Raytheon Company awarded $197M contract for guided missile and space vehicle manufacturing support

Contract Overview

Contract Amount: $197,079,812 ($197.1M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2023-09-29

End Date: 2028-09-28

Contract Duration: 1,826 days

Daily Burn Rate: $107.9K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: ENGINEERING & TECHNICAL SUPPORT

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $197.1 million to RAYTHEON COMPANY for work described as: ENGINEERING & TECHNICAL SUPPORT Key points: 1. Contract awarded to a single, large defense contractor, indicating potential for limited competition. 2. The contract type (Cost Plus Fixed Fee) can lead to cost overruns if not closely managed. 3. Long duration of 5 years suggests a need for sustained engineering and technical support. 4. The geographic location of performance in Arizona may have implications for local workforce development. 5. This award falls within the Defense sector, a significant area of federal spending. 6. The absence of small business set-aside raises questions about opportunities for smaller firms.

Value Assessment

Rating: fair

The contract's value of $197 million over five years requires careful scrutiny. While specific benchmarks for this type of specialized engineering and technical support are not readily available, the Cost Plus Fixed Fee structure necessitates robust oversight to ensure value for money. Without comparative data on similar contracts or detailed cost breakdowns, it's challenging to definitively assess pricing fairness. The fixed fee component offers some cost control, but the cost-reimbursement aspect requires diligent monitoring of expenditures.

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 a specific contractor possesses unique capabilities or when urgency dictates a rapid award. The lack of competition means that price discovery through market forces was bypassed, potentially leading to higher costs for the government compared to a competitive procurement.

Taxpayer Impact: Sole-source awards limit opportunities for taxpayers to benefit from competitive pricing. The government may be paying a premium due to the absence of bidding.

Public Impact

The Department of Defense benefits from sustained engineering and technical support for guided missile and space vehicle manufacturing. This contract supports advanced defense capabilities, contributing to national security. Performance in Arizona may create or sustain high-skilled jobs within the state's aerospace and defense sector. The contract ensures the continued development and maintenance of critical defense systems.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing, potentially increasing costs for taxpayers.
Cost Plus Fixed Fee contract type carries inherent risks of cost overruns if not meticulously managed.
Long contract duration requires sustained oversight to ensure ongoing value and performance.
Lack of small business participation may limit opportunities for smaller, innovative firms in the defense supply chain.

Positive Signals

Award to a major defense contractor like Raytheon suggests access to specialized expertise and established capabilities.
The contract duration indicates a stable, long-term need for these critical services.
Performance in Arizona could stimulate local economic activity and support a skilled workforce.

Sector Analysis

This contract falls within the broader aerospace and defense sector, specifically supporting guided missile and space vehicle manufacturing. This is a highly specialized area characterized by significant government investment and a limited number of prime contractors with the requisite technical expertise and security clearances. The market is driven by national security imperatives and technological advancement, with substantial barriers to entry for new firms. Comparable spending benchmarks are difficult to establish due to the unique nature of such support services.

Small Business Impact

The contract was not awarded as a small business set-aside, and the prime contractor, Raytheon Company, is a large business. This indicates that opportunities for small businesses would likely be through subcontracting. The absence of a specific small business goal in the prime contract raises questions about the extent to which small businesses will be engaged and benefit from this award. Further analysis of subcontracting plans would be necessary to assess the impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract is managed by the Defense Contract Management Agency (DCMA). As a definitive contract, it is subject to standard government oversight procedures, including monitoring of performance, costs, and compliance. The Cost Plus Fixed Fee structure requires diligent financial oversight to ensure that costs are reasonable and allocable. Transparency is generally maintained through contract reporting mechanisms, though specific details of cost breakdowns may be proprietary.

Related Government Programs

Guided Missile Manufacturing
Space Vehicle Manufacturing
Defense Engineering Services
Aerospace Technical Support
Cost Plus Fixed Fee Contracts

Risk Flags

Sole-source award
Cost Plus Fixed Fee contract type
Potential for cost overruns
Lack of competitive pricing

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $197.1 million to RAYTHEON COMPANY. ENGINEERING & TECHNICAL SUPPORT

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 $197.1 million.

What is the period of performance?

Start: 2023-09-29. End: 2028-09-28.

What is Raytheon Company's track record with similar Department of Defense contracts?

Raytheon Company, now part of RTX, has an extensive history of performing complex defense contracts for the Department of Defense, spanning decades. They are a major prime contractor for numerous weapon systems, including missiles, aircraft, and space systems. Their track record includes both successes and challenges, as is common for large, long-term defense programs. Past performance reviews and contract close-outs would provide specific insights into their reliability, cost control, and technical execution on prior, similar engagements. Analyzing their history with Cost Plus Fixed Fee contracts specifically would be crucial to understanding their propensity for cost overruns or efficiencies.

How does the $197 million value compare to other engineering and technical support contracts for guided missile manufacturing?

Benchmarking the $197 million value requires access to a comprehensive database of similar contracts, which is often proprietary or requires specialized tools. However, given the scale and complexity of guided missile and space vehicle manufacturing, a five-year contract valued at approximately $40 million per year for specialized engineering and technical support is within the expected range for a major defense contractor. Contracts of this nature often involve significant research and development, testing, and integration efforts. Without specific comparative data on the scope of services, duration, and specific technologies involved, a precise value comparison is difficult, but the amount reflects the high-cost, high-technology nature of the defense industry.

What are the primary risks associated with a sole-source Cost Plus Fixed Fee contract of this magnitude?

The primary risks associated with this sole-source Cost Plus Fixed Fee (CPFF) contract are twofold. Firstly, the sole-source nature bypasses competitive bidding, potentially leading to inflated prices and reduced incentive for the contractor to optimize costs. Taxpayers may not receive the best possible value. Secondly, the CPFF structure, while providing flexibility, carries inherent risks of cost overruns. The government reimburses allowable costs plus a fixed fee, meaning the contractor has less financial incentive to control costs compared to fixed-price contracts. Effective oversight, stringent cost accounting standards, and clear performance metrics are critical to mitigate these risks and ensure the government receives good value for its investment.

How effective are current oversight mechanisms for ensuring performance and value in this contract?

The effectiveness of oversight for this contract hinges on the diligence of the Defense Contract Management Agency (DCMA) and the clarity of the contract's performance work statement (PWS). For a CPFF contract, DCMA's role is crucial in auditing costs, ensuring compliance with regulations, and monitoring progress against milestones. The fixed fee provides a baseline incentive, but the government must actively manage the cost-reimbursement aspect. Robust reporting requirements, regular progress reviews, and potentially independent cost analyses are essential. The long duration and specialized nature of the work necessitate continuous engagement to ensure that performance objectives are met and that the government is receiving fair value for the funds expended.

What are the historical spending patterns for engineering and technical support in guided missile and space vehicle manufacturing?

Historical spending patterns in this niche area of defense contracting typically show consistent, significant investment driven by national security priorities and technological evolution. Agencies like the Department of Defense allocate substantial budgets to the research, development, and sustainment of missile and space systems. Spending often fluctuates based on geopolitical events, new program starts, and the lifecycle of existing platforms. Contracts for engineering and technical support are a critical component of this spending, ensuring the operational readiness and advancement of these complex systems. Analyzing historical data reveals a trend of long-term, high-value contracts awarded to a select group of large, specialized defense contractors.

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 COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0002423R5410

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: $378,613,645

Exercised Options: $224,873,115

Current Obligation: $197,079,812

Actual Outlays: $144,762

Subaward Activity

Number of Subawards: 13

Total Subaward Amount: $3,704,592

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline