Raytheon's $35M STINGER missile contract for South Korea highlights FMS program dynamics

Contract Overview

Contract Amount: $35,054,126 ($35.1M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2015-02-04

End Date: 2017-05-30

Contract Duration: 846 days

Daily Burn Rate: $41.4K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: STINGER SOUTH KOREA FMS

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $35.1 million to RAYTHEON COMPANY for work described as: STINGER SOUTH KOREA FMS Key points: 1. Contract awarded via Foreign Military Sales (FMS) mechanism, indicating international cooperation. 2. Sole-source award suggests limited market alternatives or specific national security requirements. 3. Fixed-price contract type aims to control costs for both the government and the foreign partner. 4. Contract duration of 846 days indicates a medium-term supply commitment. 5. Missile manufacturing falls under a critical defense sector, impacting national security readiness. 6. The contract's value is moderate within the broader defense procurement landscape.

Value Assessment

Rating: fair

Benchmarking the value of this specific FMS contract is challenging due to the unique nature of international sales and the specific defense article. However, the firm fixed-price structure is a positive indicator for cost control. Without comparable FMS sales data or detailed cost breakdowns, a precise value-for-money assessment is difficult. The price appears consistent with the procurement of specialized defense systems, but further analysis would require access to international pricing benchmarks for similar systems.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, likely due to the specialized nature of the STINGER missile system and its integration into the South Korean military's existing inventory. Sole-source awards typically indicate a lack of readily available alternatives or a strategic decision to procure from a specific, trusted supplier. This limits the opportunity for competitive bidding, which could potentially drive down prices through market forces.

Taxpayer Impact: Sole-source awards mean taxpayers do not benefit from the price reductions that can be achieved through competitive bidding, potentially leading to higher overall costs for the defense article.

Public Impact

South Korea benefits from the acquisition of advanced air defense capabilities. The contract supports the delivery of STINGER missiles, enhancing the nation's security posture. Geographic impact is primarily in South Korea, bolstering its defense infrastructure. Workforce implications are within Raytheon's manufacturing facilities, supporting skilled labor in the defense industry.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to higher prices than a fully competed contract.
Sole-source nature limits transparency into the pricing structure.
Dependence on a single supplier for critical defense articles can pose supply chain risks.

Positive Signals

Firm fixed-price contract provides cost certainty for the buyer.
Award to a known, established defense contractor suggests a degree of reliability.
FMS mechanism facilitates international partnerships and interoperability.

Sector Analysis

The STINGER missile system falls within the Guided Missile and Space Vehicle Manufacturing sub-sector of the aerospace and defense industry. This sector is characterized by high R&D investment, stringent quality control, and significant government procurement. The market is dominated by a few large, specialized contractors. Comparable spending benchmarks would involve other FMS contracts for similar advanced weapon systems, which are often classified or highly specific.

Small Business Impact

This contract does not appear to have a small business set-aside component, as it was awarded directly to Raytheon Company. There is no explicit information regarding subcontracting plans for small businesses within this specific award. The focus is on the prime contractor fulfilling a direct foreign military sale requirement.

Oversight & Accountability

Oversight for this contract would primarily fall under the Defense Contract Management Agency (DCMA) and the specific FMS program management within the Department of Defense. Accountability is managed through contract terms and performance monitoring. Transparency is limited due to the sole-source nature and FMS classification, but reporting requirements for FMS sales exist.

Related Government Programs

Foreign Military Sales Program
Air Defense Systems Procurement
Guided Missile Manufacturing
Defense Article Exports

Risk Flags

Sole-source award lacks competitive pricing pressure.
FMS contracts can have complex pricing structures not fully transparent.
Dependence on a single supplier for critical defense systems.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $35.1 million to RAYTHEON COMPANY. STINGER SOUTH KOREA FMS

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 $35.1 million.

What is the period of performance?

Start: 2015-02-04. End: 2017-05-30.

What is the historical spending trend for STINGER missiles through FMS?

Analyzing historical spending trends for STINGER missiles via FMS requires access to detailed FMS case data, which is often not publicly available in aggregate. However, the STINGER system has been a staple in U.S. foreign military assistance for decades, indicating consistent demand. Spending levels would fluctuate based on geopolitical conditions, regional security needs, and the availability of newer systems. The $35 million awarded in this contract represents a single transaction, and a broader trend analysis would necessitate examining multiple FMS cases over several years, considering factors like unit price variations and quantities purchased.

How does the price of this STINGER contract compare to domestic U.S. military procurements?

Direct price comparison between this FMS contract and domestic U.S. military procurements of STINGER missiles is difficult without specific data points for both. FMS pricing can be influenced by factors such as program management costs, specific configuration requirements for the foreign customer, and the overall volume of the sale. While the U.S. Department of Defense negotiates prices for its own inventory, FMS pricing aims to recover U.S. government costs and may include additional administrative fees. The firm fixed-price nature of this award suggests a negotiated price, but its competitiveness relative to domestic buys would depend on the specific terms and quantities involved in each transaction.

What are the key risks associated with a sole-source award for defense articles like the STINGER?

The primary risk of a sole-source award for defense articles like the STINGER is the potential for inflated pricing due to the absence of competitive pressure. This can lead to less value for taxpayer money, whether directly or indirectly through FMS. Another risk is a reduced incentive for the sole provider to innovate or improve efficiency, as they face no direct competition. Furthermore, sole-source contracts can create dependency on a single supplier, potentially leading to supply chain vulnerabilities if that supplier experiences production issues or faces geopolitical restrictions. Ensuring robust oversight and justification for sole-source awards is crucial to mitigate these risks.

What is Raytheon's track record in fulfilling FMS contracts for missile systems?

Raytheon Company, now part of RTX, has a long and extensive track record of fulfilling Foreign Military Sales (FMS) contracts for a wide array of missile systems, including the STINGER. As a major defense contractor, Raytheon is a primary provider of air defense solutions to numerous allied nations. Their experience spans decades, involving complex logistical, technical, and diplomatic requirements inherent in FMS. While specific performance metrics for individual contracts are often not public, Raytheon's continued role as a key supplier in global defense markets suggests a generally reliable performance history in delivering advanced weapon systems to international partners.

What are the implications of the contract's duration (846 days) on delivery timelines and readiness?

A contract duration of 846 days (approximately 2.3 years) for the STINGER missile system suggests a medium-term production and delivery schedule. This timeframe allows for planned manufacturing, quality assurance, and integration processes. For the recipient nation, South Korea, this duration implies a phased delivery, potentially aligning with their strategic planning for air defense readiness. It also indicates that the missiles are not immediately available off-the-shelf in large quantities, requiring advance planning by the procuring nation. The duration is typical for complex defense articles where production capacity and specific configurations are factors.

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

Parent Company: RTX Corp (UEI: 001344142)

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, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $70,108,251

Exercised Options: $70,108,251

Current Obligation: $35,054,126

Subaward Activity

Number of Subawards: 50

Total Subaward Amount: $15,679,659

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline