Raytheon Company awarded $794.6M for Guided Missiles, with a significant portion for Missile and Space Systems

Contract Overview

Contract Amount: $328,372,988 ($328.4M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2004-02-06

End Date: 2009-01-31

Contract Duration: 1,821 days

Daily Burn Rate: $180.3K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 200405!001702!2100!W31P4Q!USA AVIATION AND MISSILE COMMAND!W31P4Q04C0061 !A!N! !N! ! !20040206!20061231!794598573!794598573!001339159!N!RAYTHEON COMPANY !1151 EAST HERMANS ROAD !TUCSON !AZ!85706!77000!019!04!TUCSON !PIMA !ARIZONA !+000047887050!N!N!000000004788!1410!GUIDED MISSILES !A2 !MISSILE AND SPACE SYSTEMS !000 !* !336414!E! !1! ! ! ! ! !99990909!B! ! !A! !D!U!J!1!001!N!1A!A!Y!A! ! !N!C!N! ! ! !A!A!A!A!000!A!C!Y! ! ! ! ! ! !0001! !

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $328.4 million to RAYTHEON COMPANY for work described as: 200405!001702!2100!W31P4Q!USA AVIATION AND MISSILE COMMAND!W31P4Q04C0061 !A!N! !N! ! !20040206!20061231!794598573!794598573!001339159!N!RAYTHEON COMPANY !1151 EAST HERMANS ROAD !TUCSON !AZ!85706!77000!019!04!TUCSON !PIMA… Key points: 1. Contract value indicates a substantial investment in missile technology. 2. Sole-source award suggests limited market alternatives or specific contractor expertise. 3. Long contract duration implies a sustained need for these missile systems. 4. Firm Fixed Price contract type shifts cost risk to the contractor. 5. The award falls within the broader Defense sector, specifically Army aviation and missile command. 6. Contractor's established presence in missile manufacturing is a key factor.

Value Assessment

Rating: good

The total contract value of $794.6 million over approximately 5 years represents a significant investment. While direct comparisons are difficult without more specific contract details, the firm-fixed-price nature of the award suggests a defined cost structure. The value appears consistent with large-scale defense procurement for advanced missile systems, indicating a reasonable allocation of funds for the specified capabilities.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. This typically occurs when a single contractor possesses unique capabilities, proprietary technology, or is the only source capable of meeting the government's specific requirements. The lack of competition means the government did not benefit from price discovery through a bidding process.

Taxpayer Impact: For taxpayers, a sole-source award means the absence of competitive pressure that could potentially drive down costs. The government relies on negotiation and oversight to ensure fair pricing.

Public Impact

The primary beneficiaries are the U.S. Army and potentially other branches of the Department of Defense requiring advanced missile systems. The contract delivers critical guided missile systems essential for national defense and strategic capabilities. Geographic impact is primarily national, supporting defense infrastructure and readiness. Workforce implications include employment for engineers, technicians, and manufacturing personnel at Raytheon and its subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source nature limits competitive pricing benefits for taxpayers.
Long-term contract duration could lead to cost escalations if not managed effectively.
Reliance on a single contractor may create dependency and reduce future flexibility.

Positive Signals

Firm Fixed Price contract type provides cost certainty for the government.
Award to an established defense contractor suggests technical proficiency and reliability.
Significant contract value indicates a critical need for the procured systems.

Sector Analysis

This contract falls within the Defense Industrial Base, specifically the segment focused on missile and space systems manufacturing. The market for guided missiles is highly specialized, dominated by a few large defense contractors with extensive R&D and production capabilities. Spending in this sector is driven by national security requirements and technological advancements in defense capabilities. Comparable spending benchmarks would typically involve other large-scale missile system procurements by the DoD.

Small Business Impact

There is no explicit indication of small business set-asides for this particular contract. However, large defense contracts often involve subcontracting opportunities, which could potentially benefit small businesses within the defense supply chain. The prime contractor, Raytheon, would be responsible for managing its supply chain and potentially meeting subcontracting goals.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and program management offices. Accountability measures are inherent in the firm-fixed-price structure, requiring the contractor to deliver specified goods within the agreed-upon price. Transparency is generally maintained through contract awards databases, though specific performance details may be sensitive.

Related Government Programs

Missile Defense Systems
Air-to-Ground Munitions
Strategic Weapon Systems
Aviation and Missile Command Procurement

Risk Flags

Sole-source award may limit price competition.
Long contract duration could introduce cost escalation risks.
Potential for contractor dependency.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $328.4 million to RAYTHEON COMPANY. 200405!001702!2100!W31P4Q!USA AVIATION AND MISSILE COMMAND!W31P4Q04C0061 !A!N! !N! ! !20040206!20061231!794598573!794598573!001339159!N!RAYTHEON COMPANY !1151 EAST HERMANS ROAD !TUCSON !AZ!85706!77000!019!04!TUCSON !PIMA !ARIZONA !+000047887050!N!N!000000004788!1410!GUIDED MISSILES !A2 !MISSILE AND SPACE SYSTEMS !000 !* !336414!E! !1! ! ! ! ! !999

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 Army).

What is the total obligated amount?

The obligated amount is $328.4 million.

What is the period of performance?

Start: 2004-02-06. End: 2009-01-31.

What is Raytheon Company's track record with the U.S. Army for similar missile systems?

Raytheon Company has a long and extensive history of providing missile systems to the U.S. Army and other military branches. They are a prime contractor for numerous programs, including Patriot air defense missiles, Javelin anti-tank missiles, and various air-to-air and air-to-ground munitions. Their established expertise and existing production lines for guided missiles make them a logical sole-source provider for many advanced systems. Historical performance data, often found in contract award details and performance reviews, generally indicates a high level of technical capability and delivery reliability, though specific program challenges can arise.

How does the $794.6 million contract value compare to other guided missile procurements?

The $794.6 million contract value is substantial and aligns with the typical scale of major defense procurements for advanced missile systems. For context, other significant missile programs, such as the development and production of new fighter jet munitions or upgrades to existing strategic missile platforms, can range from hundreds of millions to billions of dollars. This contract's value suggests it pertains to a critical, likely high-volume or technologically advanced, guided missile system. Benchmarking against similar sole-source awards for complex defense hardware provides a reasonable comparison point, indicating that this figure is within the expected range for such specialized military equipment.

What are the primary risks associated with a sole-source award of this magnitude?

The primary risk associated with a sole-source award of this magnitude is the potential for inflated pricing due to the lack of competitive bidding. Without competing offers, the government may not achieve the most cost-effective solution. Another risk is contractor dependency; the government becomes reliant on a single supplier, which can limit flexibility in future procurements or technology upgrades. Furthermore, if the sole-source contractor experiences production issues, delays, or quality control problems, the impact on national defense readiness could be significant, as there are no immediate alternative suppliers.

How effective are firm-fixed-price contracts in managing costs for complex missile systems?

Firm-fixed-price (FFP) contracts are generally considered effective for managing costs when the scope of work is well-defined and the risks are understood. For complex missile systems, FFP shifts the cost risk to the contractor, incentivizing them to control expenses and deliver within the agreed-upon price. This provides cost certainty for the government. However, if unforeseen technical challenges arise during development or production that were not reasonably foreseeable, the contractor may seek change orders, potentially increasing the total cost. Effective contract management and clear specifications are crucial for FFP success in complex procurements.

What is the historical spending trend for guided missiles by the Department of the Army?

Historical spending by the Department of the Army on guided missiles has consistently been a significant portion of its overall procurement budget, reflecting the critical role these systems play in modern warfare. Annual expenditures can fluctuate based on specific program needs, modernization cycles, and geopolitical factors. Over the past decade, the Army has invested heavily in precision-guided munitions, air defense systems, and anti-armor capabilities. While specific figures vary year-to-year, the trend indicates a sustained and substantial commitment to acquiring and maintaining advanced missile technology, often involving multi-year contracts with major defense contractors like Raytheon.

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

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 1151 E HERMANS RD, TUCSON, AZ, 85706

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline