Raytheon awarded $297M FMS case for Stinger missiles to Taiwan and India

Contract Overview

Contract Amount: $296,999,996 ($297.0M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2021-07-13

End Date: 2025-07-01

Contract Duration: 1,449 days

Daily Burn Rate: $205.0K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: STINGER TAIWAN AND INDIA FMS CASE STINGER MISSILES AND ASSOCIATED EQUIPMENT AND SERVICES.

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $297.0 million to RAYTHEON COMPANY for work described as: STINGER TAIWAN AND INDIA FMS CASE STINGER MISSILES AND ASSOCIATED EQUIPMENT AND SERVICES. Key points: 1. Contract supports critical foreign military sales, enhancing partner defense capabilities. 2. Sole-source award for specialized missile systems indicates limited market alternatives. 3. Long-term delivery schedule suggests sustained demand and production planning. 4. Firm-fixed-price contract shifts cost risk to the contractor. 5. This award aligns with broader US foreign policy objectives in the Indo-Pacific region.

Value Assessment

Rating: good

The contract value of $297 million for Stinger missiles and associated services appears reasonable given the specialized nature of the defense equipment. Benchmarking against similar Foreign Military Sales (FMS) cases for advanced missile systems is challenging due to unique customer requirements and geopolitical considerations. However, the firm-fixed-price structure suggests that the government has negotiated a ceiling price, providing some cost certainty. The inclusion of associated services indicates a comprehensive support package.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, as is common for highly specialized defense systems like the Stinger missile, where only one manufacturer possesses the necessary technology and production capabilities. The lack of competition is inherent to the nature of the system and the Foreign Military Sales program, which often involves direct sales of specific, often proprietary, defense articles.

Taxpayer Impact: For taxpayers, a sole-source award means there is no direct price competition to drive down costs. However, the FMS program aims to provide allies with defense articles at a price comparable to what the U.S. military would pay, mitigating some of the potential cost increases from a lack of competition.

Public Impact

Taiwan and India benefit from enhanced air defense capabilities through the acquisition of Stinger missiles. The contract ensures the delivery of advanced guided missile systems and associated support services. Geographic impact is focused on the Indo-Pacific region, bolstering regional security. The contract supports the defense industrial base, potentially sustaining jobs in missile manufacturing and related fields.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for price escalation over the contract duration due to sole-source nature.
Dependence on a single supplier for critical defense technology.

Positive Signals

Supports key allies with advanced defense capabilities.
Firm-fixed-price contract provides cost predictability.
Long-term contract duration allows for efficient production planning.

Sector Analysis

The defense sector, particularly guided missile manufacturing, is characterized by high barriers to entry due to complex technology, significant R&D investment, and stringent regulatory requirements. This contract falls within the specialized niche of man-portable air-defense systems (MANPADS). The market is dominated by a few large defense contractors capable of producing such advanced weaponry. Spending in this sub-sector is driven by geopolitical demands and national security priorities.

Small Business Impact

This contract is not directly associated with small business set-asides. As a sole-source award for a highly specialized defense system, it is unlikely to involve significant subcontracting opportunities for small businesses unless Raytheon chooses to engage them for specific components or services. The primary focus is on the prime contractor's capabilities.

Oversight & Accountability

Oversight for Foreign Military Sales cases is typically managed by the Defense Security Cooperation Agency (DSCA) and the relevant military service (in this case, the Department of the Army). Transparency is maintained through reporting mechanisms within the FMS program. Inspector General jurisdiction would apply to any allegations of fraud, waste, or abuse related to the contract execution.

Related Government Programs

Foreign Military Sales Program
Guided Missile Manufacturing
Air Defense Systems

Risk Flags

Sole-source award may limit price competition.
Reliance on a single supplier for critical defense technology.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $297.0 million to RAYTHEON COMPANY. STINGER TAIWAN AND INDIA FMS CASE STINGER MISSILES AND ASSOCIATED EQUIPMENT AND SERVICES.

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 $297.0 million.

What is the period of performance?

Start: 2021-07-13. End: 2025-07-01.

What is the track record of Raytheon Company in delivering similar defense systems under FMS contracts?

Raytheon Company has a long and extensive track record of delivering advanced defense systems, including missiles, to both U.S. military branches and international partners through the Foreign Military Sales (FMS) program. They are a primary producer of the Stinger missile system and have supplied it to numerous allied nations over several decades. Their experience encompasses not only the manufacturing of the missiles but also the provision of associated training, logistics, and sustainment services. Historical data indicates a high degree of reliability in meeting delivery schedules and performance specifications for such critical defense articles, though specific contract performance metrics can vary. The company's established position in the defense industry suggests a robust capability to manage complex international sales and production requirements.

How does the pricing of this Stinger missile contract compare to previous FMS awards for the same system?

Direct comparison of pricing for this specific Stinger missile FMS case to previous awards is challenging without access to detailed historical FMS pricing data, which is often not publicly available in a granular format. However, the Foreign Military Sales program generally aims to provide defense articles to allies at a price comparable to what the U.S. Department of Defense pays. Factors such as inflation, updated technology, quantity ordered, and the specific package of associated services and training can cause price variations between different FMS cases over time. Given the firm-fixed-price nature of this award, the price is set, but understanding the baseline for 'comparable' requires detailed analysis of the specific missile variant, quantities, and support elements included in past agreements.

What are the primary risks associated with this sole-source contract for Stinger missiles?

The primary risks associated with this sole-source contract are centered around the lack of competitive pricing and potential supply chain vulnerabilities. Without competition, there is a risk that the price may not be as favorable as it could be in a competitive bidding environment, although FMS aims to mitigate this. Furthermore, reliance on a single manufacturer, Raytheon Company, for such a critical defense system creates a dependency. Any production delays, quality control issues, or unforeseen disruptions in Raytheon's supply chain could impact delivery schedules for Taiwan and India. Geopolitical factors influencing Raytheon's ability to produce or export could also pose a risk. Finally, the long-term sustainment and upgrade path for the Stinger system relies heavily on Raytheon's continued investment and product roadmap.

What is the expected program effectiveness and impact on the defense capabilities of Taiwan and India?

The program is expected to significantly enhance the low-altitude air defense capabilities of both Taiwan and India. The Stinger missile is a proven, man-portable air-defense system (MANPADS) effective against a range of airborne threats, including helicopters and low-flying aircraft. For Taiwan, acquiring these missiles is crucial for its defense strategy against potential aerial incursions. For India, it bolsters its existing air defense network, providing a mobile and versatile counter-air capability. The effectiveness hinges on proper training, integration into existing defense structures, and the continued reliability of the Stinger system. Successful delivery and deployment will contribute to deterrence and enhance the survivability of ground forces.

How does this contract fit into the broader historical spending patterns for guided missiles by the Department of Defense?

This contract represents a specific instance of spending within the broader category of guided missiles, which is a significant component of the Department of Defense's overall procurement budget. Historical spending on guided missiles is consistently high due to their critical role in modern warfare across various platforms (air-to-air, air-to-ground, surface-to-air, anti-tank, etc.). While this particular award is for Foreign Military Sales, the underlying production and technology are part of the U.S. defense industrial base. DoD spending on similar systems for its own forces, as well as FMS cases, reflects ongoing investments in maintaining air superiority, countering threats, and supporting allies. The scale of this $297 million award is substantial but falls within the typical range for major missile system procurements, especially when considering international 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 AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

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, 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: $296,999,996

Exercised Options: $296,999,996

Current Obligation: $296,999,996

Subaward Activity

Number of Subawards: 25

Total Subaward Amount: $3,772,608

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: W31P4Q21D0007

IDV Type: IDC

Timeline