Raytheon Company awarded $1.38B contract for GMA (MK25) C-BAND, impacting guided missile manufacturing

Contract Overview

Contract Amount: $1,380,494,832 ($1.4B)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2024-10-01

End Date: 2030-03-31

Contract Duration: 2,007 days

Daily Burn Rate: $687.8K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: GMA (MK25) C-BAND

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $1.38 billion to RAYTHEON COMPANY for work described as: GMA (MK25) C-BAND Key points: 1. Contract value represents a significant investment in advanced missile technology. 2. Sole-source award raises questions about potential price efficiencies and market alternatives. 3. Long contract duration (over 6 years) suggests a need for sustained technological development. 4. Fixed-price contract structure shifts performance risk to the contractor. 5. Geographic concentration in Arizona for manufacturing. 6. This contract falls within the broader defense sector's focus on strategic weapon systems.

Value Assessment

Rating: fair

The contract value of $1.38 billion over six years for GMA (MK25) C-BAND systems is substantial. Benchmarking this specific system's cost is challenging without detailed technical specifications and production volumes. However, given the sole-source nature, it's difficult to assess if this represents optimal value for money compared to a competitive environment. The firm fixed-price structure aims to control costs, but the absence of competitive bidding limits external validation of pricing.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, indicating that only one bidder, Raytheon Company, was considered capable of fulfilling the requirement. This approach is often used for highly specialized or proprietary technologies where competition is not feasible. The lack of multiple bidders means there was no direct price competition, potentially leading to higher costs than if multiple firms had vied for the contract.

Taxpayer Impact: Taxpayers may not benefit from the cost savings typically achieved through competitive bidding. The government relies on negotiation and oversight to ensure a fair price in sole-source situations.

Public Impact

The Department of Defense is the primary beneficiary, receiving advanced C-BAND missile technology. This contract supports the production and sustainment of guided missile systems critical for national defense. Manufacturing activities will be concentrated in Arizona, potentially creating or sustaining high-tech jobs in the region. The contract contributes to the U.S. defense industrial base's capabilities in advanced electronics and missile technology.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price discovery and potential cost savings for taxpayers.
Long-term nature of the contract requires robust oversight to manage scope creep and ensure continued value.
Dependence on a single contractor for critical missile components could pose supply chain risks.

Positive Signals

Firm fixed-price contract shifts cost overrun risk to the contractor.
Award to an established defense contractor suggests a high likelihood of technical success.
Contract duration allows for long-term planning and integration of technology.

Sector Analysis

The defense electronics and missile manufacturing sector is characterized by high R&D investment, long product development cycles, and significant government procurement. Contracts like this are crucial for maintaining technological superiority and national security. The market is often dominated by a few large prime contractors, with sole-source awards being common for specialized systems where intellectual property or unique capabilities reside with a single entity. Comparable spending benchmarks are difficult to establish due to the proprietary nature of defense technologies.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. While Raytheon Company is a large prime contractor, there may be opportunities for small businesses to participate as subcontractors. The extent of small business subcontracting will depend on Raytheon's procurement practices and the specific needs of the GMA (MK25) C-BAND system. Further analysis would be needed to determine the specific impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract will likely be managed by the Defense Contract Management Agency (DCMA), responsible for ensuring contractor performance and compliance. The firm fixed-price nature of the contract provides a degree of cost control, but ongoing monitoring of technical progress, quality assurance, and delivery schedules will be essential. Transparency regarding contract modifications and performance metrics will be key to accountability.

Related Government Programs

Guided Missile Manufacturing
Defense Electronics
C-Band Radar Systems
Strategic Weapon Systems
Department of Defense Procurement

Risk Flags

Sole Source Award
Long Contract Duration
Potential for Cost Overruns (inherent in large sole-source contracts)
Supply Chain Dependency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $1.38 billion to RAYTHEON COMPANY. GMA (MK25) C-BAND

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 $1.38 billion.

What is the period of performance?

Start: 2024-10-01. End: 2030-03-31.

What is the specific technical capability of the GMA (MK25) C-BAND system and its intended operational use?

The GMA (MK25) C-BAND system refers to a Ground-Mobile Artillery (GMA) component operating in the C-band frequency spectrum, likely related to radar or electronic warfare capabilities for guided missiles. While specific technical details are often classified or proprietary, C-band frequencies are commonly used in radar systems for their balance of resolution and range, suitable for target acquisition, tracking, and guidance. The 'MK25' designation suggests a specific variant or generation of this technology. Its intended operational use is within the Department of Defense's strategic missile defense or offensive strike capabilities, providing critical targeting or guidance data for missile platforms.

How does the $1.38 billion contract value compare to historical spending on similar missile components or systems?

Direct comparison of the $1.38 billion contract value for the GMA (MK25) C-BAND system to historical spending on similar components is challenging due to the specialized and often classified nature of defense technology. However, major missile system development and procurement contracts frequently run into hundreds of millions or billions of dollars, reflecting the complexity, advanced materials, and extensive testing required. For context, other advanced missile programs or upgrades can have total lifecycle costs exceeding several billion dollars. The sole-source nature of this award means a direct price-per-unit comparison with competitive programs is not feasible, making value assessment reliant on internal government cost analysis and contractor negotiation.

What are the primary risks associated with a sole-source contract of this magnitude and duration?

The primary risks associated with a sole-source contract of this magnitude ($1.38 billion) and duration (over 6 years) include potential cost overruns if not meticulously managed, lack of innovation spurred by competition, and contractor performance issues. Without competitive pressure, there's a risk that the contractor may not prioritize cost efficiency as aggressively. Furthermore, dependence on a single supplier for critical technology can create supply chain vulnerabilities. The long duration increases the risk of technological obsolescence or the emergence of superior alternative solutions during the contract period. Robust government oversight, clear performance metrics, and contingency planning are crucial to mitigate these risks.

What is Raytheon Company's track record with similar defense contracts, particularly in missile systems and C-band technology?

Raytheon Company (now RTX) has an extensive and well-established track record in developing and producing advanced defense systems, including missile technologies and radar systems operating across various frequency bands, including C-band. They are a prime contractor on numerous major defense programs for the U.S. military and international allies. Their portfolio includes air-to-air missiles, surface-to-air missiles, and strategic weapon components. Historically, Raytheon has demonstrated capability in delivering complex systems, though like any large defense contractor, they have also faced scrutiny regarding contract performance, cost, and schedule on specific programs. Their experience in this domain suggests a high probability of technical execution for the GMA (MK25) C-BAND system.

How does the firm fixed-price contract type influence the financial risk for both the government and the contractor?

A firm fixed-price (FFP) contract type places the primary financial risk on the contractor. Under an FFP agreement, the contractor is obligated to complete the work for a predetermined price, regardless of their actual costs. If the contractor's costs exceed the agreed-upon price, they absorb the loss. Conversely, if their costs are lower, they retain the profit. For the government, this contract type offers the most cost certainty, as the final price is established upfront, minimizing the risk of cost overruns. However, to achieve this certainty, the government must ensure the initial price is fair and reflects realistic cost estimates, often requiring thorough negotiation and market research, especially in sole-source situations.

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: N0002423R5405

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: $2,199,200,832

Exercised Options: $1,380,494,832

Current Obligation: $1,380,494,832

Subaward Activity

Number of Subawards: 43

Total Subaward Amount: $138,968,434

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline