DoD awards $1.69B Javelin missile production contract to Raytheon/Lockheed Martin JV, with no competition

Contract Overview

Contract Amount: $1,694,838,192 ($1.7B)

Contractor: Raytheon/Lockheed Martin Javelin JV

Awarding Agency: Department of Defense

Start Date: 2019-09-12

End Date: 2028-05-31

Contract Duration: 3,184 days

Daily Burn Rate: $532.3K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: JAVELIN PRODUCTION CONTRACT AWARD TO INCLUDE THE ALL UP ROUNDS (AUR), BATTERY COOLANT UNITS (BCU), AND JAVELIN VEHICLE LAUNCHER ELECTRONICS (JVL-E).

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $1.69 billion to RAYTHEON/LOCKHEED MARTIN JAVELIN JV for work described as: JAVELIN PRODUCTION CONTRACT AWARD TO INCLUDE THE ALL UP ROUNDS (AUR), BATTERY COOLANT UNITS (BCU), AND JAVELIN VEHICLE LAUNCHER ELECTRONICS (JVL-E). Key points: 1. Contract awarded on a firm-fixed-price basis, indicating a defined cost for the delivered goods. 2. The contract spans nearly a decade, suggesting a long-term strategic need for Javelin missile systems. 3. Awarded to a joint venture, highlighting the consolidation of capabilities in advanced weapons manufacturing. 4. The absence of competition raises questions about potential price efficiencies and market responsiveness. 5. Production is based in Arizona, potentially impacting the regional defense industrial base and workforce. 6. This award represents a significant investment in a key anti-armor weapon system for the U.S. Army.

Value Assessment

Rating: fair

The contract's value of $1.69 billion over approximately 8.5 years suggests an average annual value of roughly $200 million. Without specific details on the number of units or components (AUR, BCU, JVL-E) included in this award, a direct per-unit cost comparison is difficult. However, given the nature of advanced missile systems, this figure appears substantial. The firm-fixed-price structure aims to control costs, but the lack of competition limits the ability to benchmark against alternative suppliers or assess if the price reflects the most competitive market rate.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, the Raytheon/Lockheed Martin Javelin JV, was considered. This approach is typically used when a unique capability or product is required, or when only one source is capable of meeting the requirement. The lack of competition means that the government did not solicit bids from other potential manufacturers, which can limit price discovery and potentially lead to higher costs than if multiple bids were received.

Taxpayer Impact: Taxpayers may not be receiving the best possible price due to the absence of competitive bidding. This sole-source award bypasses the opportunity for market forces to drive down costs through multiple offers.

Public Impact

The U.S. Army benefits from the continued production of the Javelin anti-tank missile system, a critical asset for ground combat operations. This contract ensures the supply of All Up Rounds (AUR), Battery Coolant Units (BCU), and Javelin Vehicle Launcher Electronics (JVL-E). The geographic impact is concentrated in Arizona, where the production facilities are located. Workforce implications include sustained employment for skilled labor in advanced manufacturing and defense industries within Arizona.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially increasing costs for taxpayers.
Long contract duration (nearly 9 years) could lock in potentially suboptimal pricing if market conditions change.
Lack of transparency in the justification for sole-source procurement.
Dependence on a single joint venture for a critical defense system.

Positive Signals

Ensures continued availability of a vital weapon system for national defense.
Firm-fixed-price contract provides cost certainty for the government.
Award to an established joint venture suggests a high likelihood of successful delivery.
Production in Arizona supports domestic defense industrial base.

Sector Analysis

The guided missile and space vehicle manufacturing sector is a highly specialized and capital-intensive segment of the defense industry. Companies operating in this space require significant R&D investment, advanced manufacturing capabilities, and stringent quality control. The Javelin system is a key component of modern anti-armor warfare. Spending in this area is driven by geopolitical needs and the continuous evolution of threats. Comparable spending benchmarks would involve other major missile system production contracts, which often run into hundreds of millions or billions of dollars over their lifecycle.

Small Business Impact

This contract does not appear to include specific small business set-aside provisions, as indicated by 'sb: false'. The prime contractor is a joint venture of two large corporations. While the prime contractor may engage small businesses for subcontracting, the primary award is not directed towards small businesses. The impact on the small business ecosystem would depend on the subcontracting opportunities generated by the prime, which are not detailed here. Without specific subcontracting goals or reporting, it's difficult to assess the direct benefit to small businesses.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and program management offices. The firm-fixed-price nature of the contract provides a degree of cost control. Accountability measures are inherent in the contract terms, requiring delivery of specified goods. Transparency is limited due to the sole-source nature of the award. Inspector General jurisdiction would apply to any allegations of fraud, waste, or abuse related to the contract execution.

Related Government Programs

Other Army missile procurement programs
Defense production and sustainment contracts
Advanced weapons system development
Tactical missile programs

Risk Flags

Sole-source procurement
Long contract duration
Lack of competitive benchmarking

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $1.69 billion to RAYTHEON/LOCKHEED MARTIN JAVELIN JV. JAVELIN PRODUCTION CONTRACT AWARD TO INCLUDE THE ALL UP ROUNDS (AUR), BATTERY COOLANT UNITS (BCU), AND JAVELIN VEHICLE LAUNCHER ELECTRONICS (JVL-E).

Who is the contractor on this award?

The obligated recipient is RAYTHEON/LOCKHEED MARTIN JAVELIN JV.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Army).

What is the total obligated amount?

The obligated amount is $1.69 billion.

What is the period of performance?

Start: 2019-09-12. End: 2028-05-31.

What is the historical spending trend for Javelin missile production by the Department of the Army?

Historical spending data for Javelin missile production by the Department of the Army reveals a consistent and significant investment over the years. Prior to this $1.69 billion definitive contract, the Army has awarded numerous contracts for Javelin systems, including AURs, training missiles, and associated support equipment. These awards often occurred through competitive processes or as sole-source extensions when necessary. For instance, previous awards have ranged from tens of millions to several hundred million dollars annually, depending on production rates, modernization efforts, and operational demands. The current contract represents a large, consolidated award for a substantial quantity of systems and components, indicating a strategic decision to secure long-term supply rather than relying on smaller, incremental awards. Analyzing past spending patterns shows a sustained need for this capability, justifying the current large-scale procurement.

How does the pricing of this Javelin contract compare to previous Javelin procurements, considering inflation and quantity?

Directly comparing the pricing of this $1.69 billion contract to previous Javelin procurements is challenging without detailed unit quantities and specific component breakdowns for all awards. However, several factors suggest potential price increases over time. Inflation is a significant contributor; the contract spans from 2019 to 2028, encompassing several years of potential price escalation. Furthermore, advancements in technology and modernization efforts for the Javelin system (e.g., improved seeker technology, software upgrades) can increase per-unit costs. The sole-source nature of this award, compared to potentially competitive awards in the past, also limits the ability to achieve aggressive price reductions. While the firm-fixed-price structure aims for cost certainty, it may not reflect the lowest possible market price if competition were present. Therefore, while the total value is substantial, it's plausible that the per-unit cost has increased due to inflation, technological upgrades, and a lack of competitive pressure.

What are the specific risks associated with a sole-source award for a critical defense system like the Javelin?

A sole-source award for a critical defense system like the Javelin carries several inherent risks. Firstly, the lack of competition can lead to higher prices for taxpayers, as the government foregoes the potential cost savings that competitive bidding can generate. Secondly, it can reduce the incentive for the sole contractor to innovate or improve efficiency, as there is no direct market pressure from competitors. Thirdly, it creates a dependency on a single supplier, which can be problematic if that supplier experiences production issues, financial instability, or faces geopolitical challenges. This dependency can also impact the government's negotiating leverage in future contract modifications or renewals. Finally, the justification for a sole-source award must be robust; if the justification is weak or flawed, it raises concerns about the fairness and effectiveness of the procurement process.

What is the track record of the Raytheon/Lockheed Martin Javelin JV in delivering complex missile systems?

The Raytheon/Lockheed Martin Javelin JV is a well-established entity formed specifically to produce the Javelin missile system, a program with a long and successful history. Both Raytheon (now RTX) and Lockheed Martin are major defense contractors with extensive experience in developing, manufacturing, and delivering complex weapons systems, including missiles and guided munitions. The Javelin itself has been a cornerstone of U.S. and allied anti-armor capabilities for decades, demonstrating its effectiveness and reliability in various operational environments. The JV has consistently met production targets and delivered systems that have proven critical in combat. Their track record suggests a high degree of technical expertise, manufacturing capability, and program management proficiency necessary for fulfilling large, long-term contracts like this one.

How does this contract align with the Department of the Army's overall modernization and readiness goals?

This contract directly aligns with the Department of the Army's modernization and readiness goals by ensuring the continued availability of a critical anti-armor weapon system. The Javelin is a key component of the Army's maneuver force, providing infantry and light units with the capability to defeat main battle tanks and other armored threats. Maintaining a robust supply of Javelin All Up Rounds (AURs) and associated components is essential for sustaining current operational readiness and equipping newly formed units. Furthermore, the contract likely supports ongoing efforts to integrate the Javelin with emerging platforms and potentially incorporates incremental upgrades, contributing to the Army's long-term modernization strategy. By securing a long-term production capability, the Army mitigates risks associated with supply chain disruptions and ensures it can meet future demand, whether for training, domestic use, or foreign military sales.

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

Solicitation ID: W31P4Q17R0030

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 1151 E HERMANS RD BLDG 805 M\\S C6, TUCSON, AZ, 85756

Business Categories: Category Business, Manufacturer of Goods, Not Designated a Small Business, Partnership or Limited Liability Partnership, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $3,463,152,471

Exercised Options: $1,694,838,192

Current Obligation: $1,694,838,192

Actual Outlays: $33,722,041

Subaward Activity

Number of Subawards: 43

Total Subaward Amount: $199,738,418

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline