Raytheon Company awarded $74M contract for MK 49 MOD 3 missile components, with limited competition

Contract Overview

Contract Amount: $74,087,133 ($74.1M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2019-06-28

End Date: 2025-01-31

Contract Duration: 2,044 days

Daily Burn Rate: $36.2K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: MK 49 MOD 3, P/N 7345500-004

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $74.1 million to RAYTHEON COMPANY for work described as: MK 49 MOD 3, P/N 7345500-004 Key points: 1. Contract value of $74.1 million for guided missile and space vehicle manufacturing. 2. Awarded to Raytheon Company, a major defense contractor. 3. Contract duration extends to January 2025, indicating a long-term need. 4. The contract is a definitive contract with a firm fixed price. 5. Limited competition suggests potential for higher pricing. 6. The North American Industry Classification System (NAICS) code is 336414. 7. The contract is not set aside for small businesses. 8. The contract is not a small business subcontracting goal.

Value Assessment

Rating: fair

The contract value of $74.1 million for MK 49 MOD 3 components appears substantial. Benchmarking this against similar missile system component contracts is difficult without more specific data on the components themselves. However, given the limited competition and the nature of defense contracting, the pricing may be at a premium. The firm fixed price structure shifts some risk to the contractor, which can sometimes lead to higher initial bids to cover unforeseen costs.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded under a 'NOT AVAILABLE FOR COMPETITION' status, indicating limited or sole-source procurement. This suggests that either only one source was capable of meeting the requirements, or there were specific circumstances that precluded a broader competition. The lack of open competition limits the government's ability to leverage market forces to achieve the best possible price and terms.

Taxpayer Impact: Limited competition means taxpayers may not be receiving the most cost-effective solution, as competitive pressures that drive down prices are absent.

Public Impact

The Department of Defense benefits from the procurement of critical missile components. This contract supports the manufacturing of guided missiles and space vehicles. The primary geographic impact is likely within the United States, specifically Arizona where Raytheon operates. The contract supports jobs within the defense manufacturing sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition may lead to inflated costs for taxpayers.
Lack of transparency in the procurement process due to limited competition.
Potential for contractor lock-in given the specialized nature of defense components.

Positive Signals

Firm fixed price contract provides cost certainty for the government.
Award to a known, established defense contractor like Raytheon suggests a level of reliability.
Long contract duration indicates a sustained need for these components.

Sector Analysis

This contract falls within the Guided Missile and Space Vehicle Manufacturing sector, a specialized segment of the aerospace and defense industry. This sector is characterized by high technological barriers to entry, significant R&D investment, and often relies on sole-source or limited-competition procurements due to the unique capabilities required. Spending in this area is critical for national security and is typically driven by government defense budgets.

Small Business Impact

The contract data indicates that this was not set aside for small businesses, nor does it appear to have specific subcontracting goals for small businesses mentioned. This means that opportunities for small businesses to participate in this specific contract are likely limited, and the primary awardee, Raytheon, will manage the execution. The broader impact on the small business ecosystem would depend on Raytheon's own subcontracting practices outside of this specific contract's stated terms.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and procurement regulations, managed by the Defense Contract Management Agency (DCMA). Accountability measures are inherent in the firm fixed price contract type, which holds the contractor responsible for delivering within the agreed-upon price. Transparency may be limited due to the 'not available for competition' status, but contract award details are generally made public.

Related Government Programs

Guided Missile Manufacturing
Defense Procurement
Aerospace Components
Space Vehicle Manufacturing

Risk Flags

Limited Competition
Potential for Cost Overruns
Supply Chain Risk

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $74.1 million to RAYTHEON COMPANY. MK 49 MOD 3, P/N 7345500-004

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 $74.1 million.

What is the period of performance?

Start: 2019-06-28. End: 2025-01-31.

What is the historical spending pattern for MK 49 MOD 3 components with Raytheon Company?

Analyzing historical spending patterns for specific components like the MK 49 MOD 3 requires access to detailed contract databases and procurement histories. Without direct access to such data, it's challenging to provide precise figures. However, Raytheon Company is a major defense contractor with a long history of producing various missile systems and components for the U.S. military. If the MK 49 MOD 3 is a critical part of an ongoing or legacy missile program, it's plausible that there have been multiple contracts awarded over time for its production, sustainment, or upgrades. The current $74 million contract, awarded in 2019 with an end date in 2025, suggests a significant, multi-year procurement. Previous awards might have been for R&D, initial production runs, or smaller quantities. The trend in spending would likely correlate with the lifecycle of the missile system it supports – potentially increasing during peak production phases and decreasing during sustainment or as newer systems are developed.

How does the per-unit cost of the MK 49 MOD 3 component compare to similar defense articles?

Determining the per-unit cost for the MK 49 MOD 3 component is not feasible with the provided data, as the total contract value ($74,087,132.98) is for a quantity of 1 (no. = 1), which likely represents a contract award rather than a unit count. The 'br' value of 36246 might represent a batch size or a different metric, but it's not explicitly defined as a unit count for the component itself. Therefore, a direct per-unit cost calculation is impossible. Furthermore, comparing the 'value' of a specific missile component across different defense articles is complex. Each component has unique design, manufacturing, and performance requirements. The MK 49 MOD 3 is part of a guided missile system, and its cost would be influenced by factors such as material complexity, precision engineering, testing protocols, and the specific technological capabilities it enables. Without knowing the exact nature and function of the MK 49 MOD 3 and its place within the broader missile system, a meaningful comparison to other defense articles (e.g., aircraft parts, communication equipment) would be speculative and lack analytical rigor.

What are the primary risks associated with this limited-source contract for the Department of Defense?

The primary risks associated with this limited-source contract for the Department of Defense (DoD) revolve around cost, innovation, and supply chain resilience. Firstly, limited competition inherently reduces the government's leverage in price negotiations. Without multiple bidders vying for the contract, Raytheon may not be incentivized to offer the lowest possible price, potentially leading to cost overruns or inefficient use of taxpayer funds. Secondly, a lack of competition can stifle innovation. When a single contractor dominates the supply of a critical component, there is less pressure to invest in process improvements or develop alternative, potentially more advanced, solutions. This can lead to technological stagnation. Thirdly, reliance on a single source creates supply chain vulnerabilities. Any disruption affecting Raytheon—whether due to production issues, geopolitical events, or financial instability—could directly impact the DoD's ability to procure essential missile components, potentially jeopardizing national security readiness. The 'not available for competition' status, while sometimes justified by unique capabilities or national security imperatives, necessitates careful monitoring to mitigate these inherent risks.

What is Raytheon Company's track record in delivering similar defense components?

Raytheon Company, now part of RTX Corporation, has an extensive and long-standing track record in the defense industry, particularly in the development and manufacturing of missiles, sensors, and other advanced defense systems. They are a prime contractor on numerous major U.S. military programs, including various missile systems like the Patriot, Tomahawk, and Standard Missile families. Their history includes delivering complex components and integrated systems under firm fixed-price and other contract types. While specific performance metrics for every contract are not publicly available, Raytheon is generally considered a capable and experienced supplier within the defense sector. However, like any large defense contractor, they have faced scrutiny over contract performance, cost overruns, and schedule delays on certain programs in the past. For the MK 49 MOD 3 component, the fact that the Department of Defense continues to award contracts to Raytheon suggests a level of satisfaction with their past performance and capabilities in producing these specific or similar items, especially given the limited competition designation.

How does the duration and value of this contract align with typical defense procurement cycles for missile systems?

The duration of this contract (June 2019 to January 2025, approximately 67 months or over 5.5 years) and its value ($74.1 million) are generally consistent with the procurement cycles for major defense systems, particularly for components that are part of established or ongoing missile programs. Defense procurement often involves long-term contracts to ensure a stable supply chain, manage complex manufacturing processes, and account for research, development, testing, and production phases. A firm fixed-price contract over several years allows the government to lock in costs, while the contractor can plan production and investments. The value, while substantial, is not exceptionally large in the context of major weapon system procurement, suggesting it might be for a specific set of components rather than an entire system's production run. This duration and value align with the sustainment, upgrade, or continued production phases of a missile system where specific components like the MK 49 MOD 3 are required in significant quantities over an extended period.

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: N0002418R5404

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: $74,087,133

Exercised Options: $74,087,133

Current Obligation: $74,087,133

Actual Outlays: $13,753,928

Subaward Activity

Number of Subawards: 335

Total Subaward Amount: $210,257,858

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline