Raytheon Company awarded $45.4M contract for missile and space vehicle manufacturing, with a 3-year duration

Contract Overview

Contract Amount: $45,420,258 ($45.4M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2021-11-30

End Date: 2025-12-31

Contract Duration: 1,492 days

Daily Burn Rate: $30.4K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: UNDEFINITIZED CONTRACT ACTION FOR ILMF/DLMF, RECERTIFICATIONS, AND REPAIRS.

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $45.4 million to RAYTHEON COMPANY for work described as: UNDEFINITIZED CONTRACT ACTION FOR ILMF/DLMF, RECERTIFICATIONS, AND REPAIRS. Key points: 1. Contract awarded to a single, large defense contractor, indicating potential for limited competition. 2. The contract type is Cost Plus Fixed Fee, which can lead to cost overruns if not managed carefully. 3. Performance period extends over three years, suggesting a need for sustained support or development. 4. The North American Industry Classification System (NAICS) code 336414 points to specialized manufacturing capabilities. 5. The contract is not set aside for small businesses, suggesting it may be beyond the scope or capability of smaller firms. 6. The contract is for UNDEFINITIZED CONTRACT ACTION, which implies initial work may begin before final terms are fully negotiated.

Value Assessment

Rating: fair

The contract value of $45.4 million over approximately three years averages to about $15.1 million annually. Without specific deliverables or comparable contracts for similar missile and space vehicle manufacturing and recertification services, a precise value-for-money assessment is challenging. The Cost Plus Fixed Fee (CPFF) contract type, while allowing flexibility, carries inherent risks of cost escalation if the fixed fee is not adequately justified by the scope of work and if oversight is insufficient. Benchmarking against similar specialized manufacturing contracts would be necessary for a more definitive assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded under a 'NOT AVAILABLE FOR COMPETITION' basis, indicating a sole-source procurement. This suggests that the Department of Defense identified Raytheon Company as the only source capable of fulfilling the requirement, possibly due to proprietary technology, unique expertise, or existing system integration. The lack of competition means that price discovery through market forces was bypassed, and the government relied on negotiation and oversight to ensure a fair price.

Taxpayer Impact: Sole-source awards can potentially lead to higher costs for taxpayers as the competitive pressure to offer the lowest price is absent. Robust negotiation and stringent oversight are critical to mitigate this risk.

Public Impact

The primary beneficiaries are the Department of Defense, which will receive essential recertification and repair services for guided missile and space vehicles. The contract supports the sustainment and readiness of critical defense assets, ensuring operational capabilities. The geographic impact is primarily in Arizona (ST: AZ, SN: ARIZONA), where the contractor is located, potentially supporting local jobs and the regional economy. The contract implies the utilization of specialized manufacturing workforce within Raytheon Company, including engineers, technicians, and skilled labor in the guided missile and space vehicle sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Fixed Fee contract type increases the risk of cost overruns if not closely monitored.
Sole-source award limits competitive pressure, potentially impacting price efficiency for taxpayers.
Undeﬁnitized Contract Action (UCA) means work is proceeding before final agreement on terms, which can introduce negotiation risks.
The contract duration of over three years requires sustained government oversight to ensure performance and value.
Lack of small business participation noted, potentially missing opportunities for smaller innovative firms.

Positive Signals

Award to Raytheon Company, a known entity in defense manufacturing, suggests access to established expertise and infrastructure.
The contract addresses critical sustainment needs for guided missile and space vehicles, vital for national security.
The definitive contract award (AW: DEFINITIVE CONTRACT) indicates a move towards finalized terms after initial actions.
The contract is for recertifications and repairs, focusing on maintaining existing assets rather than new development, which can be more cost-effective.
The contract is located in Arizona, potentially benefiting the regional defense industrial base.

Sector Analysis

The guided missile and space vehicle manufacturing sector is a highly specialized and critical segment of the aerospace and defense industry. This contract falls under NAICS code 336414. The market is characterized by high barriers to entry, significant R&D investment, and long product lifecycles. Major players like Raytheon Company dominate this space due to their technological capabilities and established relationships with government agencies. Spending in this sector is driven by national security requirements and technological advancements, with contracts often being long-term and complex.

Small Business Impact

This contract does not appear to have a small business set-aside (SB: false). The nature of guided missile and space vehicle manufacturing typically requires extensive resources, specialized facilities, and advanced technological capabilities that are often beyond the reach of small businesses. While there is no direct subcontracting plan information provided, large prime contractors like Raytheon are often encouraged or required to subcontract portions of their work to small businesses to foster a broader defense industrial base. The absence of a set-aside suggests this contract was deemed unsuitable for small business competition.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense, likely managed by the Defense Contract Management Agency (DCMA). As a Cost Plus Fixed Fee contract, rigorous financial oversight is crucial to monitor incurred costs against the fixed fee and ensure compliance with contract terms. Transparency is typically maintained through contract reporting systems and regular performance reviews. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Missile Manufacturing
Space Vehicle Manufacturing
Defense Logistics
Aerospace Engineering
Government Contracting
Guided Missile Systems

Risk Flags

Sole-source award
Cost Plus Fixed Fee contract type
Undeﬁnitized Contract Action (UCA)

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $45.4 million to RAYTHEON COMPANY. UNDEFINITIZED CONTRACT ACTION FOR ILMF/DLMF, RECERTIFICATIONS, AND REPAIRS.

