DoD Awards $1.6B Contract to Raytheon for Patriot Launching Stations, Lacking Competition
Contract Overview
Contract Amount: $1,607,872,305 ($1.6B)
Contractor: Raytheon Company
Awarding Agency: Department of Defense
Start Date: 2023-09-29
End Date: 2030-09-30
Contract Duration: 2,558 days
Daily Burn Rate: $628.6K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: FIXED PRICE INCENTIVE
Sector: Defense
Official Description: REQUIREMENT FOR PATRIOT M903 LAUNCHING STATIONS.
Place of Performance
Location: ANDOVER, ESSEX County, MASSACHUSETTS, 01810
Plain-Language Summary
Department of Defense obligated $1.61 billion to RAYTHEON COMPANY for work described as: REQUIREMENT FOR PATRIOT M903 LAUNCHING STATIONS. Key points: 1. Significant investment in critical defense hardware. 2. Sole-source award to Raytheon raises competition concerns. 3. Long contract duration (2030) may limit future price adjustments. 4. Guided Missile Manufacturing sector is highly specialized.
Value Assessment
Rating: questionable
The contract value of $1.6 billion for Patriot M903 Launching Stations is substantial. Without competitive bidding, it's difficult to assess if this price represents fair market value compared to potential alternatives or previous procurements.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was not competed, indicating a sole-source award to Raytheon Company. This lack of competition limits price discovery and potentially leads to higher costs for taxpayers.
Taxpayer Impact: The sole-source nature of this large contract means taxpayers may be paying a premium due to the absence of competitive pressure to lower prices.
Public Impact
Ensures continued operational capability for critical missile defense systems. Supports a major defense contractor and its supply chain. Potential for extended reliance on a single provider for essential equipment.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Lack of competition
- Sole-source award
- Long contract duration
Positive Signals
- Procurement of essential defense equipment
- Supports national security objectives
Sector Analysis
This contract falls within the Guided Missile and Space Vehicle Manufacturing sector, a highly specialized area of defense industrial base. Spending benchmarks are difficult to establish due to the unique nature of these systems and limited market players.
Small Business Impact
The data does not indicate any specific provisions or set-asides for small businesses in this sole-source contract. The primary contractor, Raytheon Company, is a large aerospace and defense firm.
Oversight & Accountability
The contract is a definitive contract awarded by the Department of the Army. Oversight would focus on contract performance, delivery schedules, and adherence to the fixed-price incentive terms to ensure value for money.
Related Government Programs
- Guided Missile and Space Vehicle Manufacturing
- Department of Defense Contracting
- Department of the Army Programs
Risk Flags
- Sole-source award limits price competition.
- Long contract duration may reduce flexibility.
- Lack of transparency on justification for sole-sourcing.
- Potential for cost overruns despite FPI structure.
Tags
guided-missile-and-space-vehicle-manufac, department-of-defense, ma, definitive-contract, billion-dollar
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $1.61 billion to RAYTHEON COMPANY. REQUIREMENT FOR PATRIOT M903 LAUNCHING STATIONS.
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 $1.61 billion.
What is the period of performance?
Start: 2023-09-29. End: 2030-09-30.
What is the justification for the sole-source award, and what steps were taken to ensure the best possible price without competition?
The justification for a sole-source award typically involves unique capabilities, proprietary technology, or urgent needs where only one source can fulfill the requirement. Agencies must document these justifications thoroughly and explore options for competitive procurements where feasible. Without specific documentation, it's presumed that the Army determined Raytheon was the only viable source, but the absence of competition inherently raises concerns about price optimization.
How does the fixed-price incentive (FPI) structure mitigate risks associated with cost overruns in this long-term sole-source contract?
An FPI contract aims to share cost risks between the government and contractor. It establishes a target cost, target profit, and a price ceiling. If costs are below target, both parties share savings; if above, they share overruns up to the ceiling. For this sole-source contract, the FPI structure provides some incentive for Raytheon to control costs, but the government's leverage in negotiating the target cost and ceiling is reduced without competitive benchmarking.
What is the long-term strategic implication of awarding a sole-source contract for such a critical defense system for over 6 years?
Awarding a sole-source contract for over six years for critical defense systems like the Patriot launchers can lead to vendor lock-in, potentially stifling innovation and making it difficult to introduce alternative technologies or suppliers in the future. It also concentrates production capability within a single entity, which could pose risks if that entity faces financial or operational challenges.
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: FIXED PRICE INCENTIVE (L)
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: $2,419,168,415
Exercised Options: $1,607,872,305
Current Obligation: $1,607,872,305
Subaward Activity
Number of Subawards: 99
Total Subaward Amount: $55,270,534
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2023-09-29
Current End Date: 2030-09-30
Potential End Date: 2030-09-30 12:09:00
Last Modified: 2025-12-09
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