Defense and other government agencies. Its history includes the development and production of numerous advanced weapon systems, radar technology, and space-related components. While specific performance metrics for all past contracts are not publicly detailed, Raytheon's continued success in securing large, long-term awards suggests a generally positive track record in terms of technical capability, production capacity, and program execution. However, like any large contractor, it may have faced specific program challenges or controversies over its history.

What are the implications of the 'DEFINITIVE CONTRACT' type for government oversight and flexibility?

A 'Definitive Contract' is a standard type of fixed-price or cost-reimbursement contract used for significant procurements. For government oversight, it signifies a formal, legally binding agreement with clearly defined terms, conditions, specifications, and pricing. This provides a solid framework for monitoring performance and ensuring compliance. Flexibility can vary; fixed-price definitive contracts offer less flexibility for scope changes without formal modifications (and potentially renegotiation), which can be costly. Cost-reimbursement definitive contracts offer more flexibility in adapting to evolving requirements but require more rigorous financial oversight to control costs. The 'FIRM FIXED PRICE' (PT: FIRM FIXED PRICE) designation on this contract indicates a commitment to a set price, offering cost certainty to the government but limiting flexibility for the contractor to adjust if costs increase unexpectedly.

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 AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0002412R5409

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

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: $330,214,889

Exercised Options: $327,371,467

Current Obligation: $321,101,402

Subaward Activity

Number of Subawards: 1

Total Subaward Amount: $39,900

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline