Raytheon Company awarded $39.3M contract for ESSM CY26-30 Design Agent services by the Department of the Navy

Contract Overview

Contract Amount: $39,296,791 ($39.3M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2025-12-19

End Date: 2030-12-31

Contract Duration: 1,838 days

Daily Burn Rate: $21.4K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: ESSM CY26-30 DESIGN AGENT

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $39.3 million to RAYTHEON COMPANY for work described as: ESSM CY26-30 DESIGN AGENT Key points: 1. Contract awarded for long-term design agent services, indicating a need for sustained technical expertise. 2. Sole-source award suggests limited market availability or specific contractor qualifications. 3. Cost Plus Fixed Fee contract type may incentivize cost overruns if not closely monitored. 4. Performance period extends over five years, requiring robust program management. 5. Contract supports guided missile and space vehicle manufacturing, a critical defense sector. 6. Geographic location in Arizona may have implications for local economic impact and workforce.

Value Assessment

Rating: fair

The contract's value of $39.3 million over approximately five years averages to about $7.86 million annually. Without specific benchmarks for 'Design Agent' services in guided missile development, a direct value-for-money assessment is challenging. The Cost Plus Fixed Fee (CPFF) structure, while common for R&D, carries inherent risks of cost escalation if the fixed fee is not adequately justified by the scope and complexity of the work. Comparison to similar sole-source contracts for specialized design services would be necessary for a more definitive value assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning competition was not sought. This typically occurs when a specific contractor possesses unique capabilities, intellectual property, or is the only source capable of meeting the requirement. The lack of competition means that price discovery through market forces was bypassed, potentially leading to higher costs for the government compared to a fully competed scenario.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive bidding. The government relies on negotiation and oversight to ensure fair pricing in sole-source awards.

Public Impact

The Department of the Navy benefits from sustained expertise in guided missile and space vehicle design. This contract ensures the continued development and sustainment of critical defense capabilities. The geographic impact is concentrated in Arizona, potentially supporting local high-tech jobs and the regional economy. Workforce implications include the need for specialized engineers and technical personnel in the defense sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure on pricing.
Cost Plus Fixed Fee contract type can lead to cost overruns if not managed stringently.
Long performance period requires sustained oversight to ensure continued value.
Lack of publicly available cost breakdowns makes independent value assessment difficult.

Positive Signals

Award to Raytheon Company, a known defense contractor with established expertise.
Long-term contract indicates a strategic need and potential for stable program execution.
Focus on design agent services suggests a critical role in the program lifecycle.
Contract supports advanced defense technology development.

Sector Analysis

The defense sector, particularly guided missile and space vehicle manufacturing, is characterized by high R&D costs, long development cycles, and significant government investment. Contracts like this are essential for maintaining technological superiority. The market is often dominated by a few large, specialized contractors due to the complexity and security requirements. Benchmarking spending in this niche requires comparison with other sole-source or limited-competition contracts for similar specialized engineering and design services within the defense industrial base.

Small Business Impact

This contract does not appear to involve a small business set-aside, as indicated by the prime contractor being Raytheon Company. There is no explicit information regarding subcontracting plans for small businesses. The absence of a set-aside or specific subcontracting goals could mean limited direct opportunities for small businesses on this particular contract, though Raytheon may engage them through its broader supply chain.

Oversight & Accountability

Oversight for this contract will likely be managed by the Department of the Navy's contracting and program management offices. Accountability measures are inherent in the Cost Plus Fixed Fee structure, requiring detailed cost reporting and performance metrics. Transparency may be limited due to the sole-source nature and the sensitive defense-related work. Inspector General jurisdiction would apply to investigations of fraud, waste, or abuse.

Related Government Programs

Guided Missile Manufacturing
Space Vehicle Manufacturing
Defense Research and Development
Naval Weapon Systems
Advanced Technology Development

Risk Flags

Sole-source award may limit price competition.
Cost Plus Fixed Fee contract type carries risk of cost escalation.
Long performance period requires sustained oversight.
Sensitive defense technology development.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $39.3 million to RAYTHEON COMPANY. ESSM CY26-30 DESIGN AGENT

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 $39.3 million.

What is the period of performance?

Start: 2025-12-19. End: 2030-12-31.

What is the historical spending pattern for ESSM Design Agent services with Raytheon Company?

Historical spending data for the specific 'ESSM CY26-30 DESIGN AGENT' contract is not publicly available as this appears to be a new award for a future period. However, one could investigate prior contracts awarded to Raytheon or other entities for similar 'Design Agent' roles related to the Evolved Sea Sparrow Missile (ESSM) program or comparable missile systems. Analyzing past contract values, durations, and performance metrics for related work would provide context. Without specific historical data for this exact designation, it's difficult to establish a precise spending trend. General trends in defense R&D and sustainment spending for major weapon systems would show significant, often multi-billion dollar, investments over program lifecycles, with design and engineering services forming a crucial component.

How does the Cost Plus Fixed Fee (CPFF) structure compare to other contract types for similar R&D services?

The Cost Plus Fixed Fee (CPFF) contract type is common for research and development efforts where the scope of work is not precisely defined at the outset, or where innovation is a primary goal. In a CPFF contract, the contractor is reimbursed for allowable costs plus a fixed fee, representing profit. This differs from Fixed Price contracts, where the price is set regardless of actual costs, incentivizing efficiency but potentially increasing risk for the contractor if costs escalate. Cost Plus Incentive Fee (CPIF) contracts offer shared cost savings or target cost achievement, incentivizing both parties. For R&D, CPFF balances the need for flexibility with contractor profit, but requires robust government oversight to control costs and prevent scope creep, as the government bears the cost risk.

What are the key performance indicators (KPIs) likely used to evaluate Raytheon's performance on this contract?

Key Performance Indicators (KPIs) for this 'ESSM CY26-30 DESIGN AGENT' contract would likely focus on technical performance, schedule adherence, and cost control within the CPFF framework. Specific KPIs could include: 1. Technical Accuracy: Meeting design specifications, successful simulation and testing outcomes, and incorporation of new technologies. 2. Schedule Compliance: Meeting key design milestones and delivery dates for design documentation and support. 3. Cost Management: Adherence to projected cost estimates for the fixed fee and efficient management of allowable costs. 4. Responsiveness: Timeliness and effectiveness in addressing technical queries and providing design support to the Navy. 5. Innovation: Successful integration of new design concepts or improvements that enhance system performance or reduce lifecycle costs. These KPIs would be formally defined in the contract's Performance Work Statement (PWS).

What is the potential impact of this contract on the guided missile and space vehicle manufacturing market?

This contract, valued at approximately $39.3 million over five years, represents a significant, albeit specific, investment in the design and sustainment of the Evolved Sea Sparrow Missile (ESSM) system. For Raytheon Company, it solidifies their role as a key design agent for this critical platform, reinforcing their market position in naval defense systems. While not a massive sum in the context of overall defense spending, it signals continued commitment to the ESSM program and potentially related technologies. The sole-source nature indicates a specialized need that may limit direct opportunities for competitors in this specific design agent role, but it also highlights the high barriers to entry and specialized expertise required in this segment of the defense industrial base. The contract's duration suggests a stable, long-term demand for these specialized engineering services.

Are there any known risks associated with Raytheon Company's performance in similar defense contracts?

Raytheon Company is a major defense contractor with a long history of performance across numerous complex programs. Like any large entity, they have experienced both successes and challenges. Potential risks in defense contracting often revolve around cost overruns, schedule delays, and technical performance issues, particularly on developmental or highly complex systems. Specific past performance reviews or contract disputes involving Raytheon would need to be consulted for a detailed risk assessment on this particular contract. However, the Department of the Navy's award process typically includes a review of past performance. The sole-source nature of this award implies that the Navy has assessed Raytheon as the most capable provider, potentially mitigating some performance risks, but close oversight remains crucial, especially with a CPFF structure.

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: N0002425R5434

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: $884,909,374

Exercised Options: $104,063,252

Current Obligation: $39,296,791

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline