Raytheon Company awarded $172M contract for guided missile and space vehicle manufacturing, with a long performance period

Contract Overview

Contract Amount: $1,723,610,644 ($1.7B)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2004-08-18

End Date: 2026-07-31

Contract Duration: 8,017 days

Daily Burn Rate: $215.0K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $1.72 billion to RAYTHEON COMPANY for work described as: Key points: 1. Contract value of $172M over an extended period suggests significant investment in defense manufacturing capabilities. 2. The sole-source nature of this award warrants scrutiny regarding potential price inflation and limited market alternatives. 3. Long contract duration (over 8000 days) may indicate a need for sustained production or a strategic, long-term partnership. 4. The absence of competition raises questions about whether the government secured the best possible value. 5. Focus on guided missile and space vehicle manufacturing places this contract within a critical and high-cost defense sector. 6. The contract's performance period extends significantly, implying ongoing requirements for these specialized defense components.

Value Assessment

Rating: questionable

Benchmarking the value of this $172M contract is challenging without specific details on the goods or services provided. However, the lack of competition suggests that the government may not have achieved optimal pricing. Comparing this to similar sole-source awards for guided missile components would be necessary to assess if the price is reasonable. The long duration could also inflate overall costs if not managed effectively.

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 typically occurs when only one vendor possesses the necessary capabilities, technology, or security clearances. The lack of competition limits the government's ability to leverage market forces to drive down prices and ensure the most cost-effective solution.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive bidding. Without alternative offers, there is less pressure on the contractor to offer the lowest possible price.

Public Impact

The primary beneficiaries are the Department of Defense, which receives critical components for its missile and space programs. Services delivered include the manufacturing of guided missiles and space vehicles, essential for national defense. The geographic impact is primarily centered in Arizona, where Raytheon Company is located, potentially supporting local employment and the defense industrial base in that state. Workforce implications include the need for specialized engineers, technicians, and manufacturing personnel within Raytheon's facilities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price discovery and potentially leads to higher costs for taxpayers.
Extended contract duration of over 22 years increases the risk of cost overruns and scope creep.
Lack of transparency in the justification for sole-source procurement.
Potential for contractor lock-in due to specialized nature of missile and space vehicle manufacturing.
Absence of small business subcontracting opportunities due to sole-source nature.

Positive Signals

Ensures continued supply of critical defense components for national security.
Leverages Raytheon's established expertise in guided missile and space vehicle technology.
Provides long-term stability for a key defense contractor and its workforce.
Firm fixed-price contract type can provide cost certainty if scope is well-defined.

Sector Analysis

This contract falls within the Defense Industrial Base sector, specifically focusing on the manufacturing of guided missiles and space vehicles. This is a highly specialized and capital-intensive segment of the aerospace and defense industry, characterized by significant R&D investment and stringent quality control requirements. Market size is substantial, driven by government defense spending. Comparable spending benchmarks would involve other large-scale sole-source or competitively awarded contracts for advanced weapon systems.

Small Business Impact

As this contract was awarded on a sole-source basis, there is no explicit small business set-aside. Furthermore, without a competitive solicitation, there are no mandated subcontracting goals for small businesses. This limits opportunities for the small business defense industrial base to participate in this specific contract, although Raytheon may engage small businesses independently in its supply chain.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contract management and administration functions, likely through the Defense Contract Management Agency (DCMA). Accountability measures would be defined by the contract terms, including performance metrics and delivery schedules. Transparency is limited due to the sole-source nature and the proprietary information often associated with defense manufacturing. Inspector General jurisdiction would apply to investigations of fraud, waste, or abuse.

Related Government Programs

Missile Defense Systems
Space Launch Vehicles
Advanced Weapons Manufacturing
Strategic Defense Programs
Aerospace Component Production

Risk Flags

Sole-source award lacks competitive pricing pressure.
Extended performance period increases risk of cost escalation.
Lack of specific details on manufactured items hinders full analysis.
Potential for contractor lock-in due to specialized nature of production.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $1.72 billion to RAYTHEON COMPANY. See the official description on USAspending.

Who is the contractor on this award?

The obligated recipient is RAYTHEON COMPANY.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $1.72 billion.

What is the period of performance?

Start: 2004-08-18. End: 2026-07-31.

What specific types of guided missiles and space vehicles are being manufactured under this contract?

The provided data does not specify the exact models or types of guided missiles and space vehicles. Raytheon Company is a major defense contractor with a broad portfolio, including air-to-air missiles, surface-to-air missiles, cruise missiles, and components for space systems. Without further details, it is impossible to determine the precise nature of the manufactured items. This information is crucial for understanding the strategic importance and technological sophistication of the contract.

What is the justification for awarding this contract on a sole-source basis?

The data indicates the contract was 'NOT COMPETED,' implying a sole-source award. Typical justifications for sole-source contracts in the defense sector include unique capabilities, proprietary technology, urgent national security needs, or situations where only one responsible source can fulfill the requirement. A detailed justification document, usually required by federal acquisition regulations, would outline the specific reasons why competition was not feasible or advantageous for this particular procurement of guided missile and space vehicle manufacturing.

How does the $172 million contract value compare to similar sole-source awards for defense manufacturing?

Direct comparison is difficult without knowing the specific items being produced. However, $172 million is a substantial sum, reflecting the high cost of advanced defense manufacturing. Sole-source contracts often carry a price premium compared to competitively bid ones. To assess value, one would need to compare this contract's unit costs and overall value proposition against other sole-source awards for comparable missile systems or space vehicle components, considering factors like technological complexity, production volume, and contractor overhead.

What are the potential risks associated with the contract's long performance period (ending 2026)?

The contract's performance period extends to July 31, 2026, indicating a long-term commitment. Risks associated with such extended periods include potential for cost escalation beyond initial estimates, changes in technology rendering the manufactured items obsolete before the contract ends, shifts in government requirements or priorities, and contractor performance degradation over time. Effective contract management, including regular reviews and potential for contract modifications, is essential to mitigate these risks.

What is Raytheon Company's track record with similar Department of Defense contracts?

Raytheon Company (now RTX) has a long and extensive history of contracting with the Department of Defense, manufacturing a wide array of defense systems, including missiles, radar, and space technology. They are a prime contractor on numerous major defense programs. While specific performance metrics for this particular contract are not detailed, Raytheon is generally considered a capable and experienced defense manufacturer. However, like any large contractor, they may have faced past performance issues or disputes on other contracts, which would typically be reviewed during source selection.

What are the implications of this contract for the broader defense industrial base, particularly in Arizona?

This contract represents a significant award to Raytheon, a major defense employer, particularly in Arizona (indicated by 'ST': 'AZ'). It signifies continued investment in the state's defense manufacturing capabilities and supports a specialized segment of the industrial base. The award can contribute to job security and growth for skilled labor in the region. It also reinforces the importance of Arizona as a hub for advanced defense production, potentially attracting further investment and related businesses.

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: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: RTX Corp

Address: 1151 EAST HERMANS ROAD, TUCSON, AZ, 85706

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $517,828

Exercised Options: $517,828

Current Obligation: $1,723,610,644

Actual Outlays: $212,000

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline