FAA's $79.4M WAAS contract awarded to Raytheon, raising concerns about competition and value

Contract Overview

Contract Amount: $79,392,615 ($79.4M)

Contractor: Raytheon Company

Awarding Agency: Department of Transportation

Start Date: 2003-10-10

End Date: 2008-10-31

Contract Duration: 1,848 days

Daily Burn Rate: $43.0K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS AWARD FEE

Sector: IT

Official Description: WIDE AREA AUGMENTATION SYSTEM

Place of Performance

Location: MARLBOROUGH, MIDDLESEX County, MASSACHUSETTS, 01752

State: Massachusetts Government Spending

Plain-Language Summary

Department of Transportation obligated $79.4 million to RAYTHEON COMPANY for work described as: WIDE AREA AUGMENTATION SYSTEM Key points: 1. Significant spending on a critical aviation system. 2. Sole-source award to Raytheon Company limits competitive pricing. 3. Potential for cost overruns due to Cost Plus Award Fee structure. 4. Hardware manufacturing sector spending benchmark needs further analysis.

Value Assessment

Rating: questionable

The contract's Cost Plus Award Fee structure, combined with a lack of competition, makes a definitive value assessment difficult. The awarded amount of $79.4M over 5 years suggests a high per-unit cost, especially without competitive benchmarking.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

The contract was not competed, indicating a sole-source award to Raytheon Company. This lack of competition likely resulted in higher prices than could have been achieved through a competitive bidding process, limiting price discovery.

Taxpayer Impact: Taxpayer funds may have been spent inefficiently due to the absence of competitive pressure, potentially leading to inflated costs for the Wide Area Augmentation System.

Public Impact

Enhances GPS accuracy for aviation safety and efficiency. Supports air traffic control modernization efforts. Impacts commercial and general aviation operations nationwide.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition
Cost Plus Award Fee contract type
Potential for cost overruns

Positive Signals

Critical infrastructure for aviation safety
Long-term operational system

Sector Analysis

Spending in the hardware manufacturing sector for specialized systems like WAAS can be high due to R&D and unique requirements. Benchmarking against similar large-scale, sole-source aviation technology contracts is crucial for assessing value.

Small Business Impact

The contract was awarded to Raytheon Company, a large business. There is no indication of small business participation in this specific contract, suggesting missed opportunities for small business engagement.

Oversight & Accountability

The sole-source nature of this contract warrants close oversight to ensure Raytheon is meeting performance requirements and that costs are reasonable. Transparency in award fee determinations is essential for accountability.

Related Government Programs

Hardware Manufacturing
Department of Transportation Contracting
Federal Aviation Administration Programs

Risk Flags

Lack of competitive bidding
Cost Plus Award Fee contract type
Potential for contractor cost overruns
Limited transparency on sole-source justification
No apparent small business participation

Frequently Asked Questions

What is this federal contract paying for?

Department of Transportation awarded $79.4 million to RAYTHEON COMPANY. WIDE AREA AUGMENTATION SYSTEM

Who is the contractor on this award?

The obligated recipient is RAYTHEON COMPANY.

Which agency awarded this contract?

Awarding agency: Department of Transportation (Federal Aviation Administration).

What is the total obligated amount?

The obligated amount is $79.4 million.

What is the period of performance?

Start: 2003-10-10. End: 2008-10-31.

What was the justification for the sole-source award, and were alternatives explored?

The provided data indicates the contract was 'NOT COMPETED'. A thorough review would require access to the justification for this sole-source decision. Typically, such justifications cite unique capabilities, urgent needs, or lack of viable alternatives. Without this documentation, it's difficult to assess if competitive options were genuinely unavailable or if the procurement process favored a specific vendor.

How does the Cost Plus Award Fee structure impact cost control and contractor performance?

Cost Plus Award Fee (CPAF) contracts reimburse the contractor for allowable costs and provide a fee based on performance targets. While CPAF can incentivize desired outcomes, it also carries a risk of cost escalation if performance metrics are not tightly defined or if oversight is lax. The 'award' portion means the contractor is incentivized to meet or exceed goals, but the 'cost plus' aspect means costs are covered regardless.

What is the long-term cost projection for the WAAS system, including sustainment and upgrades?

The provided data covers the initial award of $79.4M from 2003-2008. Understanding the total lifecycle cost requires examining subsequent contracts for sustainment, maintenance, and upgrades. Without this broader view, assessing the true long-term value and taxpayer impact of the WAAS system is incomplete. Future spending on this critical infrastructure needs continuous monitoring.

Industry Classification

NAICS: Manufacturing › Hardware Manufacturing › Hardware Manufacturing

Product/Service Code: HARDWARE AND ABRASIVES

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: 1801 W HUGHES DR, FULLERTON, CA, 92833

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $79,392,615

Exercised Options: $79,392,615

Current Obligation: $79,392,615

Actual Outlays: $160,437

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline