Raytheon Company awarded $325M for Coyote Interceptors, a sole-source contract for guided missile manufacturing

Contract Overview

Contract Amount: $325,291,343 ($325.3M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2025-09-29

End Date: 2028-04-30

Contract Duration: 944 days

Daily Burn Rate: $344.6K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: COYOTE INTERCEPTORS

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $325.3 million to RAYTHEON COMPANY for work described as: COYOTE INTERCEPTORS Key points: 1. Contract awarded to a single, established provider, raising questions about price competitiveness. 2. Focus on guided missile manufacturing indicates a critical defense capability. 3. Long contract duration suggests a sustained need for these interceptors. 4. Contract type (Cost Plus Fixed Fee) may incentivize cost overruns. 5. No small business set-aside indicates limited direct opportunities for smaller firms. 6. Geographic location in Arizona may have implications for regional economic impact.

Value Assessment

Rating: questionable

The contract's value of $325 million for Coyote Interceptors requires careful benchmarking against similar defense procurement programs. As a sole-source award, direct price comparisons are difficult, but the Cost Plus Fixed Fee structure warrants scrutiny for potential cost escalations. Without competitive bidding, it's challenging to ascertain if the government is receiving optimal value for money. The absence of a clear per-unit cost benchmark in the provided data further complicates a precise value assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning Raytheon Company was the only bidder considered. This approach is typically used when only one source is capable of meeting the requirement, often due to proprietary technology or specialized expertise. The lack of competition means there was no opportunity for price discovery through a bidding process, potentially leading to higher costs for the government compared to a competed contract.

Taxpayer Impact: Sole-source awards limit taxpayer value by removing the downward pressure on prices that competition provides. This can result in higher overall spending for essential defense systems.

Public Impact

The primary beneficiaries are the U.S. Army, receiving critical interceptor capabilities. The contract delivers guided missile and space vehicle manufacturing services. The contract's performance is linked to Arizona, potentially impacting the local economy and workforce. This supports specialized manufacturing jobs within the defense industrial base.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potentially increases costs for taxpayers.
Cost Plus Fixed Fee contract type can incentivize higher spending if not closely managed.
Lack of small business participation may limit broader economic benefits and innovation.
Limited transparency on specific performance metrics and cost breakdowns due to sole-source nature.

Positive Signals

Award to Raytheon, a known defense contractor, suggests a degree of reliability and established capability.
Long contract duration indicates a sustained and critical need for the interceptor system.
Focus on advanced missile technology supports national defense objectives.
Contracting within Arizona may leverage existing defense manufacturing infrastructure.

Sector Analysis

The defense sector, particularly guided missile and space vehicle manufacturing, is characterized by high barriers to entry, significant R&D investment, and long production cycles. This contract falls within a specialized niche of defense manufacturing. Comparable spending benchmarks are difficult to establish without more specific details on the interceptor's capabilities and quantity, but multi-hundred-million-dollar awards are common for advanced weapon systems.

Small Business Impact

This contract does not appear to include a small business set-aside, nor is there an indication of mandatory subcontracting goals for small businesses. This suggests that the primary contract is being fulfilled by a large prime contractor, potentially limiting direct opportunities for small businesses within this specific award. However, Raytheon may engage small businesses indirectly through its supply chain.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's established procurement regulations and the Army Contracting Command. Accountability measures are inherent in the Cost Plus Fixed Fee structure, which requires detailed cost reporting and justification. Transparency may be limited due to the sole-source nature and the classified aspects of defense technology, but Inspector General offices can investigate fraud, waste, and abuse.

Related Government Programs

Missile Defense Systems
Air Defense Systems
Guided Missile Manufacturing
Defense Procurement
Cost Plus Fixed Fee Contracts

Risk Flags

Sole-source award
Cost Plus Fixed Fee contract type
Lack of competitive bidding
Potential for cost overruns

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $325.3 million to RAYTHEON COMPANY. COYOTE INTERCEPTORS

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 $325.3 million.

What is the period of performance?

Start: 2025-09-29. End: 2028-04-30.

What is the specific capability and intended use of the Coyote Interceptors being procured?

The Coyote Interceptors are designed as a versatile, low-cost, multi-mission interceptor system. They are primarily used for counter-UAS (unmanned aerial system) missions, acting as a kinetic interceptor to neutralize threats. Their modular design allows for adaptation to various roles, including counter-drone operations, border security, and force protection. The specific variant and intended operational context for this $325 million award would likely be classified or sensitive, but their general purpose is to provide a rapid response capability against aerial threats.

How does the Cost Plus Fixed Fee (CPFF) contract type compare to other pricing arrangements in defense procurement, and what are its implications for value?

Cost Plus Fixed Fee (CPFF) contracts reimburse the contractor for allowable costs incurred plus a predetermined fixed fee representing profit. This structure is often used for research and development or complex projects where cost estimation is difficult. While it allows flexibility, it can incentivize contractors to incur higher costs, as their profit (the fixed fee) remains constant regardless of the final cost. For taxpayers, this means a higher risk of cost overruns compared to fixed-price contracts, necessitating robust government oversight to manage expenditures effectively and ensure value.

What are the typical performance metrics and success indicators for contracts involving guided missile manufacturing?

Performance metrics for guided missile manufacturing contracts typically include adherence to stringent quality control standards, meeting production schedules, achieving specified reliability rates (e.g., mean time between failures), and successful completion of developmental and operational testing. Success indicators often involve the successful deployment and effectiveness of the missiles in training or operational scenarios, demonstrated by high hit rates or mission accomplishment. For interceptors like the Coyote, effectiveness against designated threats in realistic simulations or exercises would be a key performance indicator.

Given the sole-source nature, what mechanisms are in place to ensure Raytheon Company's pricing is fair and reasonable?

Even in sole-source procurements, the government employs mechanisms to ensure fair and reasonable pricing. This often involves obtaining certified cost or pricing data from the contractor, which is then analyzed by government cost estimators. The Defense Contract Audit Agency (DCAA) may audit the contractor's proposed costs. The procuring agency will compare the proposed price against historical data, independent government cost estimates, and potentially data from similar commercial items or services. However, the absence of competition inherently limits the government's leverage in price negotiations.

What is Raytheon Company's track record with similar defense contracts, particularly in missile systems?

Raytheon Company (now RTX) has an extensive and long-standing track record as a major defense contractor, particularly in missile systems. They are known for producing a wide array of advanced weaponry, including air-to-air missiles (like the AMRAAM), air defense systems (like Patriot), and various interceptor technologies. Their experience spans decades, involving numerous large-scale contracts with the Department of Defense and allied nations. While specific performance details on all contracts are not public, their continued success in securing significant defense awards suggests a generally positive track record in delivering complex weapon systems.

How does this $325 million contract compare to overall U.S. spending on missile defense and counter-UAS systems?

This $325 million contract represents a significant, but not unprecedented, investment within the broader U.S. defense budget allocated to missile defense and counter-unmanned aerial systems (C-UAS). The U.S. military invests billions annually in developing, procuring, and maintaining a wide range of air and missile defense capabilities, including large-scale programs like the Ground-based Midcourse Defense (GMD) system and various regional air defense initiatives. Spending on C-UAS capabilities has rapidly increased in recent years due to the proliferation of drones. This single contract for Coyote Interceptors contributes to that overall effort, focusing on a specific, agile interceptor solution.

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

Pricing Type: COST PLUS FIXED FEE (U)

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: $993,171,169

Exercised Options: $325,291,343

Current Obligation: $325,291,343

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: W31P4Q25D0013

IDV Type: IDC

Timeline