Raytheon Company awarded $745M for EXCALIBUR 155MM Increment IB, a 15-year R&D contract

Contract Overview

Contract Amount: $745,446,695 ($745.4M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2008-09-26

End Date: 2023-06-16

Contract Duration: 5,376 days

Daily Burn Rate: $138.7K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: EXCALIBUR 155MM INCREMENT IB

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $745.4 million to RAYTHEON COMPANY for work described as: EXCALIBUR 155MM INCREMENT IB Key points: 1. Contract value of $745.4M over 15 years suggests significant investment in advanced munitions. 2. Full and open competition indicates a potentially robust market for this technology. 3. Definitive contract type with firm fixed price terms implies clear scope and cost controls. 4. Research and Development focus highlights innovation in physical and engineering sciences. 5. Contract duration of over 15 years points to long-term strategic importance for the DoD. 6. The contract's significant value may indicate a critical capability for national defense.

Value Assessment

Rating: good

The total contract value of $745.4 million over approximately 15 years represents a substantial investment. Benchmarking this against similar long-term R&D contracts for advanced munitions is challenging due to the specialized nature of the EXCALIBUR system. However, the firm fixed-price structure suggests an effort to control costs, and the duration implies a sustained need for the developed capabilities. The value-for-money assessment hinges on the successful development and deployment of the specified increments.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, suggesting that multiple capable vendors had the opportunity to bid. The presence of 3 bids indicates a competitive landscape for this specific defense technology. A competitive process is generally expected to drive better pricing and innovation, although the long-term nature and specialized requirements of R&D can influence the number and nature of bidders.

Taxpayer Impact: Full and open competition is beneficial for taxpayers as it encourages a wider range of solutions and potentially lower prices through market forces. It ensures that the government is not limited to a single provider, fostering a more efficient use of public funds.

Public Impact

The primary beneficiaries are the U.S. Army and Marine Corps, who will receive advanced 155mm munitions capabilities. The contract supports the development and enhancement of precision-guided artillery projectiles. Geographic impact is national, with potential implications for defense industrial base resilience. Workforce implications include highly skilled R&D positions in engineering, physics, and related fields.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Long contract duration could lead to scope creep or evolving requirements that increase costs.
Reliance on a single contractor (Raytheon) for multiple increments may limit future competition.
The specialized nature of the technology might create barriers to entry for new competitors.
Potential for cost overruns in long-term R&D projects if not closely managed.

Positive Signals

Firm fixed-price contract provides cost certainty for the government.
Full and open competition suggests a healthy market and potential for innovation.
Award to a known defense contractor with relevant expertise reduces technical risk.
Long-term commitment signals strategic importance and sustained funding for critical capabilities.

Sector Analysis

This contract falls within the Defense sector, specifically focusing on Research and Development for advanced munitions. The market for precision-guided munitions is highly specialized and dominated by a few large defense contractors. The EXCALIBUR program represents a significant advancement in artillery capabilities, aiming to provide extended range and precision strike options. Comparable spending benchmarks would be other major defense R&D programs for next-generation weapon systems.

Small Business Impact

There is no indication of small business set-asides for this specific contract, nor is there explicit information on subcontracting plans for small businesses. Given the nature of advanced R&D in defense, prime contracts are typically awarded to large, established corporations. The impact on the small business ecosystem would likely be indirect, potentially through opportunities with the prime contractor or in specialized component supply chains.

Oversight & Accountability

Oversight is likely managed by the Defense Contract Management Agency (DCMA), which is responsible for contract administration. Accountability measures are embedded in the firm fixed-price structure and the phased delivery of increments. Transparency is generally limited for defense R&D contracts due to national security considerations, though contract awards and basic details are publicly available.

Related Government Programs

Advanced Field Artillery Ammunition System (AFASS)
Precision Guided Mortar Munitions (PGMM)
Next Generation Combat Vehicle (NGCV) Armament
Long Range Precision Fires (LRPF)

Risk Flags

Long-term R&D contract
High contract value
Specialized defense technology

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $745.4 million to RAYTHEON COMPANY. EXCALIBUR 155MM INCREMENT IB

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 $745.4 million.

What is the period of performance?

Start: 2008-09-26. End: 2023-06-16.

What is the historical spending trend for the EXCALIBUR program prior to this award?

Detailed historical spending data for the EXCALIBUR program prior to this specific $745.4 million award is not directly available in the provided data. However, the contract's duration (ending in 2023, awarded in 2008) and its significant value suggest substantial prior investment. The EXCALIBUR 155mm Increment IB award itself spans a considerable period, indicating a phased development approach. To understand historical spending, one would need to examine previous contract awards and funding allocations specifically for the EXCALIBUR program across its various increments and development phases, likely through defense budget documents and historical contract databases.

How does the per-unit cost of EXCALIBUR munitions compare to conventional artillery shells?

The per-unit cost of EXCALIBUR munitions is significantly higher than conventional artillery shells due to its advanced guidance systems, precision targeting capabilities, and extended range. Conventional 155mm shells can cost a few hundred to a few thousand dollars each. EXCALIBUR, being a precision-guided munition designed to achieve direct hits on targets at much longer ranges, has a per-unit cost that is orders of magnitude higher, often estimated in the tens of thousands or even over $100,000 per round, depending on the specific variant and production volume. This higher cost is justified by its ability to reduce the number of rounds needed to achieve desired effects, minimize collateral damage, and engage targets that are otherwise inaccessible.

What are the key performance improvements expected from EXCALIBUR Increment IB over previous versions?

The EXCALIBUR Increment IB is expected to deliver enhanced capabilities beyond previous versions, focusing on improvements in areas such as range, accuracy, guidance, and potentially lethality or target set expansion. While specific technical details are often classified or proprietary, increments typically represent iterative advancements. Increment IB likely builds upon the successes of earlier increments by refining the software, hardware, or fusing capabilities to address evolving battlefield needs and threats. This could include improved resistance to electronic countermeasures, enhanced seeker performance in adverse weather, or greater flexibility in target engagement profiles, ultimately aiming for greater mission effectiveness and reduced logistical burden.

What is Raytheon's track record with developing and delivering advanced munitions for the DoD?

Raytheon Company, now RTX, has a long and extensive track record of developing and delivering advanced munitions for the Department of Defense. They are a major defense contractor with significant expertise in missile systems, guided munitions, and artillery projectiles. Raytheon has been instrumental in programs like the Paveway series of laser-guided bombs, Tomahawk cruise missiles, and Javelin anti-tank missiles, in addition to the EXCALIBUR program itself. Their history includes successful development, large-scale production, and sustainment of complex weapon systems, often involving significant R&D investment and navigating stringent DoD requirements for performance, reliability, and cost-effectiveness.

What are the primary risks associated with the long-term R&D nature of this contract?

The primary risks associated with this long-term R&D contract include technological obsolescence, where advancements in competing technologies could render the developed system less effective before its full lifecycle is realized. There's also the risk of cost overruns, as R&D projects are inherently uncertain and can encounter unforeseen technical challenges requiring additional funding. Programmatic risks include potential shifts in military requirements or strategic priorities that could reduce the need for the system, leading to cancellation or reduced scope. Furthermore, contractor performance risks, such as delays or failure to meet technical specifications, are always present in long-duration projects, necessitating robust oversight.

How does the $745M contract value compare to the total known spending on the EXCALIBUR program?

The $745.4 million awarded for EXCALIBUR 155MM Increment IB represents a significant portion of the program's overall investment, but it is unlikely to be the total spending for the entire EXCALIBUR initiative. The EXCALIBUR program has been in development and production for many years, involving multiple increments and variants. Total program costs, encompassing R&D, procurement, and sustainment across all phases, would likely be substantially higher than this single contract award. To ascertain the total spending, one would need to aggregate all contract actions related to EXCALIBUR across its history, which often runs into billions of dollars for major defense systems of this nature.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Scientific Research and Development Services › Research and Development in the Physical, Engineering, and Life Sciences (except Biotechnology)

Product/Service Code: AMMUNITION AND EXPLOSIVES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: W15QKN08R0345

Offers Received: 3

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

Financial Breakdown

Contract Ceiling: $746,116,317

Exercised Options: $745,803,534

Current Obligation: $745,446,695

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline