Missile Defense Agency's $171M X-Band Radar contract awarded to Raytheon Company shows limited competition

Contract Overview

Contract Amount: $171,001,549 ($171.0M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2014-11-01

End Date: 2017-04-30

Contract Duration: 911 days

Daily Burn Rate: $187.7K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Defense

Official Description: IGF::OT::IGF THIS EFFORT IS FOR DEPLOYMENT, OPERATIONS, AND SUPPORT OF MDA X-BAND RADARS AND OTHER SYSTEMS AT LOCATIONS DESIGNATED BY THE GOVERNMENT. THE ACTUAL EFFORT IS AUTHORIZED BY INDIVIDUAL TASK ORDERS.

Place of Performance

Location: WASHINGTON, DISTRICT OF COLUMBIA County, DISTRICT OF COLUMBIA, 20301

State: District of Columbia Government Spending

Plain-Language Summary

Department of Defense obligated $171.0 million to RAYTHEON COMPANY for work described as: IGF::OT::IGF THIS EFFORT IS FOR DEPLOYMENT, OPERATIONS, AND SUPPORT OF MDA X-BAND RADARS AND OTHER SYSTEMS AT LOCATIONS DESIGNATED BY THE GOVERNMENT. THE ACTUAL EFFORT IS AUTHORIZED BY INDIVIDUAL TASK ORDERS. Key points: 1. Contract awarded on a cost-plus-incentive-fee basis, suggesting shared risk and reward between government and contractor. 2. The contract's duration of 911 days indicates a significant, long-term commitment for radar system support. 3. Research and Development in Physical, Engineering, and Life Sciences is the primary NAICS code, highlighting the technical nature of the services. 4. The contract was not competed, raising questions about potential cost efficiencies and market-driven pricing. 5. Awarded to Raytheon Company, a major defense contractor with extensive experience in radar systems. 6. The contract supports X-Band Radars and other systems, critical for missile defense operations. 7. The contract's value of over $171 million underscores the significant investment in national defense infrastructure.

Value Assessment

Rating: fair

The contract's cost-plus-incentive-fee structure allows for flexibility but requires careful monitoring to ensure value for money. Benchmarking against similar radar system support contracts would be necessary to fully assess pricing effectiveness. Given the lack of competition, it's difficult to ascertain if the pricing reflects optimal market rates. The total award value of $171,001,549.49 over its period of performance suggests a substantial investment in critical defense technology.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award. Without a competitive bidding process, it is challenging to assess the extent of price discovery and whether the government secured the most advantageous terms. The lack of multiple bidders means potential cost savings that could arise from a competitive environment may not have been realized.

Taxpayer Impact: For taxpayers, a sole-source award means the absence of competitive pressure to drive down costs, potentially leading to higher overall expenditures for this critical defense capability.

Public Impact

The primary beneficiaries are the U.S. military and national security apparatus, which rely on advanced radar systems for missile defense. Services delivered include the deployment, operations, and support of MDA X-Band Radars and associated systems. The geographic impact is localized to government-designated locations where these radar systems are deployed. Workforce implications include the employment of highly skilled engineers, technicians, and support personnel by Raytheon Company.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to higher costs for taxpayers.
Sole-source awards can reduce transparency in pricing and service delivery.
Reliance on a single contractor for critical defense systems poses a potential risk if performance issues arise.

Positive Signals

Award to an experienced contractor (Raytheon) suggests a high likelihood of successful technical execution.
Cost-plus-incentive-fee structure aligns contractor and government interests towards performance and cost control.
Support for critical missile defense systems contributes directly to national security.

Sector Analysis

The Missile Defense Agency's (MDA) focus on advanced radar technology places this contract within the broader defense electronics and aerospace sector. This sector is characterized by high R&D investment, long product development cycles, and significant government procurement. The market for specialized radar systems is often concentrated among a few large defense contractors due to the technical expertise and capital required. Comparable spending benchmarks would typically involve other large-scale radar system development and sustainment contracts within the Department of Defense.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Furthermore, the 'ss' flag is also false, suggesting no specific small business subcontracting goals were explicitly stated or tracked in this data snippet. The award to a large prime contractor like Raytheon Company means that any subcontracting opportunities for small businesses would be at the discretion of the prime, rather than mandated by a set-aside program.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense and the Missile Defense Agency. The cost-plus-incentive-fee (CPIF) structure necessitates robust financial oversight to ensure costs are reasonable and allowable, and that incentives are appropriately applied. Accountability measures would be tied to performance metrics outlined in the contract's task orders. Transparency may be limited due to the sole-source nature of the award, but contract actions and performance reports are typically subject to internal review and potentially Inspector General audits.

Related Government Programs

Missile Defense Systems
Ground-Based Midcourse Defense (GMD)
Ballistic Missile Defense Systems
Advanced Radar Technology Development
Department of Defense Research and Development Contracts

Risk Flags

Sole-source award
Lack of competition
Cost-plus contract type requires diligent oversight

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $171.0 million to RAYTHEON COMPANY. IGF::OT::IGF THIS EFFORT IS FOR DEPLOYMENT, OPERATIONS, AND SUPPORT OF MDA X-BAND RADARS AND OTHER SYSTEMS AT LOCATIONS DESIGNATED BY THE GOVERNMENT. THE ACTUAL EFFORT IS AUTHORIZED BY INDIVIDUAL TASK ORDERS.

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 $171.0 million.

What is the period of performance?

Start: 2014-11-01. End: 2017-04-30.

What is Raytheon Company's track record with the Missile Defense Agency and similar radar contracts?

Raytheon Company, now RTX, has a long and extensive history of working with the Missile Defense Agency (MDA) and other Department of Defense entities on radar systems and missile defense technologies. They are a primary contractor for several key MDA programs, including the AN/TPY-2 radar, which is a component of the Terminal High Altitude Area Defense (THAAD) system and the Forward-Based Mode of the Ground-Based Interceptor (GBI). Their experience spans development, production, and sustainment of advanced radar systems, including X-band radars. This specific contract leverages that established expertise. While this data doesn't detail specific past performance metrics for this exact contract, Raytheon's overall portfolio indicates a strong capability in this domain. However, the sole-source nature of this award means that direct comparisons of performance against competing bids are not available.

How does the cost-plus-incentive-fee (CPIF) structure compare to other contract types for similar R&D services?

Cost-Plus-Incentive-Fee (CPIF) contracts are common in research and development (R&D) and complex system integration efforts where the final costs are uncertain. Unlike fixed-price contracts, CPIF allows for cost reimbursement plus a fee that is adjusted based on performance against targets (e.g., cost, schedule, technical performance). This contrasts with Cost-Plus-Fixed-Fee (CPFF), where the fee is fixed, or Cost-Plus-Award-Fee (CPAF), where the fee is based on subjective performance evaluations. For R&D, CPIF is often preferred when the government wants to incentivize the contractor to control costs while achieving specific performance goals, sharing the risk and reward. However, it requires robust government oversight to manage costs effectively and ensure the incentives are driving the desired outcomes. Other contract types like Firm-Fixed-Price (FFP) are generally used when requirements are well-defined and stable, which is less common in early-stage R&D.

What are the primary risks associated with a sole-source award for critical defense systems like X-Band Radars?

The primary risks associated with a sole-source award for critical defense systems like X-Band Radars include potential for inflated costs due to lack of competitive pressure, reduced incentive for innovation and efficiency, and a higher risk of contractor lock-in. Without competition, the government may pay more than necessary, as there's no market benchmark to ensure optimal pricing. Furthermore, a sole-source provider might have less motivation to explore cost-saving measures or introduce cutting-edge technologies if their position is guaranteed. This can also create a vulnerability if the sole contractor experiences significant performance issues, financial instability, or strategic shifts, as finding and transitioning to an alternative provider for highly specialized systems can be extremely difficult, time-consuming, and costly.

What is the historical spending trend for X-Band Radar systems and related MDA procurements?

Historical spending on X-Band Radar systems and related Missile Defense Agency (MDA) procurements has been substantial and generally increasing, reflecting the growing emphasis on missile defense capabilities. The MDA's budget consistently allocates significant funds towards developing, deploying, and sustaining various radar systems, including those that utilize X-band frequencies. These systems are crucial for tracking and engaging ballistic missiles at different stages of flight. While specific figures for X-band radar procurement fluctuate year-to-year based on program needs and modernization efforts, the overall trend indicates a sustained, high-level investment. This particular contract, valued at over $171 million, fits within this pattern of significant, long-term investment in advanced radar technology for national security purposes.

How does the 'Research and Development in the Physical, Engineering, and Life Sciences' NAICS code apply to radar system operations and support?

The NAICS code 541712, 'Research and Development in the Physical, Engineering, and Life Sciences (except Biotechnology),' is applied here because the contract encompasses not just the operation and support of existing X-Band Radars, but also likely involves ongoing research, development, and engineering efforts to maintain, upgrade, and potentially enhance these complex systems. Radar technology is inherently rooted in physics and engineering principles. Activities such as system diagnostics, performance optimization, integration of new software or hardware components, and troubleshooting complex technical issues often fall under the umbrella of R&D services, even when performed on operational systems. This code signifies that a significant portion of the effort involves applying scientific and engineering expertise to ensure the systems remain effective and potentially improve their capabilities over time.

Industry Classification

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

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

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: HQ000607R0009

Pricing Type: COST PLUS INCENTIVE FEE (V)

Evaluated Preference: NONE

Contractor Details

Parent Company: RTX Corp (UEI: 001344142)

Address: 225 PRESIDENTIAL WAY, WOBURN, MA, 01801

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $183,405,429

Exercised Options: $179,308,474

Current Obligation: $171,001,549

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HQ000608D0003

IDV Type: IDC

Timeline