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 $45.4 million.

What is the period of performance?

Start: 2021-11-30. End: 2025-12-31.

What is Raytheon Company's track record with similar Cost Plus Fixed Fee contracts for missile and space vehicle services?

Raytheon Company, now part of RTX Corporation, has a long history of performing complex defense contracts, including those utilizing Cost Plus Fixed Fee (CPFF) arrangements. CPFF contracts are common for research, development, and complex services where costs are difficult to predict precisely. Raytheon's extensive experience in aerospace and defense suggests they are adept at managing the financial and performance aspects of such contracts. However, the effectiveness of CPFF contracts heavily relies on robust government oversight to control costs and ensure value. Historical data on Raytheon's specific performance on similar contracts, including any instances of cost overruns or performance issues, would provide a more detailed assessment. Without access to specific contract performance databases or historical audit reports, a definitive judgment on their track record for this specific contract type remains general.

How does the $45.4 million contract value compare to similar government contracts for missile and space vehicle recertification and repairs?

Benchmarking the $45.4 million contract value requires comparing it against similar contracts for the recertification and repair of guided missile and space vehicles. The North American Industry Classification System (NAICS) code 336414, 'Guided Missile and Space Vehicle Manufacturing,' provides a relevant industry context. However, specific services like 'recertifications and repairs' can vary significantly in scope and complexity. A direct comparison would necessitate identifying contracts with similar service descriptions, contract types (Cost Plus Fixed Fee), and durations (approximately 3 years). Given the specialized nature of this sector and the sole-source award, it's plausible that this value reflects unique requirements or limited vendor availability. A comprehensive analysis would involve querying contract databases for comparable awards, adjusting for inflation and contract specifics, to determine if the price is within an expected range for the services rendered.

What are the primary risks associated with this UNDEFINITIZED CONTRACT ACTION (UCA) award?

An UNDEFINITIZED CONTRACT ACTION (UCA) signifies that the contract has been awarded, and work can commence, but the final terms, conditions, and price have not yet been fully negotiated and agreed upon. The primary risk associated with this UCA is that the government may end up paying more than necessary if the final negotiated price exceeds initial estimates or if the contractor incurs costs that are later deemed unallowable or unreasonable. There's also a risk that the final scope of work might deviate from what was initially anticipated, potentially leading to disputes or inefficiencies. Furthermore, the negotiation period for a UCA can extend, creating uncertainty. Robust government oversight during the negotiation phase is critical to mitigate these risks and ensure the final contract represents fair value for the services provided.

What is the expected effectiveness of Raytheon Company in fulfilling the recertification and repair requirements for guided missile and space vehicles under this contract?

Raytheon Company (now part of RTX) is a major defense contractor with extensive experience and established infrastructure in the aerospace and defense sector, particularly in areas related to missile systems. Their designation under NAICS code 336414 indicates specialized capabilities in guided missile and space vehicle manufacturing. Given their industry position and historical performance in delivering complex defense systems, the expectation is that Raytheon possesses the technical expertise, skilled workforce, and facilities necessary to effectively perform the recertification and repair services. The effectiveness will ultimately depend on the clarity of the final contract terms, the adequacy of government oversight, and Raytheon's execution of the defined tasks within the agreed-upon schedule and budget.

How does the sole-source nature of this contract impact long-term government strategy for missile and space vehicle sustainment?

A sole-source award, like this one to Raytheon Company, can have implications for the government's long-term strategy for missile and space vehicle sustainment. While it ensures that a critical capability is met, it can reduce competitive pressure, potentially leading to higher costs over time and limiting opportunities for innovation from other potential suppliers. If the government relies heavily on sole-source contracts for sustainment, it may hinder the development of a broader, more competitive industrial base. This could make the government overly dependent on a single provider, increasing vulnerability if that provider faces financial difficulties or strategic shifts. A long-term strategy might involve efforts to foster competition, encourage technology transfer, or develop alternative sources to ensure resilience and cost-effectiveness in sustainment.

What are the historical spending patterns for guided missile and space vehicle manufacturing and sustainment within the Department of Defense?

The Department of Defense (DoD) consistently allocates significant portions of its budget to the research, development, procurement, and sustainment of guided missile and space vehicle systems. Historical spending patterns show a continuous investment driven by evolving threats, technological advancements, and the need to maintain a strategic advantage. This includes substantial outlays for platforms like intercontinental ballistic missiles (ICBMs), cruise missiles, air-to-air missiles, and various space-based assets. The sustainment of these complex systems, encompassing maintenance, repair, and upgrades, represents a substantial and ongoing expenditure. Spending in this category is often characterized by large, multi-year contracts awarded to prime contractors like Raytheon, Boeing, Lockheed Martin, and Northrop Grumman, reflecting the high cost and long lifecycle of these defense assets.

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: N0002421R5415

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

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: $97,466,877

Exercised Options: $56,384,961

Current Obligation: $45,420,258

Subaward Activity

Number of Subawards: 12

Total Subaward Amount: $1,057,876

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline