Raytheon awarded $459.7M for advanced field artillery tactical data systems, with a significant portion for R&D

Contract Overview

Contract Amount: $459,740,085 ($459.7M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 1999-09-14

End Date: 2012-12-31

Contract Duration: 4,857 days

Daily Burn Rate: $94.7K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS AWARD FEE

Sector: Defense

Official Description: 199912!2100!3904!AB07 !USA COMM-ELECTRONICS COMMAND !DAAB0799CE003 !A!*!* !19990914!20020830!963995485!001339159!001339159!N!37695!RAYTHEON COMPANY (INC) !1010 PRODUCTION RD !FORT WAYNE !IN!46808!25000!003!18!FORT WAYNE !ALLEN !INDIANA !0001!+000000500000!N!N!000000000000!AC65!RDTE/ELECTRONICS & COMMUNICATION EQ-ENG/MANUF DEV !A7 !ELECTRONICS AND COMMUNICATION !1GFD!AFATDS ADV FLD ART TAC DATA SY!8711!3!*!*!*!B!A!*!C !N!R!1!001!N!1G!C!Y!Z!* !* !N!C!*!A!A!A!A!A!*!* !*!N!A!C!N!*!*!*!*!*!

Place of Performance

Location: FORT WAYNE, ALLEN County, INDIANA, 46808

State: Indiana Government Spending

Plain-Language Summary

Department of Defense obligated $459.7 million to RAYTHEON COMPANY for work described as: 199912!2100!3904!AB07 !USA COMM-ELECTRONICS COMMAND !DAAB0799CE003 !A!*!* !19990914!20020830!963995485!001339159!001339159!N!37695!RAYTHEON COMPANY (INC) !1010 PRODUCTION RD !FORT WAYNE !IN!46808!25000!003!18!FORT WAYNE !ALLEN … Key points: 1. Contract value indicates substantial investment in advanced defense technology. 2. Sole-source award suggests limited market alternatives or specific contractor expertise. 3. Long contract duration points to complex development and integration needs. 4. Significant R&D component highlights innovation and future capability development. 5. Contract awarded to a large, established defense contractor. 6. Geographic location of contractor in Indiana may have local economic implications.

Value Assessment

Rating: fair

The contract's total value of $459.7 million over its extended period is substantial. However, without specific performance metrics or detailed cost breakdowns, a precise value-for-money assessment is challenging. The 'Cost Plus Award Fee' structure implies incentives for performance, but the actual award fees are not detailed here. Benchmarking against similar R&D contracts for advanced tactical data systems would be necessary for a more definitive assessment of pricing and value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, indicating that the government identified Raytheon Company as the only responsible source capable of meeting the requirement. This could be due to proprietary technology, unique capabilities, or a lack of viable alternatives. The limited competition means that price discovery through a competitive bidding process was not utilized, potentially leading to higher costs than if multiple bidders had participated.

Taxpayer Impact: For taxpayers, a sole-source award means that the government did not leverage competitive pressures to drive down costs. This necessitates a higher degree of scrutiny on the contractor's pricing and cost justification to ensure fair and reasonable pricing.

Public Impact

The primary beneficiaries are the U.S. Army's field artillery units, receiving enhanced tactical data systems. The contract supports the development and manufacturing of advanced electronics and communication equipment. The geographic impact is primarily centered in Fort Wayne, Indiana, where Raytheon's facility is located. Workforce implications include employment for engineers, technicians, and manufacturing personnel at Raytheon.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing, potentially increasing costs for taxpayers.
Cost Plus Award Fee contracts can be complex to manage and audit effectively.
Long contract duration increases the risk of cost overruns and scope creep if not managed diligently.

Positive Signals

Award to a major defense contractor like Raytheon suggests access to established expertise and technology.
Focus on R&D indicates investment in cutting-edge capabilities for national defense.
The contract supports critical military operational needs for advanced tactical data systems.

Sector Analysis

This contract falls within the Research and Development sector, specifically focusing on electronics and communication equipment for defense applications. The market for such specialized systems is often dominated by a few large, established defense contractors due to high barriers to entry, including intellectual property, specialized manufacturing capabilities, and security clearances. Comparable spending benchmarks would involve looking at other large-scale R&D contracts for advanced military hardware and software systems within the Department of Defense.

Small Business Impact

This contract was not competed and there is no indication of small business set-asides or subcontracting plans. As a sole-source award to a large prime contractor, the direct impact on small businesses is likely minimal unless Raytheon actively engages them for subcontracting opportunities. The absence of a small business focus in the award details suggests that the primary objective was securing specialized capabilities from the prime.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor compliance with contract terms, quality standards, and delivery schedules. The 'Cost Plus Award Fee' structure requires careful monitoring of costs and performance to ensure that award fees are justified. Transparency is generally limited for sole-source R&D contracts, with detailed cost breakdowns often considered proprietary. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Advanced Field Artillery Tactical Data Systems
Command and Control Systems
Defense Research and Development Programs
Tactical Communication Systems
Electronic Warfare Systems

Risk Flags

Sole-source award requires strong justification to ensure fair pricing.
Cost Plus Award Fee contracts necessitate robust oversight to manage performance and costs effectively.
Long contract duration increases the potential for cost overruns and schedule delays.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $459.7 million to RAYTHEON COMPANY. 199912!2100!3904!AB07 !USA COMM-ELECTRONICS COMMAND !DAAB0799CE003 !A!*!* !19990914!20020830!963995485!001339159!001339159!N!37695!RAYTHEON COMPANY (INC) !1010 PRODUCTION RD !FORT WAYNE !IN!46808!25000!003!18!FORT WAYNE !ALLEN !INDIANA !0001!+000000500000!N!N!000000000000!AC65!RDTE/ELECTRONICS & COMMUNICATION EQ-ENG/MANUF DEV !A7 !ELECTRONICS AND COMMUNICATION !1GFD!AFATDS ADV FLD ART TAC DATA SY!8711!3!*!*!*!B!A!*!C !N!R!1!0

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 $459.7 million.

What is the period of performance?

Start: 1999-09-14. End: 2012-12-31.

What specific advancements in tactical data systems does this contract aim to achieve?

This contract, awarded to Raytheon Company, focuses on the 'AFATDS ADV FLD ART TAC DATA SY' (Advanced Field Artillery Tactical Data System). While the data provided doesn't detail the specific technological advancements, the 'RDTE/ELECTRONICS & COMMUNICATION EQ-ENG/MANUF DEV' (Research, Development, Test, and Evaluation/Electronics & Communication Equipment-Engineering/Manufacturing Development) classification suggests the contract is for developing and improving the engineering and manufacturing capabilities of these systems. This likely involves enhancing processing power, communication bandwidth, data integration, user interface, and potentially incorporating new sensor technologies or artificial intelligence for improved battlefield situational awareness and fire support coordination for field artillery units.

How does the 'Cost Plus Award Fee' (CPAF) structure influence contractor performance and cost control?

The Cost Plus Award Fee (CPAF) contract structure allows the contractor (Raytheon) to be reimbursed for all allowable costs incurred, plus a fixed fee that is subject to an award amount based on performance. This means Raytheon receives its base fee regardless of performance, but can earn additional 'award fees' if it meets or exceeds specific performance objectives defined in the contract. This structure incentivizes the contractor to perform well and achieve desired outcomes, as higher performance can lead to greater overall profit. However, it also requires robust government oversight to define objective performance criteria and to fairly assess the contractor's achievements to prevent inflated award fees. The government's ability to control costs depends heavily on the clarity and measurability of these performance metrics.

What is the historical spending trend for Advanced Field Artillery Tactical Data Systems or similar programs?

The provided data represents a single contract award of $459.7 million for AFATDS development and manufacturing, spanning from 1999 to 2012. To understand historical spending trends, one would need to analyze a broader dataset encompassing all contracts awarded for AFATDS and related tactical data systems across different agencies and time periods. This would involve looking at annual spending, the number of contracts, average contract values, and the primary contractors involved. Without this broader context, it's difficult to determine if this $459.7 million award represents a typical investment, an increase, or a decrease in spending for such systems over time. Analyzing trends would reveal if the government is increasing investment in these capabilities, shifting towards different technologies, or consolidating efforts.

What are the potential risks associated with a sole-source award for advanced defense technology?

Sole-source awards for advanced defense technology carry several potential risks. Firstly, the lack of competition can lead to higher prices than might be achieved in a competitive bidding process, as the government does not benefit from market pressures driving down costs. Secondly, it can reduce the incentive for innovation if the contractor faces no competitive threat. Thirdly, it can create vendor lock-in, making it difficult and costly to switch to alternative solutions or suppliers in the future. Lastly, it raises concerns about the thoroughness of the justification for sole-sourcing; ensuring that no viable alternatives truly existed requires careful vetting to prevent potential waste or inefficiency. The government must rigorously justify why only one contractor can meet the need.

How does the R&D component of this contract align with broader Department of Defense modernization goals?

The significant Research, Development, Test, and Evaluation (RDT&E) component of this contract, classified under 'Research and Development in the Physical, Engineering, and Life Sciences,' directly aligns with the Department of Defense's (DoD) continuous modernization goals. The DoD consistently invests in R&D to maintain technological superiority and adapt to evolving threats. Developing advanced tactical data systems enhances battlefield command and control, improves the speed and accuracy of fire support, and integrates disparate battlefield information. This modernization effort is crucial for ensuring that U.S. forces can operate effectively against potential adversaries who are also advancing their military technologies. The focus on electronics and communication equipment development suggests an effort to improve network-centric warfare capabilities.

Industry Classification

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

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

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS AWARD FEE (R)

Evaluated Preference: NONE

Contractor Details

Address: 1010 PRODUCTION RD, FORT WAYNE, IN, 46808

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline