Raytheon awarded $794.6M for guided missiles, with a significant portion for sustainment and modernization

Contract Overview

Contract Amount: $1,363,893,134 ($1.4B)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2006-09-15

End Date: 2017-11-30

Contract Duration: 4,094 days

Daily Burn Rate: $333.1K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 200612!005329!2100!W31P4Q!USA AVIATION AND MISSILE COMMAND!W31P4Q06C0466 !A!N! !N! ! !20060915!20120630!794598573!794598573!001339159!N!RAYTHEON MISSILE SYSTEMS COMPA!1151 E HERMANS RD !TUCSON !AZ!85706!77000!019!04!TUCSON !PIMA !ARIZONA !+000018652998!N!N!000000000000!1410!GUIDED MISSILES !A5 !WEAPONS !000 !NOT DISCERNABLE !336419!E! !3! ! ! ! ! !99990909!B! ! !A! !D!N!J!1!001!N!1G!Z!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 $1.36 billion to RAYTHEON COMPANY for work described as: 200612!005329!2100!W31P4Q!USA AVIATION AND MISSILE COMMAND!W31P4Q06C0466 !A!N! !N! ! !20060915!20120630!794598573!794598573!001339159!N!RAYTHEON MISSILE SYSTEMS COMPA!1151 E HERMANS RD !TUCSON !AZ!85706!77000!019!04!TUCSON !PIMA… Key points: 1. Contract value indicates a substantial investment in missile systems, likely for long-term sustainment and upgrades. 2. The 'NOT COMPETED' status raises questions about potential cost efficiencies and market-driven pricing. 3. A long contract duration suggests a need for ongoing support and potential for scope creep. 4. The specific product code points to a niche but critical defense manufacturing sector. 5. Geographic concentration in Arizona highlights a key hub for this type of defense production.

Value Assessment

Rating: fair

The total contract value of $794.6 million over its life is substantial. However, without specific performance metrics or comparison data for similar missile sustainment contracts, a definitive value-for-money assessment is challenging. The 'NOT COMPETED' nature suggests potential for higher costs than a fully competed contract. Benchmarking against industry standards for missile maintenance and modernization would be necessary for a more robust evaluation.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not open to competition from other potential suppliers. This approach is often used when a specific contractor possesses unique capabilities, intellectual property, or when urgency dictates a rapid award. The lack of competition limits price discovery and may result in higher costs for the government.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive bidding, as the government did not benefit from the price pressures that typically arise in a competitive procurement environment.

Public Impact

The U.S. Army benefits from the continued availability and modernization of guided missile systems. Services delivered include the manufacturing and sustainment of guided missiles and related components. The contract's geographic impact is concentrated in Tucson, Arizona, supporting local industry and employment. Workforce implications include specialized manufacturing and engineering roles within Raytheon's facilities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition could lead to inflated prices and reduced innovation.
Long contract duration increases the risk of cost overruns and schedule delays.
Sole-source awards can limit opportunities for smaller, innovative companies to enter the market.

Positive Signals

Ensures continued availability of critical missile systems for national defense.
Leverages Raytheon's established expertise in guided missile technology.
Provides long-term sustainment, potentially leading to greater system reliability.

Sector Analysis

This contract falls within the Defense Industrial Base, specifically the manufacturing of guided missiles and related components. The market for defense systems is characterized by high barriers to entry, significant R&D investment, and a primary customer in the U.S. government. Spending in this sector is driven by national security priorities and technological advancements. Comparable spending benchmarks would typically involve other major defense contractors producing similar weapon systems.

Small Business Impact

There is no indication of a small business set-aside for this contract. Given the nature of guided missile manufacturing, it is likely that Raytheon, a large prime contractor, will perform the majority of the work. Subcontracting opportunities for small businesses may exist, but they would be determined by Raytheon's procurement practices rather than a specific set-aside requirement in this award.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Army and potentially the Department of Defense's Inspector General. Accountability measures would be tied to contract performance clauses, delivery schedules, and quality standards. Transparency is limited due to the sole-source nature and the classified aspects often associated with defense procurement.

Related Government Programs

Missile Defense Systems
Air-to-Ground Munitions
Naval Weapons Systems
Strategic Missile Programs

Risk Flags

Sole-source award limits price competition.
Long contract duration increases risk of cost overruns.
Lack of detailed performance metrics hinders value assessment.
Potential for contractor lock-in due to specialized nature of defense systems.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $1.36 billion to RAYTHEON COMPANY. 200612!005329!2100!W31P4Q!USA AVIATION AND MISSILE COMMAND!W31P4Q06C0466 !A!N! !N! ! !20060915!20120630!794598573!794598573!001339159!N!RAYTHEON MISSILE SYSTEMS COMPA!1151 E HERMANS RD !TUCSON !AZ!85706!77000!019!04!TUCSON !PIMA !ARIZONA !+000018652998!N!N!000000000000!1410!GUIDED MISSILES !A5 !WEAPONS !000 !NOT DISCERNABLE !336419!E! !3! ! ! ! ! !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 $1.36 billion.

What is the period of performance?

Start: 2006-09-15. End: 2017-11-30.

What is Raytheon's track record with the U.S. Army on similar missile contracts?

Raytheon Company, now RTX, has a long and extensive history of supplying missile systems to the U.S. Army and other branches of the military. They are a primary contractor for numerous programs, including Patriot air defense missiles, Javelin anti-tank missiles, and Tomahawk cruise missiles. Their track record generally includes successful delivery of complex systems, but like many large defense contractors, they have also faced scrutiny regarding cost, schedule, and performance on specific programs. Historical data would need to be reviewed for specific contract performance metrics, delivery timeliness, and any associated contract disputes or modifications related to missile production and sustainment for the Army.

How does the $794.6 million contract value compare to historical spending on guided missiles?

The $794.6 million awarded to Raytheon for guided missiles represents a significant investment. To contextualize this, one would need to examine historical spending trends for the specific National Stock Number (NSN) or Product Service Code (PSC) associated with this contract (336419 - Other Guided Missile and Space Vehicle Parts and Auxiliary Equipment Manufacturing). Annual defense budgets and specific appropriations for missile procurement and sustainment would provide a benchmark. For instance, comparing this single award to the total annual spending on all guided missiles by the Department of Defense or the Army over the past decade would reveal whether this contract is an outlier, a typical large award, or indicative of increased investment in this capability area.

What are the primary risks associated with a sole-source award for missile systems?

The primary risks associated with a sole-source award for missile systems include potential for inflated pricing due to lack of competition, reduced incentive for the contractor to innovate or improve efficiency, and a lack of transparency in the procurement process. Taxpayers may bear a higher cost for these systems. Furthermore, reliance on a single supplier can create supply chain vulnerabilities and limit the government's flexibility if the contractor faces production issues or decides to exit a particular market segment. This can also stifle competition from emerging technologies or alternative solutions that might be more cost-effective or capable.

What is the expected program effectiveness given the contract's duration and scope?

The contract's duration of approximately 10 years (from initial award in 2006 to final completion in 2017, with modifications extending it) and its substantial value suggest a focus on long-term sustainment, modernization, and potentially continued production of guided missile components. Program effectiveness will hinge on Raytheon's ability to meet stringent performance specifications, maintain high reliability rates for the missiles, and adapt to evolving threats and technological advancements. The 'NOT COMPETED' status implies a reliance on existing capabilities, which could be effective for maintaining current systems but might limit the integration of breakthrough innovations unless specifically incorporated into contract modifications. Success will be measured by the operational readiness and effectiveness of the missile systems in supporting Army missions.

How has spending on guided missiles evolved over the past 10-15 years?

Spending on guided missiles has generally remained a significant component of defense budgets over the past 10-15 years, driven by ongoing military operations, geopolitical tensions, and the need to modernize aging platforms and counter evolving threats. While specific figures fluctuate annually based on strategic priorities and available funding, there has been a consistent demand for advanced missile technologies across various domains (air, land, sea, and space). Investments often focus on areas like hypersonic missiles, precision-guided munitions, air defense systems, and counter-drone capabilities. The trend reflects a global emphasis on maintaining a technological edge in missile warfare, with substantial R&D and procurement efforts by major military powers.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Other Guided Missile and Space Vehicle Parts and Auxiliary Equipment 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

Parent Company: Rockwell Collins Australia PTY Limited

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

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $1,202,617,323

Exercised Options: $1,223,368,242

Current Obligation: $1,363,893,134

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline