Raytheon Company awarded $1.9B contract for ballistic missile defense systems, highlighting R&D in advanced defense technologies

Contract Overview

Contract Amount: $1,913,071,797 ($1.9B)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2003-04-08

End Date: 2013-06-30

Contract Duration: 3,736 days

Daily Burn Rate: $512.1K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS AWARD FEE

Sector: Defense

Official Description: 200308!000297!9700!ZD60 !MISSILE DEFENSE AGENCY !HQ000603C0047 !A!N! !N! !20030408!20060331!039321963!039321963!001339159!N!RAYTHEON COMPANY !180 HARTWELL RD !BEDFORD !MA!01730!04650!017!25!BEDFORD !MIDDLESEX !MASS !+000001500000!N!N!000000000000!AC24!RDTE/MISSILE AND SPACE SYSTEMS-DEMO/VALID !A2 !MISSILE AND SPACE SYSTEMS !1CAA!BALLISTIC MISSILE DEFENSE SYS !541710!E! !1! ! ! ! ! !99990909!B! ! !A! !D!U!R!1!001!N!1G!Z!Y!Z! ! !N!C!N! ! ! !A!A!A!A!000!A!C!N! ! ! !Y! ! !0001! !

Place of Performance

Location: WOBURN, MIDDLESEX County, MASSACHUSETTS, 01801

State: Massachusetts Government Spending

Plain-Language Summary

Department of Defense obligated $1.91 billion to RAYTHEON COMPANY for work described as: 200308!000297!9700!ZD60 !MISSILE DEFENSE AGENCY !HQ000603C0047 !A!N! !N! !20030408!20060331!039321963!039321963!001339159!N!RAYTHEON COMPANY !180 HARTWELL RD !BEDFORD !MA!01730!04650!017!25!BEDFORD !MIDDL… Key points: 1. Contract awarded for advanced ballistic missile defense systems, indicating a focus on cutting-edge defense capabilities. 2. Significant investment in Research and Development (R&D) for missile and space systems, suggesting a long-term strategic objective. 3. The contract's 'Not Competed' status warrants scrutiny regarding potential cost efficiencies and market alternatives. 4. A substantial contract value suggests a critical role for Raytheon in national missile defense infrastructure. 5. The duration of the contract (over 10 years) implies a sustained need for these specialized defense systems. 6. Focus on 'Missile and Space Systems' aligns with evolving threats and the need for advanced technological solutions.

Value Assessment

Rating: questionable

The contract value of approximately $1.9 billion over a decade is substantial. Without comparable sole-source contracts for similar advanced missile defense systems, it is difficult to benchmark the value for money. The 'Cost Plus Award Fee' (CPAF) contract type can incentivize performance but also carries risks of cost overruns if not managed tightly. Further analysis of the award fee structure and performance metrics would be needed to fully assess value.

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 among multiple vendors. This approach is typically used when a specific contractor possesses unique capabilities or when there is an urgent need that cannot be met through a competitive process. The lack of competition raises questions about whether the government secured the best possible pricing and terms.

Taxpayer Impact: Sole-source awards can potentially lead to higher costs for taxpayers as there is less pressure on the contractor to offer competitive pricing. It also limits opportunities for other companies to secure government contracts.

Public Impact

The primary beneficiaries are the U.S. military and national security apparatus, receiving advanced ballistic missile defense capabilities. Services delivered include the development, integration, and potential sustainment of critical missile defense systems. The geographic impact is national, contributing to the overall defense posture of the United States. Workforce implications include specialized engineering, research, and technical roles within Raytheon and its subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may result in higher costs for taxpayers.
Cost Plus Award Fee structure requires careful oversight to prevent cost overruns.
Long contract duration could indicate a lack of readily available alternatives or a sustained, evolving need.

Positive Signals

Contract addresses critical national security needs in ballistic missile defense.
Award to a known prime contractor suggests a degree of confidence in their capabilities.
Focus on R&D indicates investment in future defense technologies.

Sector Analysis

This contract falls within the Defense sector, specifically focusing on Research and Development for Missile and Space Systems. The market for ballistic missile defense is highly specialized, dominated by a few large defense contractors with the necessary expertise and infrastructure. Spending in this area is driven by national security priorities and evolving threat landscapes. Comparable spending benchmarks would likely be found within other major defense R&D programs for advanced weapon systems.

Small Business Impact

Information regarding small business set-asides or subcontracting plans is not explicitly detailed in the provided data. As a sole-source award, the typical competitive dynamics that encourage subcontracting to small businesses may be altered. Further investigation into Raytheon's subcontracting practices for this specific contract would be necessary to assess its impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would primarily fall under the Missile Defense Agency (MDA) and the Department of Defense. As a Cost Plus Award Fee contract, performance metrics and cost controls would be key areas of scrutiny. Transparency may be limited due to the sole-source nature and the sensitive defense-related aspects of the work. Inspector General jurisdiction would apply to investigations of fraud, waste, or abuse.

