DoD awards Raytheon Company $1.4B for missile assembly, with a significant portion allocated to long-term sustainment

Contract Overview

Contract Amount: $1,398,663,147 ($1.4B)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2021-09-29

End Date: 2025-10-30

Contract Duration: 1,492 days

Daily Burn Rate: $937.4K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: GUIDED MISSILE ASSEMBLY AND PIO CEILING TRACKER CLINS AWARD

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $1.40 billion to RAYTHEON COMPANY for work described as: GUIDED MISSILE ASSEMBLY AND PIO CEILING TRACKER CLINS AWARD Key points: 1. Contract value indicates substantial investment in guided missile production and support. 2. Sole-source award raises questions about competition and potential price efficiencies. 3. Long contract duration suggests a need for sustained missile system readiness. 4. Fixed-price contract type aims to control costs, but requires careful oversight. 5. Geographic concentration in Arizona for assembly may have local economic impacts. 6. The contract's focus on parts and auxiliary equipment highlights supply chain importance.

Value Assessment

Rating: fair

The total contract ceiling of $1.4 billion over approximately four years represents a significant investment. Without specific benchmarks for comparable missile assembly contracts or detailed cost breakdowns, assessing value-for-money is challenging. The fixed-price nature suggests an attempt to cap costs, but the large ceiling implies potential for substantial expenditure. Further analysis would require comparing unit costs for specific components or assembly tasks against industry averages and historical data for similar defense systems.

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 is the sole provider of a critical component or system. While it ensures access to specialized expertise, it limits opportunities for competitive bidding, which could potentially drive down prices and foster innovation from other firms.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as the government lacks the leverage of competitive bidding to secure the best possible price.

Public Impact

The Department of Defense benefits from the continued production and sustainment of guided missile systems. Raytheon Company, as the contractor, receives substantial revenue and maintains its position in the defense sector. The workforce in Arizona involved in guided missile assembly and support is sustained by this contract. The ultimate beneficiaries are the warfighters who rely on these advanced missile systems for national security.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated prices.
Long-term contract duration could mask inefficiencies if not actively managed.
Sole-source nature limits transparency into cost drivers.
Dependence on a single contractor for critical missile components.

Positive Signals

Firm Fixed Price contract type provides cost certainty for the government.
Awarding to an established defense contractor like Raytheon suggests access to proven capabilities.
Contract duration allows for long-term planning and sustainment of critical assets.

Sector Analysis

The defense industry, particularly the segment focused on guided missile manufacturing, is characterized by high barriers to entry, significant R&D investment, and long product development cycles. This contract falls within the 'Other Guided Missile and Space Vehicle Parts and Auxiliary Equipment Manufacturing' sector. Spending in this area is critical for maintaining military readiness and technological superiority. Comparable spending benchmarks would typically involve analyzing other large-scale missile production contracts awarded by the DoD, considering factors like system complexity and quantity.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb: false'. There is no explicit mention of subcontracting goals for small businesses within the provided data. This suggests that the primary focus is on the prime contractor's capabilities. The lack of a small business set-aside may limit opportunities for smaller firms to participate directly in this large-scale defense procurement, potentially impacting the broader small business ecosystem within the defense supply chain.

Oversight & Accountability

Oversight for this contract would primarily fall under the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor performance and compliance. The firm fixed-price contract type provides a degree of cost control, but ongoing monitoring of progress, quality, and adherence to specifications is crucial. Transparency is limited by the sole-source nature, but contract modifications, performance reports, and audits would be key accountability measures. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Guided Missile Production
Defense Logistics and Sustainment
Aerospace Manufacturing
National Defense Spending
Weapon System Development

Risk Flags

Sole-source award
Lack of competition
Potential for cost overruns
Long-term sustainment focus

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $1.40 billion to RAYTHEON COMPANY. GUIDED MISSILE ASSEMBLY AND PIO CEILING TRACKER CLINS AWARD

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 $1.40 billion.

What is the period of performance?

Start: 2021-09-29. End: 2025-10-30.

What is Raytheon Company's track record with similar large-scale defense contracts, particularly in missile assembly?

Raytheon Company (now RTX) has a long and extensive history of producing complex defense systems, including a wide array of guided missiles and related components for the U.S. Department of Defense and international allies. They are a prime contractor on numerous major defense programs, such as the Patriot missile system, Tomahawk cruise missile, and various air-to-air and air-to-ground munitions. Their track record generally indicates a strong capability in advanced manufacturing, systems integration, and program management for large, high-value defense contracts. However, like any major defense contractor, they have faced scrutiny over cost, schedule, and performance on specific programs throughout their history. The scale and nature of this $1.4 billion contract align with Raytheon's core competencies and typical contract awards within the defense sector.

How does the $1.4 billion contract value compare to historical spending on guided missile assembly and parts?

The $1.4 billion ceiling for this contract is substantial and falls within the typical range for major defense procurement programs involving complex weapon systems like guided missiles. Historical spending data from the Department of Defense reveals consistent, multi-billion dollar annual investments in missile programs, encompassing research, development, procurement, and sustainment. For instance, individual missile programs often see ceilings in the hundreds of millions to billions of dollars over their lifecycle. This specific contract's value is significant, reflecting the ongoing need for advanced missile capabilities and the associated manufacturing and support infrastructure. Benchmarking requires comparing it against similar system types (e.g., air defense missiles, tactical missiles) and considering the contract duration and scope (assembly vs. full system development).

What are the primary risks associated with a sole-source award of this magnitude?

The primary risk associated with a sole-source award of this magnitude is the potential for reduced price competition, which can lead to higher costs for the government and taxpayers. Without competing bids, there is less market pressure on the contractor to offer the most cost-effective solution. This can also reduce incentives for innovation and efficiency. Furthermore, sole-source contracts can create a dependency on a single supplier, potentially leading to supply chain vulnerabilities if that contractor faces production issues, financial instability, or geopolitical challenges. Ensuring robust oversight, detailed cost analysis, and clear performance metrics becomes even more critical to mitigate these risks and ensure fair value is obtained.

What does the 'Other Guided Missile and Space Vehicle Parts and Auxiliary Equipment Manufacturing' classification imply about the contract's scope?

The North American Industry Classification System (NAICS) code 336419, 'Other Guided Missile and Space Vehicle Parts and Auxiliary Equipment Manufacturing,' indicates that this contract is focused on the production of components, sub-assemblies, and auxiliary equipment for guided missiles and space vehicles, rather than the complete, end-item missile system itself. This could include items such as guidance systems, propulsion components, warheads, airframes, or specialized electronic parts. It suggests a role in the broader missile production ecosystem, potentially supplying critical elements to prime integrators or other manufacturers. The contract's scope likely involves complex manufacturing processes and adherence to stringent quality and performance specifications for these specialized parts.

How does the contract's duration (ending in 2025) align with typical defense procurement cycles for missile systems?

The contract duration, with an estimated end date of October 30, 2025, spans approximately four years from its start date. This timeframe is relatively common for the production and sustainment phases of defense contracts, particularly for components or specific assembly tasks. Major defense acquisition programs often have lifecycles spanning decades, involving initial development, low-rate initial production, full-rate production, and long-term sustainment. A four-year period for assembly and parts provision allows for consistent production, potential upgrades, and ensures a steady supply chain for critical missile components. It is long enough to provide stability but short enough to allow for periodic re-evaluation of needs and potentially re-competition or contract adjustments.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Other Guided Missile and Space Vehicle Parts and Auxiliary Equipment Manufacturing

Product/Service Code: GUIDED MISSLES

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0002420R5408

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: RTX Corp

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: $1,414,538,774

Exercised Options: $1,398,688,849

Current Obligation: $1,398,663,147

Subaward Activity

Number of Subawards: 896

Total Subaward Amount: $638,453,929

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline