Raytheon [RTN] and Aerojet Rocketdyne [AJRD] have reached a "strategic sourcing agreement" that one Raytheon executive believes, if approved by the Defense Department, could save the military roughly $100 million.Raytheon Missile Systems Supply Chain Management Vice President John Brauneis told Defense Daily Monday the agreement with Aerojet Rocketdyne is a four-year deal that covers seven programs and nine products across all four services. He said these programs include the Standard Missile family of rockets, Tomahawk, Stinger, Griffin and Patriot GEM-T.Brauneis…
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Raytheon [RTN] and Aerojet Rocketdyne [AJRD] have reached a “strategic sourcing agreement” that one Raytheon executive believes, if approved by the Defense Department, could save the military roughly $100 million.
Raytheon Missile Systems Supply Chain Management Vice President John Brauneis told Defense Daily Monday the agreement with Aerojet Rocketdyne is a four-year deal that covers seven programs and nine products across all four services. He said these programs include the Standard Missile family of rockets, Tomahawk, Stinger, Griffin and Patriot GEM-T.
A SM-3 during a test. Photo: MDA.
Brauneis said the agreement stems from a previous acquisition effort called Large Lot Procurement, that was developed, but never implemented, by DoD. He said Large Lot Procurement was to align prime contract awards, but it never got off the ground because it proved to be too difficult to drive alignment among all services and all the buying commands to coordinate awards.
Brauneis said Raytheon and Aerojet Rocketdyne spent their own money over the past couple years to identify hundreds of cost reduction opportunities. These opportunities, he said, come in three “buckets:” one where the supplier has the discretion to incorporate on its own; another where the prime contractor, in this case, Raytheon, would have to approve the opportunity; and finally, one where DoD would have approve the cost reduction.
Brauneis said Raytheon has a similar deal in the works with other suppliers, but he declined to say which ones. Brauneis also said DoD has not signed off on this deal, but he believes the Pentagon “in general terms” supports the idea.
Brauneis said Raytheon is meeting with DoD on Wednesday to discuss the agreement with Aerojet Rocketdyne and, hopefully, find a sponsor for the agreement. He said Raytheon has been briefing various DoD officials, including multiple buying commands, for the last six months.
Brauneis said he is concerned, but upbeat, about House and Senate authorizers’ approval of this deal and that authorizers’ leadership from either the House and Senate have not been briefed on the agreement.
“I am hopeful that we, as industry, as government, can adapt to this type of innovative agreement,” Brauneis said.
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