DoD Awards Raytheon $5.6B for 10 Fire Units, Ending May 2025
Contract Overview
Contract Amount: $5,608,431,753 ($5.6B)
Contractor: Raytheon Company
Awarding Agency: Department of Defense
Start Date: 2014-12-19
End Date: 2025-05-31
Contract Duration: 3,816 days
Daily Burn Rate: $1.5M/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: FIXED PRICE INCENTIVE
Sector: Defense
Official Description: TEN FIRE UNITS FOR QATAR
Place of Performance
Location: ANDOVER, ESSEX County, MASSACHUSETTS, 01810
Plain-Language Summary
Department of Defense obligated $5.61 billion to RAYTHEON COMPANY for work described as: TEN FIRE UNITS FOR QATAR Key points: 1. Significant investment in guided missile technology. 2. Sole-source award to Raytheon Company raises competition concerns. 3. Long contract duration (over 9 years) may impact price flexibility. 4. Focus on defense sector, specifically missile manufacturing.
Value Assessment
Rating: questionable
The contract value of $5.6 billion for 10 fire units is substantial. Without comparable contracts or detailed cost breakdowns, assessing its value against similar procurements is difficult. The fixed-price incentive structure aims to control costs, but the lack of competition makes a true benchmark challenging.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was not competed, indicating a sole-source award to Raytheon Company. This limits price discovery and potentially leads to higher costs for taxpayers as there was no competitive pressure to drive down the price.
Taxpayer Impact: The lack of competition in this large sole-source contract likely results in a higher cost to taxpayers than if multiple vendors had vied for the award.
Public Impact
Taxpayers are funding advanced missile defense systems for Qatar. The long-term nature of the contract ties up significant resources. Potential for cost overruns exists due to the sole-source nature. This procurement supports U.S. foreign military sales objectives.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award
- Long contract duration
- Lack of transparency in pricing
- Potential for cost overruns
Positive Signals
- Acquisition of critical defense assets
- Long-term strategic partnership
- Fixed-price incentive contract type
Sector Analysis
This contract falls within the Guided Missile and Space Vehicle Manufacturing sector, a high-value segment of the defense industry. Spending in this area is often driven by geopolitical needs and technological advancements, with significant government investment.
Small Business Impact
The data indicates this contract was awarded to Raytheon Company, a large defense contractor. There is no indication that small businesses were involved in this specific sole-source award, suggesting limited direct impact on the small business sector for this procurement.
Oversight & Accountability
The sole-source nature of this contract warrants close oversight to ensure costs are reasonable and performance meets expectations. The Department of the Army's contracting office is responsible, but the lack of competition limits external accountability mechanisms.
Related Government Programs
- Guided Missile and Space Vehicle Manufacturing
- Department of Defense Contracting
- Department of the Army Programs
Risk Flags
- Sole-source award limits competitive pricing.
- Long contract duration increases risk of cost escalation.
- Lack of transparency in pricing justification.
- Potential for vendor lock-in.
- Dependency on a single supplier for critical defense assets.
Tags
guided-missile-and-space-vehicle-manufac, department-of-defense, ma, definitive-contract, billion-dollar
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $5.61 billion to RAYTHEON COMPANY. TEN FIRE UNITS FOR QATAR
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 $5.61 billion.
What is the period of performance?
Start: 2014-12-19. End: 2025-05-31.
What is the justification for awarding this contract sole-source, and were alternative solutions considered?
The justification for a sole-source award typically involves unique capabilities, urgent needs, or lack of viable alternatives. Without further documentation, it's unclear why this contract was not competed. A thorough review would examine if market research was adequately performed to identify potential competitors or if specific national security concerns necessitated a sole-source approach.
How does the pricing structure of this fixed-price incentive contract ensure cost-effectiveness given the lack of competition?
A fixed-price incentive (FPI) contract has target cost, target profit, and share ratios. While FPI aims to incentivize cost control by sharing savings or overruns, its effectiveness is diminished without competition. The government must rigorously monitor performance and costs to ensure Raytheon meets targets and doesn't exploit the lack of competitive pressure to inflate prices or reduce quality.
What is the long-term strategic value of these fire units to the U.S. and Qatar, and how does this influence the contract's necessity?
These fire units likely represent advanced missile defense capabilities crucial for regional security and U.S. foreign policy objectives. The long duration and significant investment suggest a strategic commitment. The necessity is tied to perceived threats and the desire to equip allies with advanced technology, influencing the willingness to award such a large, long-term contract.
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: FIXED PRICE INCENTIVE (L)
Evaluated Preference: NONE
Contractor Details
Parent Company: Rockwell Collins Australia PTY Limited
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: $8,394,847,187
Exercised Options: $5,608,431,753
Current Obligation: $5,608,431,753
Subaward Activity
Number of Subawards: 15021
Total Subaward Amount: $6,825,294,235
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2014-12-19
Current End Date: 2025-05-31
Potential End Date: 2025-05-31 00:00:00
Last Modified: 2025-09-22
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