DoD Awards Raytheon $100M+ for SM-2 Missile Production Amidst Limited Competition

Contract Overview

Contract Amount: $100,363,964 ($100.4M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2025-07-31

End Date: 2031-09-30

Contract Duration: 2,252 days

Daily Burn Rate: $44.6K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Defense

Official Description: SM-2 BLK IIICU EMD

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $100.4 million to RAYTHEON COMPANY for work described as: SM-2 BLK IIICU EMD Key points: 1. Significant investment in critical missile defense technology. 2. Sole reliance on Raytheon for this specific missile variant raises concerns about long-term cost control. 3. Potential for cost overruns due to the Cost Plus Incentive Fee structure. 4. The sector is characterized by high barriers to entry and specialized manufacturing.

Value Assessment

Rating: questionable

The contract's Cost Plus Incentive Fee structure, while incentivizing performance, can lead to costs exceeding initial estimates. Benchmarking is difficult without comparable contracts for this specific variant.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award. This limits price discovery and potentially leads to higher costs for taxpayers as competition is absent.

Taxpayer Impact: The lack of competition for this sole-source contract may result in taxpayers paying a premium for the SM-2 missile production.

Public Impact

Ensures continued availability of a key defensive asset. Potential for increased defense spending without competitive pressure. Impacts the strategic balance of power in regions where these missiles are deployed.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award
Cost Plus Incentive Fee contract type
Lack of small business participation noted

Positive Signals

Supports critical defense capabilities
Long-term contract provides stability

Sector Analysis

The defense sector, particularly missile manufacturing, involves highly specialized technology and significant R&D investment. Spending benchmarks are often classified or difficult to compare due to unique system requirements.

Small Business Impact

The data indicates no specific small business participation in this contract. The complex nature of advanced missile manufacturing often presents challenges for small businesses to compete directly.

Oversight & Accountability

The Department of the Navy is the awarding agency, responsible for oversight. The sole-source nature necessitates robust oversight to ensure cost reasonableness and performance.

Related Government Programs

Guided Missile and Space Vehicle Manufacturing
Department of Defense Contracting
Department of the Navy Programs

Risk Flags

Sole-source award limits competition.
Cost Plus Incentive Fee structure can lead to cost overruns.
No small business participation identified.
Long contract duration increases exposure to market changes.
Potential for price escalation over the contract life.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $100.4 million to RAYTHEON COMPANY. SM-2 BLK IIICU EMD

Who is the contractor on this award?

The obligated recipient is RAYTHEON COMPANY.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Navy).

What is the total obligated amount?

The obligated amount is $100.4 million.

What is the period of performance?

Start: 2025-07-31. End: 2031-09-30.

What is the projected cost per missile unit under this contract, and how does it compare to previous or similar missile systems?

The provided data does not specify a per-unit cost, only the total contract value. Benchmarking is challenging due to the sole-source nature and the specific variant (BLK IIICU). Further analysis would require access to classified cost breakdowns or comparative data on similar missile programs.

What are the specific risks associated with a sole-source award for critical defense components like the SM-2 missile?

The primary risks include inflated costs due to lack of competition, potential for reduced innovation, and vendor lock-in. This can lead to taxpayers bearing a higher financial burden and the government having less leverage in future negotiations.

How effective is the Cost Plus Incentive Fee structure in ensuring value for money for this specific missile production contract?

The effectiveness is debatable. While it incentivizes meeting cost and performance targets, the 'cost-plus' element inherently allows for costs to rise. Without strong oversight and clear, achievable targets, it may not guarantee optimal value compared to fixed-price contracts.

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: N0002423R5413

Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE (V)

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: $263,137,090

Exercised Options: $258,742,330

Current Obligation: $100,363,964

Subaward Activity

Number of Subawards: 1

Total Subaward Amount: $428,100

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline