JA_Amend_SM3_IDIQ_Ceiling_Increase_Redacted_20260115_Redacted.pdf

DEPARTMENT OF WAR

MISSILE DEFENSE AGENCY

5700 18th STREET

FORT BELVOIR, VIRGINIA 22060-5573

Go Fast, Think BIG!

J&A No: 24-0001-01 Contract No. HQ085121D0001

JUSTIFICATION AND APPROVAL

FOR OTHER THAN FULL AND OPEN COMPETITION – FAR Part 6

Program/Equipment: Standard Missile-3 (SM-3) Block (Blk) IA, SM-3 Blk IB, and SM-3 Blk IIA sustaining engineering and product support (SE&PS) services including technical baseline engineering, obsolescence mitigation, production and sustainment support, and other related activities as described below.

Authority: 10 United States Code (U.S.C.) 3204(a)(1) as implemented in Federal Acquisition Regulation (FAR) 6.302-1(a)(2)(iii)(A), substantial duplication of cost to the government that is not expected to be recovered through competition.

Amount: $11,742.11 million; an increase of $8,410.28 million to the current authorized ceiling of $3,331.83 million.

1. Agency and Contracting Activity (FAR 6.303-2(b)(1)).

This Justification and Approval (J&A) is for the Missile Defense Agency (MDA), Aegis-Based Defense Program Executive (AB) in support of the Guided Missile Program Office (ABG) and MDA/AB International Programs Directorate (ABI) for Foreign Military Sales (FMS). The contracting activity is MDA/AB Contracts Directorate (DACA). The point of contact for this action is Procuring Contracting Officer, .

2. Nature and Description of the Action Being Approved (FAR 6.303-2(b)(2)).

The intent of this J&A amendment to the previously approved J&A is to request a ceiling increase of $8,410.28 million from $3,331.83 million to $11,742.11 million in support of the munition acceleration activities. This increase will be awarded as a modification to the sole source contract HQ085121D0001 to Raytheon, a Raytheon Technologies Business (RTX), to provide SE&PS services for all SM-3 assets (currently in United States (U.S.) and FMS inventory). The original effort was awarded for $722.45 million. The ceiling was increased to $1,197.73 million on P00031, dated November 4, 2022. The ceiling was increased to $3,331.83 million on P00046, dated May 12, 2025. The ordering period of the HQ085121D0001 contract is October 30, 2020, through October 29, 2029. The contract type is a hybrid indefinite delivery indefinite quantity (IDIQ) (task order/delivery order) contract with various Contract Line Item Numbers necessary to ensure cost and performance efficiency based on identified technical risk (firm-fixed price/cost-plus-incentive fee/cost-plus fixed fee/cost). The contract utilizes research, development, testing and evaluation, procurement, operation and maintenance, and FMS funding.

3. Description of the Supplies and/or Services Required to Meet the Agency’s Needs (including the estimated value) (FAR 6.303-2(b)(3)).

This amendment addresses an increase in requirements due to munitions acceleration activities resulting in significant growth in obsolescence mitigation, cybersecurity, technical baseline engineering, flight test activities, service life evaluation, production rate capability studies, transition to production, special projects, spares, sustainment, Defense of Guam, and FMS efforts that were not incorporated in the previous cost estimates.

The work included in the scope of the SE&PS services effort are:

• Post deployment operational data analysis

• Service Life Evaluation Program activities

• Assessment of the threat set; future concept development and related studies

• SM-3 modeling and simulation activities

• SM-3 Technology Refresh development and transition to production

• SM-3 Software Upgrade Program

• SM-3 Enhanced Aegis Data Link

• Obsolescence and diminished manufacturing sources and material shortages mitigation activities and requirements

• SM-3 Blk IIA circuit card assembly obsolescence recovery efforts

• SM-3 Blk IB throttleable divert and attitude control system hazard mitigations

• Systems Engineering and Integration activities with the Aegis Ballistic Missile Defense

Weapon Systems

• Performance analysis and support (flight test support)

• Analysis of operational usage profile changes

• Root cause failure analysis

• Anti-Ship Ballistic Missile requirements analysis

• Mission Assurance activities

• Cybersecurity activities

• Ordnance Assessment & Evaluation

• Technical Baseline Engineering

• Missile Power Application, Non-launch functionality

• Product Development activities

• Acquisition of spare parts to maintain deployed missiles

• Recertification, maintenance, and repair of missiles

• Materiel readiness and operational performance requirements

• Flight tests and associated support including Defense of Guam flight test and modeling requirements

• FMS sustaining engineering and product support

• Demilitarization and disposal of SM-3 missiles

• Production Capacity Expansion

Amended Table 3. J&A History

J&A Number Date Approved Value Aggregate Value

18-0014 7/10/2018 $722.446M $722.446M

22-0021 10/19/2022 $475.280M $1,197.726M

24-0001 7/19/2024 $2,134.10M $3,331.83M

24-0001-01 TBD $8,410.28M $11,742.11M

4. Statutory Authority Permitting Other Than Full and Open Competition (FAR 6.303- 2(b)(4)).

The statutory authority permitting other than full and open competition for SM-3 Blk IA, IB, and IIA SE&PS services is 10 U.S.C. 3204(a)(l) as implemented by FAR 6.302-1(a)(2)(iii)(A), only one responsible source and no other supplies or services will satisfy agency requirements, which states that:

For Department of Defense, services may be deemed to be available only from the original source in the case of follow-on contracts for the continued provision of highly specialized services when it is likely that award to any other source would result in a substantial duplication of cost to the Government that is not expected to be recovered through competition.

5. Demonstration of Contractor’s Unique Qualifications or the Nature of the Acquisition Requires use of the Authority Cited (FAR 6.303-2(b)(5)).

RTX and its predecessor companies (General Dynamics, Hughes, and Standard Missile Company) have been the round design agent for all SM variants since 1966. RTX possesses unique knowledge and specialized expertise, in-depth background, technical and management knowledge of requirements and processes, resident resources, facilitation, and proprietary data related to this complex and highly specialized Aegis Weapon System to conduct sustaining engineering for SM-3 missiles and to provide product support for deployed assets. More specifically, RTX has demonstrated specialized experience in the design, development, test, and production of variants of sea-based exo-atmospheric hit-to-kill interceptors including the SM-3 Blk IA, IB, and IIA. The design and development of the SM-3 configuration through final design review was initiated under contract N0002496C5301 and continued under contracts

N0002403C6111, N0002407C6119, HQ027608C0001, HQ027610C0005, HQ027611C0002,

HQ027613C0001, HQ027615C0005, HQ027615C0003, HQ027620C0002, HQ027622C0001,

HQ027624C0001. RTX is the sole source contractor and both capable and qualified to execute sustaining engineering of the missile designs and product support services for SM-3 variants in a timely and cost-effective manner.

The ABG estimates developed for the J&A 24-0001-01 confirm the same positions described in the J&A 24-0001, J&A 22-0021, and J&A 18-0014; that an award of the SM-3 Blk IA, IB, and SM-3 Blk IIA SE&PS services to another source would result in an excessive amount of duplicative cost that is not expected to be recovered through competition.

The findings of the TDP review were as follows:

• Initial cost studies do not support likely return on investment for SM-3 Blk IB missiles

• SM-3 Blk IIA competition undesirable based on owned TDPs

• Potential negative impacts on other organizations (SM-2, SM-6) that share integration facilities

Acquisition and legal challenge processes necessary to compete this requirement would entail significant personnel and financial resources and likely 5+ years to complete.

This ROM is noted in the FY 2022 line under the "Other Source" column in Table 4 above. The MDA has not obtained an estimate for a Level 3 TDP and GPR for the SM-3 Blk IB.

Additional SM-3 Blk IB estimating is unnecessary as procuring the SM-3 Blks IB and IIA Level 3 TDPs is unaffordable. No other source has the necessary special missile test equipment, nor do they have knowledge of or experience in supporting missile sections, performing subsection level integration, assembly, test, and checkout when the all-up rounds come in for repair and recertification.

RTX is a highly specialized source and is uniquely capable of satisfying the work contemplated herein. To replicate the necessary experience and resources with a new source would necessitate substantial duplication of cost that is not recoverable through competition.

6. Efforts to Obtain Competition (FAR 6.303-2(b)(6)).

The Government regularly releases Request for Information (RFI) announcements related to SM-3 Blks IA, IB, and IIA production and sustainment efforts. The limiting factor in all these efforts has been the fact that the TDP is owned by RTX. Over time the Government has noticed a decrease in responses to the RFI by large companies that could, in theory, produce and support SM-3 missiles if the TDP was provided. The Government expects this trend to continue unless the Government will be able to acquire the TDP. The Government will continue to investigate opportunities to compete portions of the SM-3 production and sustainment, where applicable, by conducting market research and continually research competitive opportunities in industry. The Government is currently reviewing current and planned efforts on this IDIQ contract that can either be off ramped or broken off to competitive contracts as described below in section 11.

• Effective competition. The facts previously stated preclude offers being solicited from contractors other than RTX. RTX is the only qualified source with the technical knowledge, expertise, and test equipment necessary to meet the requirement for SE&PS services. Effective competitions may be accomplished at the subcontract level. RTX is encouraged to promote competition for all subcontracts when possible.

• Subcontracting competition. The contract for this requirement contains FAR 52.244-5, Competition in Subcontracting, which requires the contract to select contractors on a competitive basis to the maximum practical extent, and DFARS Clause 252.219-7004, Small Business Subcontracting Plan (Test Program). RTX is encouraged to promote competition for all subcontracts when possible. Applicable clauses pertaining to subcontracting are included.

7. Determination of Fair and Reasonable Cost (FAR 6.303-2(b)(7)).

In accordance with FAR 15.402, the Contracting Officer (CO) shall ensure that all supplies and services under the contract are procured at a fair and reasonable cost. The Contractor will submit a formal price proposal with certified cost or pricing data and sufficient information to support accuracy and reliability of the estimate. A thorough analysis of proposed costs will be conducted to include comparisons of proposed costs to costs experienced on previous contracts with RTX in support of MDA/AB. Additionally, the CO will conduct negotiations which utilize the results of the Government’s analysis of proposed costs to ensure the settlement of a fair and reasonable total price that is in the best interest of the Government.

8. Description of Market Research Conducted (FAR 6.303-2(b)(8)).

In May 2022, ABG published an RFI announcement on the System for Award Management website requesting information packages from any interested party to determine capability of sources. The requested requirements included advanced capability development/upgrades, manufacturing/production, testing, and operational sustainment. RTX and The Boeing Company were the respondents to the RFI. The Boeing Company was determined to be a moderate risk with experience manufacturing missile systems, but would require capital investments for facilities and equipment, as well as the TDP currently owned by RTX. RTX was judged as a low risk. In addition, the Government conducted further market research in September 2023. This RFI was posted on June 6, 2023. There were two responses to the RFI, RTX and Innovative Defense Technologies (IDT). It was noted in the Market Research Report (MRR) that The Boeing Company, a previous respondent to SM-3 RFIs, did not respond. IDT only highlighted its ability to perform digital testing but included nothing about its ability to produce or integrate SM-3 missiles. Based on IDT’s limited knowledge in the ability to integrate, repair, and recertify SM-3 missiles, IDT was judged to not have any of the facilities and capacity required to perform the requirements. Additionally, IDT would require significant capital investment to be able to produce or support SM-3 missiles. Thus, RTX was identified as the only supplier with the ability to support SM-3 operations as RTX has the technical knowledge to meet the program office requirements. The program office also noted that the lack of access to the TDP, which is currently owned by RTX, was a large barrier to other large businesses capable of missile production but declined to respond due to knowledge of that fact.

The most recent MRR was approved on November 10, 2025. This MRR reviewed prior MRRs for this contract as well as other SM-3 Block IB and IIA related MRRs, including the IB and IIA production MRR signed in November 2023 and the SM-3 Block IIA production MRR signed in July 2025. In addition, a program level RFI in support of Production and Engineering was posted to the System for Award Management (SAM.gov) on September 16, 2025, with a response due date of October 7, 2025. Per FAR 10.002(b)(2)(iv), the SM-3 acquisition team used the RFI to gain market research data for an in-depth understanding of the current market’s interest and capabilities. Responses to the RFI were received from Voyager Technologies, Inc and RTX. An analysis of these submissions showed that RTX remains the only viable source of SM-3-related products and services.

9. Any Other Facts Supporting the Use of Other Than Full and Open Competition (FAR 6.303-2(b)(9)).

This J&A includes an increase to an already established contract that has an ordering period of nine years. The program office will continue to monitor and research opportunities to pursue full and open competition when/where available. The main barrier to competition for the SM-3 program has always been the lack of ownership of the SM-3 TDP.

A more recent deep dive at the MDA Director-level determined that the TDP purchase was impractical from a cost standpoint and, would be impacted by international agreements with , and competition would not substantially lower costs to make the purchase of the TDP practical. Previous SM-3 related production and sustainment contracts have been made via sole source contracts to RTX (Table 5).

Table 5. MDA RTX Sole Source Contract History

Contract Number Award Date Scope

HQ027608C0001 Dec 2007 SM-3 Technical Development and Engineering

HQ027610C0005 Sep 2010 SM-3 Blk IIA Development

HQ027611C0002 Feb 2011 SM-3 Engineering and Development

HQ027613C0001 Mar 2013 FY 2014 SM-3 Blk IB Production

HQ027615C0005 May 2015 FY 2015 – FY 2017 SM-3 Blk IB Production

HQ027615C0003 Jul 2015 FY 2016, FY2018 – FY 2020 SM-3 Blk IIA Manufacturing

HQ027618C0001 Jun 2018 FY 2018 SM-3 Blk IB Production

HQ085120C0002 Mar 2020 FY 2019 – FY 2023 SM-3 Blk IB Multi-Year Production

HQ085121D0001 Oct 2020 Sustaining Engineering and Product Support IDIQ

HQ085122C0001 Jun 2022 FY 2021 – FY 2022 SM-3 Blk IIA Production

HQ085124C0001 Jul 2024 FY 2023 – FY 2025 SM-3 Blk IB and IIA Production

10. Listing of Sources (FAR 6.303-2(b)(10)).

For the MRR dated May 2022, the responding sources were RTX and The Boeing Company.

Boeing’s RFI response was rated as medium risk, with the ability to produce SM-3 missiles with some capital investments required. Boeing highlighted corporate experience with producing the Patriot Advanced Capability and Ground-based Midcourse Defense programs. To produce SM-3 missiles and provide SE&PS support to the SM-3 Program, Boeing would need to make significant capital investments in tooling, test equipment, and facilities. Boeing did have all the capabilities to develop and maintain tooling and equipment required to support SM-3 production and supporting engineering but would require the TDP to develop that equipment. Boeing also reported they would require the full TDP to support SM-3 activities. The Boeing response was rated as being a moderate risk because of the need for a Government-provided TDP which was listed as a precondition and a barrier to competition. As the current prime contractor for SM-3 production and support, RTX’s response noted its current abilities to support all aspects of SM-3 production and engineering support without any investments or additional costs to the Government. Thus, the RTX response was rated as low risk.

The MRR dated September 2023 involved two responding sources as well: RTX and IDT. IDT’s response described its abilities in establishing digital test environments and automated testing capabilities but was unable to support any other SM-3 related production, integration, or support requirements. IDT lacked tooling, test equipment such as virtual operational missiles, and facilities to conduct required activities for SM-3 production, integration, and testing. IDT could be awarded a contract to assist with SM-3 testing, but this would require access to information and equipment such as the full TDP. IDT lacked historical experience in producing or supporting guided missiles. IDT’s response did not address its ability to monitor or mitigate SM3 obsolescence issues. The program office’s lack of a TDP to provide to IDT was noted, but even with the TDP IDT would have been rated as high risk. The IDT response was rated as being a high risk because of the lack of capability to actual design, build, integrate, test, and deliver of SM-3 missile variants, as well as the need for Government-provided equipment, facilities, and investment. The RTX response was rated as a low risk because it showed evidence that it could provide all the required production, integration, testing, and delivery scope with both an acceptable capability rating and low risk.

11. Actions Taken to Remove Barriers to Competition (FAR 6.303-2(b)(11)).

As part of this acquisition effort, the program office is developing a strategic approach to review requirements that can be completed in the future. The program office has identified future requirements that may be able to be completed and is preparing to conduct market research to determine the viability of industry partners to meet those requirements and how it will affect the risk and cost profile of the program. Currently, these efforts are targeting lower-level suppliers to the SM-3 production contracts that are also currently sole source. Going forward, ABG will review efforts and requirements to identify work that can be off ramped from the IDIQ to future competitive efforts. This strategy will require regular tailored and specific RFIs and MRRs as competitive work is identified. ABG will also work with partner programs that utilize the IDIQ contract to identify SM-3 requirements that can be completed as well.

MDA attempted to procure a Level 3 TDP with GPR from RTX to facilitate competition in the manufacturing, sustainment, and product support of SM-3 missiles. RTX responded on December 17, 2014, stating that the design included intellectual property that had been developed exclusively at private expense or with private funding.

This figure only includes the RTX portion of Level 3

TDP. RTX further flowed the Level 3 TDP request to its suppliers. Per RTX, most responded that, "they are not willing to sell the rights to their intellectual property and that a TDP cannot be provided without including their intellectual property." The Director level review determined that it is unaffordable and impractical to purchase the Level 3 TDP.

12. Technical/Requirements Official Certification (FAR 6.303-2(c)). “I certify that this justification for other than full and open competition is made in good faith and that the supporting data and information are accurate and complete to the best of my knowledge and belief. I further certify that this request is not the result of a lack of advance planning.”

Program Manager, MDA/ABG

13. Contracting Officer (FAR 6.303-2(b)(7) and (12)). “I have determined that the anticipated cost to the government will be fair and reasonable and certify that the justification is accurate and complete to the best of my knowledge and ability.”

Procuring Contracting Officer, MDA/DACA

14. Program Legal Counsel (Program Level). “I have reviewed the justification and determined it to be legally sufficient.”

, Associate General Counsel, MDA/GCA

15. Contracting Director (Program Level). “I have reviewed the justification and recommend it be approved.”

Chief of Contracting Office, MDA/DACA

16. Recommendation of Competition Advocate. "I reconunend approval of the above justification."

17. Director for Acquisition. "I have reviewed the justification and recommend it be approved."

Director for Acquisition & Sustainment, MDAIDA

18. Approval (FAR 6.304). "In accordance with FAR 6.304, the above justification for other than full and open competition is hereby approved."

Director