Wes Kremer, president of Raytheon, said fourth-tier defense suppliers could decide a course of action regarding their operations if the government commits to multiple years of procuring munition and other systems.
“What a multi-year contract does is it gives them surety,” Kremer told Breaking Defense in an interview posted Tuesday.
“And when they understand that they’re going to be building X number for five years, then they can make that business decision, ‘Hey, do I hire more people? Do I invest in more capital or automation?’ It allows them to have certainty around making those kinds of decisions.”
He noted that multiyear procurement transactions are complex due to threshold requirements, such as cost, and the need to authorize contract funds in advance for the manufacturer to begin obtaining long-lead materials from its supply base.
Kremer added he thinks the government should address the challenge of contracting in shorter timelines.
Raytheon is one of the three businesses operating under the new RTX.