Raytheon Company awarded $65.3M for advanced digital voice terminal modernization by the Air Force

Contract Overview

Contract Amount: $65,343,847 ($65.3M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2020-06-02

End Date: 2022-09-30

Contract Duration: 850 days

Daily Burn Rate: $76.9K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: VINSON/ADVANCED NARROWBAND DIGITAL VOICE TERMINAL (ANDVT) CRYPTOLOGIC MODERNIZATION (VACM) FULL RATE PRODUCTION (FRP)

Place of Performance

Location: FORT WAYNE, ALLEN County, INDIANA, 46808

State: Indiana Government Spending

Plain-Language Summary

Department of Defense obligated $65.3 million to RAYTHEON COMPANY for work described as: VINSON/ADVANCED NARROWBAND DIGITAL VOICE TERMINAL (ANDVT) CRYPTOLOGIC MODERNIZATION (VACM) FULL RATE PRODUCTION (FRP) Key points: 1. Contract awarded to a single, established defense contractor, indicating potential for limited competition. 2. The firm fixed-price contract type suggests a defined scope and cost control by the government. 3. The contract duration of 850 days implies a significant, multi-year effort for modernization. 4. The absence of small business set-asides may limit opportunities for smaller firms in this specific award. 5. This award falls under the broader category of defense communications equipment manufacturing.

Value Assessment

Rating: fair

Benchmarking the value of this specific contract is challenging without comparable sole-source awards for similar cryptographic modernization efforts. The total award amount of $65.3 million over approximately two years suggests a substantial investment in advanced communication technology. However, the lack of competitive bidding means there is no direct market comparison to assess if the pricing represents optimal value for money. Further analysis would require understanding the specific technological advancements and the cost breakdown of the modernization components.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, Raytheon Company, was solicited. This approach is typically used when a specific capability is required that only one contractor can provide, or in situations where competition is not feasible or practical. The lack of competition means that the government did not benefit from the price discovery and potential cost reductions that typically arise from multiple bids.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive pressure, as the government did not have multiple offers to compare and negotiate against.

Public Impact

The primary beneficiaries are the U.S. Air Force personnel who will utilize the modernized digital voice terminals for secure communications. The contract delivers upgraded cryptographic capabilities for advanced narrowband digital voice terminals, enhancing communication security. The geographic impact is primarily within the Department of Defense's operational theaters where these terminals are deployed. Workforce implications may include specialized technical roles for installation, maintenance, and support of the new systems.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potentially increases costs for taxpayers.
Lack of transparency in the sole-source justification process could obscure potential alternatives.
Dependence on a single vendor for critical modernization may create long-term sustainment risks.
No small business participation noted, potentially excluding smaller innovative firms.

Positive Signals

Award to a known, established defense contractor like Raytheon suggests a high likelihood of successful technical execution.
Firm fixed-price contract provides cost certainty for the government once the scope is defined.
Modernization of cryptographic systems directly enhances national security and operational effectiveness.
The contract addresses a specific, critical need for secure voice communications.

Sector Analysis

This contract falls within the broader defense electronics and communications equipment manufacturing sector. This sector is characterized by high R&D investment, stringent security requirements, and often involves long-term relationships between government agencies and prime contractors. The market size for defense communications is substantial, driven by continuous technological evolution and the need for secure, reliable systems. Raytheon is a major player in this space, and this contract represents a specific investment in upgrading legacy communication systems with modern cryptographic capabilities.

Small Business Impact

This contract does not appear to include any specific small business set-asides, nor is there an indication of subcontracting goals for small businesses. The award to a large prime contractor like Raytheon suggests that the primary focus was on acquiring the specialized technology. This means that opportunities for small businesses to participate directly in this particular contract may be limited, potentially impacting the small business ecosystem that relies on defense prime contracts for subcontracting work.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Air Force's contracting and program management offices. Accountability measures are inherent in the firm fixed-price structure, which incentivizes the contractor to meet defined cost and performance targets. Transparency is limited due to the sole-source nature of the award, but contract modifications and performance reports would be subject to internal review and potentially Inspector General oversight if specific concerns arise regarding waste, fraud, or abuse.

Related Government Programs

Advanced Narrowband Digital Voice Terminal (ANDVT)
Cryptologic Modernization Programs
Defense Communications Systems
Secure Voice Communications Equipment
Radio and Television Broadcasting and Wireless Communications Equipment Manufacturing

Risk Flags

Sole-source award may lead to higher costs.
Lack of competition limits price discovery.
Potential for vendor lock-in with a single provider.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $65.3 million to RAYTHEON COMPANY. VINSON/ADVANCED NARROWBAND DIGITAL VOICE TERMINAL (ANDVT) CRYPTOLOGIC MODERNIZATION (VACM) FULL RATE PRODUCTION (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 $65.3 million.

What is the period of performance?

Start: 2020-06-02. End: 2022-09-30.

What is Raytheon Company's track record with similar sole-source defense modernization contracts?

Raytheon Company, now part of RTX, has a long and extensive history of performing sole-source and competitively awarded defense contracts, particularly in areas of advanced electronics, communications, and cybersecurity. They are a prime contractor on numerous programs for the Department of Defense and other government agencies. While specific data on all sole-source modernization contracts is not publicly detailed, their established position as a major defense industrial base supplier indicates a significant track record. This includes experience with complex systems integration, cryptographic technologies, and delivering upgrades to legacy platforms. Their performance on such contracts is generally monitored through contract performance metrics, though detailed public reviews of sole-source awards are less common than for competitive ones.

How does the $65.3 million award compare to other federal spending on similar cryptographic modernization efforts?

Directly comparing this $65.3 million award for the 'VINSON/ADVANCED NARROWBAND DIGITAL VOICE TERMINAL (ANDVT) CRYPTOLOGIC MODERNIZATION (VACM) FULL RATE PRODUCTION (FRP)' to other federal spending on similar efforts is challenging due to the specialized nature of the technology and the sole-source award. However, the Department of Defense consistently invests billions annually in communications modernization and cybersecurity, which includes cryptographic upgrades. Awards for such systems can range from tens of millions to hundreds of millions of dollars, depending on the scope, technology maturity, and number of units. This specific award appears to be a significant, but not exceptionally large, investment within the broader context of DoD's ongoing efforts to maintain secure communication capabilities.

What are the primary risks associated with a sole-source award for critical communication modernization?

The primary risks associated with a sole-source award for critical communication modernization include potential for higher costs due to lack of competitive pricing, reduced incentive for innovation from the sole provider, and increased vendor lock-in. Taxpayers may bear a higher cost as there is no market pressure to drive down prices. The government's negotiating power is also diminished. Furthermore, reliance on a single vendor can create strategic risks if that vendor experiences financial difficulties, undergoes significant restructuring, or if their technology becomes obsolete faster than anticipated. Ensuring robust oversight and clear performance metrics becomes even more critical in sole-source situations to mitigate these risks.

How effective is the firm fixed-price contract type in managing costs for this type of modernization?

The firm fixed-price (FFP) contract type is generally considered effective for managing costs when the scope of work is well-defined and understood, as is often the case with production or modernization of established systems. For this contract, it means Raytheon Company assumes the risk of cost overruns. This incentivizes the contractor to control expenses and deliver the modernized terminals within the agreed-upon price. However, the effectiveness is contingent on the initial scope definition being accurate and comprehensive. If unforeseen technical challenges arise that significantly alter the scope, contract modifications could still lead to cost increases, though the FFP structure provides a strong baseline for cost control.

What is the historical spending trend for ANDVT modernization or similar cryptographic upgrades within the Air Force?

Historical spending trends for ANDVT modernization or similar cryptographic upgrades within the Air Force are part of broader investments in secure communications. While specific historical data for this exact VACM program is not readily available in the provided data, the Air Force, like other branches of the DoD, has consistently allocated significant funds towards upgrading communication security. This includes replacing aging cryptographic equipment with more advanced, tamper-resistant, and interoperable solutions. Spending in this area is driven by evolving threats, technological advancements, and policy mandates for secure communications, indicating a sustained and often increasing investment over time.

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

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: RTX Corp

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: $65,343,847

Exercised Options: $65,343,847

Current Obligation: $65,343,847

Subaward Activity

Number of Subawards: 1

Total Subaward Amount: $40,638

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA830717D0017

IDV Type: IDC

Timeline