DoD Awards Raytheon $1.23B for 5 Patriot Units to Switzerland, Highlighting Defense Sector Spending

Contract Overview

Contract Amount: $1,226,657,656 ($1.2B)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2023-03-28

End Date: 2032-12-31

Contract Duration: 3,566 days

Daily Burn Rate: $344.0K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: THIS REQUIREMENT IS FOR THE PROCUREMENT OF FIVE (5) PATRIOT FIRING UNITS IN SUPPORT OF THE COUNTRY OF SWITZERLAND.

Place of Performance

Location: ANDOVER, ESSEX County, MASSACHUSETTS, 01810

State: Massachusetts Government Spending

Plain-Language Summary

Department of Defense obligated $1.23 billion to RAYTHEON COMPANY for work described as: THIS REQUIREMENT IS FOR THE PROCUREMENT OF FIVE (5) PATRIOT FIRING UNITS IN SUPPORT OF THE COUNTRY OF SWITZERLAND. Key points: 1. Significant contract value for advanced missile defense systems. 2. Raytheon Company is the sole awardee, indicating a specialized market. 3. Long-term contract duration (2023-2032) suggests sustained demand. 4. Focus on international military sales within the defense sector.

Value Assessment

Rating: good

The contract value of $1.23 billion for five Patriot firing units is substantial. Benchmarking against similar international sales of complex defense systems is difficult due to limited public data, but the price appears aligned with the advanced technology and scale of the procurement.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, suggesting multiple vendors had the opportunity to bid. This competitive process is expected to drive price discovery and ensure a fair market price for the Patriot systems.

Taxpayer Impact: Taxpayer funds are being utilized for a foreign military sale, supporting a key ally's defense capabilities and potentially strengthening international security partnerships.

Public Impact

Enhances Switzerland's air and missile defense capabilities. Supports U.S. foreign policy objectives through military aid. Contributes to the global defense industry and Raytheon's revenue. Represents a significant investment in advanced military technology.

Waste & Efficiency Indicators

Waste Risk Score: 75 / 10

Warning Flags

Long contract duration could lead to cost overruns if not managed effectively.
Reliance on a single supplier for critical defense components.
Geopolitical risks associated with international arms sales.

Positive Signals

Strengthens alliance with Switzerland.
Provides advanced defense technology to a partner nation.
Supports U.S. defense industrial base.

Sector Analysis

This contract falls within the Guided Missile and Space Vehicle Manufacturing sector, a critical component of the defense industry. Spending in this area is often driven by geopolitical factors and national security priorities, with high unit costs for sophisticated weaponry.

Small Business Impact

The contract is awarded to Raytheon Company, a large prime contractor. There is no specific indication of subcontracting opportunities for small businesses within the provided data, which is common for large, specialized defense procurements.

Oversight & Accountability

The Department of Defense and Department of the Army are responsible for oversight. The definitive contract award and long duration necessitate ongoing monitoring to ensure performance, cost control, and adherence to terms, especially given the international nature of the sale.

Related Government Programs

Guided Missile and Space Vehicle Manufacturing
Department of Defense Contracting
Department of the Army Programs

Risk Flags

High contract value.
Sole awardee.
Long contract duration.
International sale complexity.
Reliance on advanced, specialized technology.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $1.23 billion to RAYTHEON COMPANY. THIS REQUIREMENT IS FOR THE PROCUREMENT OF FIVE (5) PATRIOT FIRING UNITS IN SUPPORT OF THE COUNTRY OF SWITZERLAND.

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 $1.23 billion.

What is the period of performance?

Start: 2023-03-28. End: 2032-12-31.

What is the projected return on investment for the U.S. in terms of enhanced diplomatic relations and security cooperation with Switzerland through this Patriot system sale?

The return on investment is primarily strategic rather than financial. By providing advanced defense capabilities, the U.S. strengthens its alliance with Switzerland, enhances regional stability, and reinforces its position as a key security partner. This can lead to greater interoperability, intelligence sharing, and diplomatic leverage, which are valuable but difficult to quantify monetarily.

What are the key performance indicators (KPIs) being used to measure the effectiveness of the Patriot system delivery and integration in Switzerland?

Effectiveness is likely measured through several KPIs, including on-time delivery of all five firing units, successful system integration with Swiss command and control structures, achievement of specified operational readiness rates post-delivery, and successful completion of initial training and operational tests. Performance metrics would also include adherence to maintenance schedules and system reliability.

Given the firm fixed-price nature of the contract, what mechanisms are in place to mitigate risks associated with potential cost increases in raw materials or labor for Raytheon?

While a firm fixed-price contract aims to transfer cost risk to the contractor, mechanisms to mitigate extreme, unforeseen cost increases might exist through contract clauses addressing extraordinary inflation or material shortages, though these are typically narrowly defined. Raytheon's risk mitigation would primarily involve robust supply chain management, hedging strategies for raw materials, and efficient production planning to absorb standard market fluctuations.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Guided Missile and Space Vehicle Manufacturing

Product/Service Code: GUIDED MISSLES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: RTX Corp

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: $1,229,628,724

Exercised Options: $1,226,657,656

Current Obligation: $1,226,657,656

Subaward Activity

Number of Subawards: 282

Total Subaward Amount: $61,152,929

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline