Raytheon Company awarded $75.2M contract for wireless communications equipment, raising questions about competition and value

Contract Overview

Contract Amount: $75,216,166 ($75.2M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2016-12-21

End Date: 2018-12-20

Contract Duration: 729 days

Daily Burn Rate: $103.2K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: VACM FRP

Place of Performance

Location: FORT WAYNE, ALLEN County, INDIANA, 46808

State: Indiana Government Spending

Plain-Language Summary

Department of Defense obligated $75.2 million to RAYTHEON COMPANY for work described as: VACM FRP Key points: 1. Contract awarded on a sole-source basis, limiting price discovery and potentially increasing costs. 2. Significant contract value suggests a substantial need for wireless communications equipment. 3. The fixed-price contract type offers some cost certainty but may not fully capture efficiencies. 4. Awarded to a single vendor, indicating potential lack of market competition for this specific need. 5. The contract duration of two years suggests a medium-term requirement for the equipment. 6. Performance is in Indiana, potentially impacting local workforce and economy.

Value Assessment

Rating: fair

The contract value of $75.2 million for wireless communications equipment is substantial. Without comparable sole-source awards or detailed cost breakdowns, it is difficult to definitively benchmark the value for money. The firm fixed-price structure provides some cost control, but the lack of competition means there's less pressure on the contractor to offer the most competitive pricing. Further analysis of the specific equipment and its market price would be needed for a more precise valuation.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. This approach is typically used when only one vendor can provide the required goods or services, or in situations where competition is deemed not to be in the government's best interest. The lack of competition means that the government did not benefit from the price reductions and innovation that typically arise from a competitive bidding process.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive bidding. The government missed an opportunity to leverage market forces to secure the best possible price and terms.

Public Impact

The Department of the Air Force benefits from the acquisition of essential wireless communications equipment. This contract supports the operational readiness and communication capabilities of military personnel. The contract's performance location in Indiana may create or sustain jobs within the state's manufacturing or technical sectors. The delivered equipment will likely enhance secure and reliable communication networks for defense operations.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially leading to higher costs for taxpayers.
Lack of transparency in the sole-source justification could obscure potential alternatives or cost savings.
Reliance on a single vendor may create long-term dependency and limit future procurement flexibility.

Positive Signals

Firm fixed-price contract provides cost certainty for the government once awarded.
Award to a known entity like Raytheon suggests a potentially established relationship and understanding of requirements.
The contract addresses a specific need for critical wireless communications equipment.

Sector Analysis

The wireless communications equipment sector is a vital component of the broader electronics and defense industries. This contract falls under the manufacturing of radio and television broadcasting and wireless communications equipment. The market is characterized by rapid technological advancements and significant R&D investment. Government contracts, particularly in defense, represent a substantial portion of demand for specialized and high-reliability equipment in this sector.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. There is no information provided regarding subcontracting plans for small businesses. Therefore, the direct impact on the small business ecosystem from this specific award is likely minimal, and there is no explicit mechanism to ensure small business participation.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Air Force's contracting and program management offices. The firm fixed-price nature of the contract provides a degree of financial oversight by establishing a set cost. Transparency regarding the justification for the sole-source award and the specific technical requirements would be key areas for public and internal oversight. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Defense Communications Systems
Wireless Network Infrastructure
Military Electronics Procurement
Radio and Television Broadcasting Equipment

Risk Flags

Sole-source award raises concerns about potential lack of competition and value for money.
Contract value is substantial, warranting scrutiny of pricing and necessity.
Lack of detailed justification for sole-source award limits transparency.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $75.2 million to RAYTHEON COMPANY. VACM FRP

Who is the contractor on this award?

The obligated recipient is RAYTHEON COMPANY.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Air Force).

What is the total obligated amount?

The obligated amount is $75.2 million.

What is the period of performance?

Start: 2016-12-21. End: 2018-12-20.

What specific type of wireless communications equipment was procured under this contract, and what are its intended military applications?

The contract data indicates the procurement of 'Radio and Television Broadcasting and Wireless Communications Equipment Manufacturing' under NAICS code 334220. While the specific model or type of equipment is not detailed in the provided data, it is associated with the Department of Defense and awarded to Raytheon Company. Given the contractor's expertise and the awarding agency, the equipment likely pertains to secure, tactical, or strategic communication systems essential for military operations. This could range from encrypted radio systems for field units to advanced wireless networking components for base infrastructure or command and control platforms. The exact application would depend on the specific technical requirements outlined in the full contract documentation, which are not available here.

What was the justification for awarding this contract on a sole-source basis instead of through full and open competition?

The provided data explicitly states the contract type as 'NOT COMPETED' and the competition level as 'sole-source'. The specific justification for this sole-source award is not detailed in the abbreviated data. Typically, sole-source awards are justified under specific circumstances outlined in federal acquisition regulations, such as when only one responsible source can provide the required supplies or services, or when there is a compelling urgency. Other justifications can include follow-on work to a previously competed contract where the original contractor is the only viable option, or when the cost of competition would outweigh the benefits. Without the official justification document, it's impossible to know the precise rationale used by the Department of the Air Force for this particular procurement.

How does the contract value of $75.2 million compare to similar wireless communications equipment procurements by the Department of Defense?

Benchmarking the $75.2 million contract value requires access to historical procurement data for similar wireless communications equipment within the Department of Defense. The provided data does not include comparative contract values or details on the specific equipment's technical specifications, which are crucial for an accurate comparison. However, $75.2 million represents a significant investment, suggesting a substantial quantity or highly specialized nature of the equipment. Without knowing if this is for a large-scale deployment, a critical system upgrade, or a niche requirement, it's difficult to assess if the value is high or low relative to market norms or other government purchases. Further research into similar contracts awarded over the past few years would be necessary for a meaningful comparison.

What is Raytheon Company's track record with the Department of Defense, particularly in wireless communications equipment contracts?

Raytheon Company (now part of RTX) has a long and extensive history of contracting with the Department of Defense across a wide array of defense systems and technologies, including communications. While the provided data focuses on a single contract, Raytheon is a major defense contractor known for its capabilities in areas such as radar, missiles, cybersecurity, and integrated defense systems, which often involve complex communication components. Their track record with the DoD is generally substantial, involving numerous large-value contracts. Specific performance details, past issues, or successes related to wireless communications equipment would require a deeper dive into contract databases and performance reviews beyond the scope of this summary data.

What are the potential risks associated with a sole-source award of this magnitude for critical communication equipment?

A sole-source award of $75.2 million for critical communication equipment carries several potential risks. Firstly, the lack of competition can lead to inflated prices, as the government does not benefit from the cost-saving pressures inherent in a competitive bidding process. Secondly, there's a risk of vendor lock-in, where the government becomes dependent on a single supplier, potentially limiting future flexibility and negotiation power. Thirdly, without competitive benchmarking, it can be harder to ensure the technology is the most advanced or cost-effective available on the market. Finally, if the sole-source justification is weak or based on incomplete information, it could indicate potential inefficiencies or missed opportunities for better value procurement.

Industry Classification

NAICS: Manufacturing › Communications Equipment Manufacturing › Radio and Television Broadcasting and Wireless Communications Equipment Manufacturing

Product/Service Code: COMM/DETECT/COHERENT RADIATION

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

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

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

Financial Breakdown

Contract Ceiling: $75,216,166

Exercised Options: $75,216,166

Current Obligation: $75,216,166

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA830717D0017

IDV Type: IDC

Timeline