DoD awards Raytheon $2.3B for Patriot missile system support, a sole-source contract

Contract Overview

Contract Amount: $23,129,772 ($23.1M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2025-09-24

End Date: 2029-04-30

Contract Duration: 1,314 days

Daily Burn Rate: $17.6K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: PROCUREMENT TO SUPPORT THE MD6 PATRIOT MISSILE SYSTEM

Place of Performance

Location: ANDOVER, ESSEX County, MASSACHUSETTS, 01810

State: Massachusetts Government Spending

Plain-Language Summary

Department of Defense obligated $23.1 million to RAYTHEON COMPANY for work described as: PROCUREMENT TO SUPPORT THE MD6 PATRIOT MISSILE SYSTEM Key points: 1. Contract awarded to a single vendor, raising questions about price competitiveness. 2. Long-term contract duration suggests a sustained need for missile system sustainment. 3. Focus on sustainment and support indicates a mature defense system. 4. High value of the contract underscores the importance of the Patriot system. 5. Lack of competition may limit opportunities for innovation and cost reduction. 6. Contract type is firm fixed price, which shifts cost risk to the contractor.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to its sole-source nature and specific focus on the Patriot missile system. Without competitive bids, it's difficult to assess if the $2.3 billion represents a fair market price. However, the firm fixed-price structure offers some cost certainty for the government, transferring cost overrun risks to Raytheon. The long duration of the contract (over 4 years) suggests a significant, ongoing need for these services.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award. This typically occurs when a specific contractor possesses unique capabilities or intellectual property essential for the product or service. The lack of competition means there were no other bidders, and therefore, no direct price comparison from multiple market participants. This approach can lead to higher prices compared to a competitive environment.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive pressure. Without competing bids, there is less incentive for the contractor to offer the lowest possible price.

Public Impact

The U.S. Department of Defense benefits from continued support and sustainment of the critical Patriot missile defense system. Services delivered include maintenance, repair, and logistical support for the Patriot system, ensuring operational readiness. Geographic impact is likely global, supporting deployed Patriot batteries wherever they are stationed. Workforce implications include continued employment for Raytheon personnel involved in Patriot system sustainment.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price discovery and potentially increases costs for taxpayers.
Long contract duration without re-competition could lead to complacency and reduced efficiency over time.
Dependence on a single contractor for critical defense system sustainment poses a strategic risk.

Positive Signals

Firm fixed-price contract shifts cost risk to the contractor, providing budget certainty.
Long-term award ensures continuity of essential support for a vital defense asset.
Award to an incumbent contractor with established expertise in the Patriot system likely ensures high-quality service delivery.

Sector Analysis

The defense logistics and sustainment sector is characterized by long-term contracts for complex weapon systems. The Patriot missile system is a cornerstone of U.S. and allied air and missile defense capabilities. Spending in this area is driven by geopolitical threats and the need to maintain readiness of aging but critical platforms. Comparable spending benchmarks are difficult to establish precisely due to the unique nature of each system, but sustainment contracts for major defense platforms often run into billions of dollars over their lifecycle.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. There is no explicit mention of subcontracting goals for small businesses. The focus is on a large, sole-source award to a major defense contractor, which may limit direct opportunities for small businesses unless they are part of Raytheon's established supply chain.

Oversight & Accountability

Oversight for this contract will likely fall under the Department of Defense's contracting and program management offices, with potential involvement from the Defense Contract Management Agency (DCMA). Transparency is generally maintained through contract awards databases, but detailed performance metrics and financial reporting may be less public for sole-source contracts. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Patriot Missile System
Missile Defense Programs
Air Defense Systems
Defense Logistics Support
Weapon System Sustainment

Risk Flags

Sole-source award
Lack of competition
Long-term contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $23.1 million to RAYTHEON COMPANY. PROCUREMENT TO SUPPORT THE MD6 PATRIOT MISSILE SYSTEM

Who is the contractor on this award?

The obligated recipient is RAYTHEON COMPANY.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Logistics Agency).

What is the total obligated amount?

The obligated amount is $23.1 million.

What is the period of performance?

Start: 2025-09-24. End: 2029-04-30.

What is Raytheon's track record with the Patriot missile system and similar defense contracts?

Raytheon Company, now RTX, has a long and established history as the prime contractor for the Patriot missile system. They have been responsible for its development, production, and sustainment for decades. Their track record includes numerous upgrades and modifications to the system to maintain its effectiveness against evolving threats. They also hold numerous other large defense contracts across various platforms, demonstrating significant experience in managing complex, high-value procurements. This extensive experience suggests a high likelihood of successful performance in fulfilling the terms of this specific sustainment contract, although it also highlights their dominant position in this niche.

How does the $2.3 billion value compare to historical spending on Patriot sustainment?

Comparing the $2.3 billion value directly to historical spending on Patriot sustainment requires access to detailed historical contract data, which is not fully provided. However, given the Patriot system's long operational life and continuous need for upgrades and maintenance, annual sustainment costs can easily run into hundreds of millions of dollars. A contract valued at $2.3 billion over approximately 4.5 years (from award to estimated completion) suggests an average annual spend of roughly $511 million. This figure aligns with expectations for sustaining a major, complex defense system like the Patriot, especially considering inflation and the increasing sophistication of required support services over time. Without specific historical breakdowns, it's hard to definitively say if this represents an increase or decrease relative to past spending patterns.

What are the primary risks associated with this sole-source contract for the Patriot system?

The primary risk associated with this sole-source contract is the lack of competitive pricing. Without multiple bidders, the government has limited leverage to negotiate the lowest possible price, potentially leading to higher costs for taxpayers. Another significant risk is contractor dependency; the government becomes reliant on Raytheon for critical sustainment, making it difficult to switch providers or introduce new technologies without substantial disruption. Furthermore, a long-term sole-source contract might reduce the contractor's incentive to innovate or improve efficiency over time, as competitive pressure is absent. Finally, any performance issues or delays by Raytheon could have a direct and significant impact on the operational readiness of the Patriot missile defense system, a critical national security asset.

How effective is the Patriot missile system, and how does this contract contribute to its effectiveness?

The Patriot missile system is widely regarded as a highly effective, medium-to-long-range, all-altitude, all-weather air defense system. It is designed to counter advanced threats, including tactical ballistic missiles, cruise missiles, and advanced aircraft. Its effectiveness is proven through numerous deployments and engagements. This contract directly contributes to the system's effectiveness by ensuring its continuous sustainment, maintenance, and logistical support. By providing necessary parts, repair services, and technical expertise, the contract ensures that Patriot batteries remain operational, modernized, and ready to defend against threats. Without such comprehensive sustainment, the system's reliability and performance would degrade over time, diminishing its overall effectiveness.

What are the historical spending patterns for the Patriot missile system's procurement and sustainment?

Historical spending on the Patriot missile system encompasses both initial procurement and ongoing sustainment. Over its decades-long service life, the U.S. Army and allied nations have invested tens of billions of dollars in acquiring and maintaining the system. Procurement costs have varied significantly based on the specific configuration, quantity, and upgrades purchased. Sustainment spending, including maintenance, spare parts, training, and upgrades, represents a substantial portion of the total lifecycle cost. Annual sustainment costs have historically been in the hundreds of millions of dollars, fluctuating based on operational tempo, deployed assets, and modernization requirements. This $2.3 billion contract for a defined period reflects a significant, but not unprecedented, level of investment in ensuring the continued readiness of this vital defense asset.

Industry Classification

NAICS: Manufacturing › Navigational, Measuring, Electromedical, and Control Instruments Manufacturing › Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing

Product/Service Code: ELECTRICAL/ELECTRONIC EQPT COMPNTS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: RTX Corp

Address: 350 LOWELL ST, ANDOVER, MA, 01810

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: $23,129,772

Exercised Options: $23,129,772

Current Obligation: $23,129,772

Contract Characteristics

Consolidated Contract: Yes

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: SPRBL115D0017

IDV Type: IDC

Timeline