Related Government Programs

Missile Defense Systems
Ballistic Missile Defense Program
Advanced Weapon Systems R&D
Space Systems Development
National Defense Contracts

Risk Flags

Sole-source award lacks competitive pricing pressure.
Cost Plus Award Fee contracts require diligent oversight to manage costs.
Long contract duration may not adapt to rapid technological change.
Potential for technology obsolescence over the contract's lifespan.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $1.91 billion to RAYTHEON COMPANY. 200308!000297!9700!ZD60 !MISSILE DEFENSE AGENCY !HQ000603C0047 !A!N! !N! !20030408!20060331!039321963!039321963!001339159!N!RAYTHEON COMPANY !180 HARTWELL RD !BEDFORD !MA!01730!04650!017!25!BEDFORD !MIDDLESEX !MASS !+000001500000!N!N!000000000000!AC24!RDTE/MISSILE AND SPACE SYSTEMS-DEMO/VALID !A2 !MISSILE AND SPACE SYSTEMS !1CAA!BALLISTIC MISSILE DEFENSE SYS !541710!E! !1! ! ! ! ! !99990909!B

Who is the contractor on this award?

The obligated recipient is RAYTHEON COMPANY.

Which agency awarded this contract?

Awarding agency: Department of Defense (Missile Defense Agency).

What is the total obligated amount?

The obligated amount is $1.91 billion.

What is the period of performance?

Start: 2003-04-08. End: 2013-06-30.

What specific missile defense capabilities does this contract aim to develop or enhance?

The contract data indicates the award is for 'BALLISTIC MISSILE DEFENSE SYS' and falls under the 'MISSILE AND SPACE SYSTEMS' category. This suggests the contract likely supports the development, integration, testing, or sustainment of systems designed to detect, track, and intercept ballistic missiles. Given the R&D nature, it could involve advancing existing technologies, developing new interceptor capabilities, enhancing sensor or command and control systems, or exploring novel approaches to missile defense architecture. The specific details of the system's function would be elaborated in the contract's statement of work, which is not provided here.

Why was this contract awarded on a sole-source basis instead of being competed?

Sole-source awards are typically justified when only one responsible source can provide the required supplies or services. For advanced defense systems like ballistic missile defense, this could be due to unique technological expertise, proprietary technology, existing infrastructure integration, or urgent national security needs where a competitive process would cause unacceptable delays. The Missile Defense Agency would have had to document the justification for not competing the award, citing reasons such as the specialized nature of Raytheon's capabilities in this specific area or the need to leverage prior investments and knowledge gained from previous contracts with the same vendor.

How does the 'Cost Plus Award Fee' (CPAF) structure influence contractor performance and costs?

A Cost Plus Award Fee (CPAF) contract reimburses the contractor for allowable costs incurred and provides a base fee, plus an award fee that is earned if the contractor meets or exceeds specific performance objectives. This structure aims to incentivize high performance by linking a portion of the contractor's profit to achieving defined goals, which could include technical milestones, schedule adherence, or cost management. However, it also requires robust government oversight to ensure that the performance objectives are clearly defined, measurable, and that the award fee determination is objective and fair. Without strong oversight, there's a risk that costs could escalate, or the award fee might be granted without truly exceptional performance.

What is the historical spending trend for ballistic missile defense systems by the Missile Defense Agency?

The Missile Defense Agency (MDA) has historically been a significant recipient of defense funding, with annual budgets often in the billions of dollars dedicated to developing and deploying missile defense capabilities. Spending trends fluctuate based on perceived threats, technological advancements, and strategic priorities. Contracts for systems like those awarded to Raytheon are a substantial part of this budget. Analyzing historical MDA budgets and contract awards for similar R&D and system development efforts would reveal patterns of investment, shifts in focus (e.g., from early warning to interceptors, or from regional to homeland defense), and the sustained commitment to missile defense as a critical national security function.

What are the potential risks associated with a long-duration contract (over 10 years) for R&D in a rapidly evolving technological field?

Long-duration R&D contracts in rapidly evolving fields like missile defense present several risks. Firstly, technology can become obsolete before the contract term ends, rendering the developed systems less effective against emerging threats. Secondly, initial cost estimates and performance requirements may become misaligned with future needs or market conditions, leading to cost overruns or scope creep. Thirdly, the extended duration might stifle innovation by locking in specific technological paths, potentially preventing the adoption of more advanced or cost-effective solutions that emerge later. Effective contract management, including regular reviews and potential modifications, is crucial to mitigate these risks.

How does this contract contribute to Raytheon's overall position in the defense industry, particularly in missile defense?

This substantial, sole-source contract significantly bolsters Raytheon's (now RTX) standing as a premier provider of missile defense solutions. It reinforces their deep technical expertise and established relationship with the Missile Defense Agency, likely stemming from prior successful work. Such a large award not only provides a stable revenue stream over its duration but also enhances their reputation and competitive advantage for future contracts in this specialized and critical sector. It signals to competitors and allies alike that Raytheon remains at the forefront of developing and delivering advanced missile defense technologies, potentially influencing future R&D investments and strategic partnerships.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Scientific Research and Development Services › Research and Development in the Physical, Engineering, and Life Sciences

Product/Service Code: RESEARCH AND DEVELOPMENT › C – National Defense R&D Services

Competition & Pricing

Extent Competed: NOT COMPETED

Offers Received: 1

Pricing Type: COST PLUS AWARD FEE (R)

Contractor Details

Address: 180 HARTWELL RD, BEDFORD, MA, 01730

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $1,964,912,700

Exercised Options: $1,964,243,542

Current Obligation: $1,913,071,797

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline