Raytheon Company awarded $17.8M for National Advanced Surface to Air Missile System by Department of the Army

Contract Overview

Contract Amount: $17,884,901 ($17.9M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2020-06-24

End Date: 2024-06-30

Contract Duration: 1,467 days

Daily Burn Rate: $12.2K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: NATIONAL ADVANCED SURFACE TO AIR MISSILE SYSTEM

Place of Performance

Location: TEWKSBURY, MIDDLESEX County, MASSACHUSETTS, 01876

State: Massachusetts Government Spending

Plain-Language Summary

Department of Defense obligated $17.9 million to RAYTHEON COMPANY for work described as: NATIONAL ADVANCED SURFACE TO AIR MISSILE SYSTEM Key points: 1. Contract awarded on a cost-plus-fixed-fee basis, which can lead to cost overruns if not managed carefully. 2. The contract was not competed, raising questions about potential price efficiencies and market responsiveness. 3. The duration of the contract is substantial at 1467 days, indicating a long-term need for these services. 4. The specific Product Service Code (PSC) is not provided, limiting detailed analysis of the service category. 5. The contract is a delivery order under an existing contract, suggesting a continuation of services rather than a new acquisition.

Value Assessment

Rating: questionable

The contract's cost-plus-fixed-fee structure warrants scrutiny, as it shifts some cost risk to the government. Without a competitive bidding process, it is difficult to benchmark the pricing against market rates or similar contracts. The total award amount of $17.8 million over approximately four years suggests a significant investment, but the value for money is uncertain due to the lack of competition and the fee structure.

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. This approach is typically used when only one vendor can provide the required goods or services, or in specific emergency situations. The lack of competition limits the government's ability to leverage market forces to achieve the best possible price and terms.

Taxpayer Impact: Taxpayers may not be receiving the best value due to the absence of competitive pressure, which typically drives down costs and encourages innovation.

Public Impact

The Department of the Army benefits from the acquisition of the National Advanced Surface to Air Missile System, enhancing air defense capabilities. This contract supports the development and delivery of critical missile defense technology. The geographic impact is primarily within the United States, supporting domestic defense manufacturing and research. The contract likely supports a specialized workforce in engineering and defense manufacturing.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to higher costs for taxpayers.
Cost-plus-fixed-fee contracts can incentivize cost overruns if not closely monitored.
Limited transparency due to sole-source award and unspecified PSC.

Positive Signals

Addresses a critical national defense need for air defense.
Awarded to a known defense contractor with relevant expertise.
Long-term contract duration suggests sustained capability development.

Sector Analysis

The defense sector is characterized by long procurement cycles, high R&D costs, and significant government investment. Contracts for advanced missile systems fall under this umbrella, often involving complex engineering and manufacturing. The market is dominated by a few large prime contractors, with significant subcontracting to specialized firms. Benchmarking this contract is challenging without specific technical details, but spending on air and missile defense systems represents a substantial portion of the defense budget.

Small Business Impact

There is no indication that this contract includes small business set-asides. As a sole-source award to a large prime contractor, the opportunities for small businesses are likely limited to subcontracting roles. The impact on the small business ecosystem depends on the extent to which Raytheon engages small businesses in its supply chain for this specific contract.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and program management offices. Accountability measures would be defined in the contract terms and conditions, including performance metrics and reporting requirements. Transparency may be limited due to the sole-source nature and the sensitive nature of defense technology. Inspector General jurisdiction would apply to investigations of fraud, waste, or abuse.

Related Government Programs

Missile Defense Systems
Air Defense Systems
Surface-to-Air Missile Systems
Department of the Army Procurement
Defense Contracts

Risk Flags

Sole-source award
Cost-plus-fixed-fee contract type
Lack of detailed service description (PSC missing)

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $17.9 million to RAYTHEON COMPANY. NATIONAL ADVANCED SURFACE TO AIR MISSILE SYSTEM

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 $17.9 million.

What is the period of performance?

Start: 2020-06-24. End: 2024-06-30.

What is the specific performance history of Raytheon Company on similar defense contracts?

Raytheon Company, now part of RTX, has a long and extensive history of performing on complex defense contracts, including those related to missile defense and air defense systems. They are a major defense contractor with a proven track record in developing and producing advanced weaponry. Performance on similar contracts would be detailed in past performance reviews and award সুতরাং. While specific data for this exact contract is not provided, Raytheon's general performance across numerous large-scale defense programs indicates a high level of technical capability and program execution experience. However, the success of any individual contract also depends on specific program management, funding stability, and evolving requirements. Government contract databases and reports from agencies like the Government Accountability Office (GAO) often contain reviews of contractor performance on major programs.

How does the pricing structure (Cost Plus Fixed Fee) compare to other similar missile system development contracts?

Cost-Plus-Fixed-Fee (CPFF) contracts are common in research and development or when the scope of work is not well-defined, allowing for flexibility. Compared to fixed-price contracts, CPFF shifts more cost risk to the government. For similar missile system development contracts, the choice of contract type often depends on the maturity of the technology and the predictability of the work. If the requirements are stable and well-defined, a fixed-price contract might offer better value. However, for cutting-edge systems where innovation and adaptation are key, CPFF can be justified. Benchmarking requires comparing the fee percentage and the total costs incurred against the scope of work delivered for comparable R&D-intensive defense programs. Without specific details on the fee percentage and the final cost, a direct comparison is difficult, but CPFF is generally considered less cost-certain for the government than fixed-price options.

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

The primary risk of a sole-source award for advanced missile systems is the potential for inflated costs due to the lack of competitive pressure. Without competing bids, the government may pay more than necessary. Another risk is reduced innovation, as the sole provider may have less incentive to explore cost-saving measures or novel solutions. Furthermore, sole-source contracts can sometimes indicate a lack of market research or an over-reliance on a single supplier, which can create strategic vulnerabilities. Ensuring robust oversight, detailed performance metrics, and fair negotiation of terms becomes even more critical in sole-source situations to mitigate these risks and ensure the government receives good value and necessary capabilities.

What is the projected effectiveness or capability enhancement of the National Advanced Surface to Air Missile System?

The National Advanced Surface to Air Missile System (NASAMS) is designed to provide robust, short-to-medium range air defense against a variety of threats, including cruise missiles, aircraft, and drones. Its effectiveness stems from its networked, modular design, which allows for integration with other air defense assets and sensors. The system utilizes advanced radar and fire control technology to detect, track, and engage targets. Enhancements typically focus on increasing range, improving target discrimination, expanding the spectrum of threats that can be countered, and enhancing survivability in contested environments. The specific capabilities and projected effectiveness of the system procured under this contract would be detailed in the Army's operational requirements and program documentation, aiming to bolster layered air defense architectures.

How has spending on air and missile defense systems evolved within the Department of the Army over the past five years?

Spending on air and missile defense (AMD) systems within the Department of the Army has generally seen an increasing trend over the past five years, driven by evolving threat landscapes and a renewed focus on near-peer competition. The Army has prioritized modernizing its AMD capabilities to counter threats such as advanced cruise missiles, ballistic missiles, and unmanned aerial systems. This includes investments in systems like Patriot, THAAD, and NASAMS, as well as research and development into next-generation capabilities. Budgetary allocations reflect this priority, with significant portions of the Army's procurement and R&D funds directed towards AMD programs. Specific figures fluctuate annually based on congressional appropriations and strategic priorities, but the overall trajectory indicates sustained and often growing investment in this critical area of defense.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: RTX Corp

Address: 50 APPLE HILL DR, TEWKSBURY, MA, 01876

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: $17,884,901

Exercised Options: $17,884,901

Current Obligation: $17,884,901

Actual Outlays: $1,899,756

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: W31P4Q20D0008

IDV Type: IDC

Timeline