Raytheon awarded $32.6M for advanced cryptologic modernization, raising questions about competition and value

Contract Overview

Contract Amount: $32,605,710 ($32.6M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2021-11-19

End Date: 2024-07-31

Contract Duration: 985 days

Daily Burn Rate: $33.1K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

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

Place of Performance

Location: FORT WAYNE, ALLEN County, INDIANA, 46808

State: Indiana Government Spending

Plain-Language Summary

Department of Defense obligated $32.6 million to RAYTHEON COMPANY for work described as: VINSON/ADVANCED NARROWBAND DIGITAL VOICE TERMINA (ANDVT) CRYPTOLOGIC MODERNIZATION (VACM) FULL RATE PRODUCTION (RFP) Key points: 1. Contract awarded via other than full and open competition, limiting price discovery. 2. Significant investment in modernization suggests a critical need for enhanced communication security. 3. Long contract duration of nearly three years indicates a substantial and ongoing requirement. 4. Fixed-price contract type aims to control costs, but initial award lacks competitive benchmark. 5. Focus on digital voice terminals and modernization points to evolving defense communication needs. 6. Geographic location in Indiana may imply specific operational or manufacturing hubs.

Value Assessment

Rating: questionable

The contract value of $32.6 million for cryptologic modernization is difficult to benchmark without competitive data. As a sole-source award, there is no direct comparison to similar contracts or market rates to assess value for money. The fixed-price nature provides some cost certainty, but the lack of competition means the government may not have secured the most advantageous pricing. Further analysis would be needed to determine if the price reflects fair market value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded using other than full and open competition, meaning Raytheon was the only source considered. The justification for this approach is not provided, but it significantly limits the opportunity for multiple bidders to offer their solutions and potentially drive down costs. Without a competitive process, it is challenging to ascertain the full range of available technologies or the most cost-effective options.

Taxpayer Impact: The lack of competition means taxpayers may have paid a premium, as there was no pressure from competing bids to ensure the lowest possible price. This also limits transparency in the pricing structure.

Public Impact

The Department of the Air Force benefits from enhanced and modernized cryptologic capabilities. Services delivered include the production of advanced digital voice terminals for secure communications. The contract supports national security by ensuring the integrity and confidentiality of sensitive data. Workforce implications may include specialized roles in manufacturing, engineering, and cybersecurity within Raytheon.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competitive bidding raises concerns about potential overpricing and limited innovation.
The sole-source nature of the award warrants scrutiny to ensure necessity and justification.
Absence of detailed performance metrics in the provided data makes assessing effectiveness challenging.

Positive Signals

Fixed-price contract type offers cost control predictability for the government.
Modernization of cryptologic systems indicates a proactive approach to cybersecurity threats.
Award to a major defense contractor suggests access to established expertise and technology.

Sector Analysis

The contract falls within the Radio and Television Broadcasting and Wireless Communications Equipment Manufacturing sector, specifically focusing on advanced communication security. This sector is critical for defense applications, requiring specialized technology and high levels of reliability. Spending in this area is often driven by national security imperatives and the need to stay ahead of evolving threats. Comparable spending benchmarks are difficult to establish without more specific details on the technology's unique capabilities.

Small Business Impact

The contract data indicates that small business participation was not a primary consideration, as the 'ss' (small business set-aside) and 'sb' (small business) flags are false. There is no explicit mention of subcontracting goals for small businesses. This suggests that the primary contractor, Raytheon, is expected to fulfill the requirements directly or through larger partners, potentially limiting opportunities for the small business ecosystem in this specific procurement.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Air Force's contracting and program management offices. The fixed-price nature provides some level of financial oversight. Transparency is limited due to the sole-source award. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse. Further details on specific oversight mechanisms and reporting requirements would be found in the contract's terms and conditions.

Related Government Programs

Defense Communications Systems
Cryptographic Equipment Manufacturing
Secure Voice Communication Systems
Wireless Communication Technology
Department of Defense Procurement

Risk Flags

Sole-source award requires justification.
Lack of competitive bidding may impact price.
Performance metrics not detailed.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $32.6 million to RAYTHEON COMPANY. VINSON/ADVANCED NARROWBAND DIGITAL VOICE TERMINA (ANDVT) CRYPTOLOGIC MODERNIZATION (VACM) FULL RATE PRODUCTION (RFP)

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 $32.6 million.

What is the period of performance?

Start: 2021-11-19. End: 2024-07-31.

What is the specific justification for awarding this contract on a sole-source basis to Raytheon?

The provided data does not include the specific justification for the sole-source award. Typically, sole-source contracts are awarded when only one responsible source can provide the required supplies or services, such as when a unique capability is needed, or for reasons of urgency or national security. Without the official justification document (e.g., a Justification and Approval - J&A), it is impossible to verify the necessity of bypassing full and open competition. This lack of transparency is a significant concern for ensuring fair pricing and exploring all available technological solutions.

How does the $32.6 million contract value compare to similar cryptologic modernization efforts within the Department of Defense?

Direct comparison of the $32.6 million contract value is challenging without knowing the precise scope and technical specifications of the 'ANDVT Cryptologic Modernization' effort. However, modernization of secure communication systems can range widely in cost depending on the complexity, number of units, and integration requirements. Larger-scale cryptographic system upgrades for entire branches of the military can run into hundreds of millions or even billions of dollars. Given this is for 'full rate production,' it implies a mature technology, and the value suggests a significant number of units or a substantial upgrade package. Benchmarking would require access to data on comparable sole-source or competitively awarded contracts for similar modernization programs.

What are the key risks associated with a sole-source contract for advanced defense technology?

The primary risks associated with a sole-source contract for advanced defense technology include potential overpricing due to the absence of competitive pressure, limited innovation as the contractor may face less incentive to develop novel or more cost-effective solutions, and a reduced ability for the government to explore alternative technologies or vendors. There's also a risk of vendor lock-in, making future procurements or transitions more difficult and potentially more expensive. Ensuring the contractor's performance and meeting all requirements become paramount, as there are no other options readily available if issues arise.

What is Raytheon's track record with similar Department of Defense communication and cryptology contracts?

Raytheon Company (now RTX) has a long and extensive history of providing advanced defense systems, including communications, intelligence, surveillance, and reconnaissance (ISR) technologies, and cybersecurity solutions to the Department of Defense and other government agencies. They are a major prime contractor on numerous large-scale defense programs. Their track record typically involves complex system integration, advanced manufacturing, and research and development. While specific performance details for this particular contract are not provided, Raytheon's general experience suggests they possess the technical capability to execute such a program, though oversight is still crucial.

What are the potential implications of this contract on future defense communication security standards?

This contract for the modernization of Advanced Narrowband Digital Voice Terminals (ANDVT) and their associated cryptology suggests a continued reliance on, or upgrade path for, narrowband communication systems, which are often used in environments where bandwidth is limited or spectrum is contested. The modernization implies an effort to enhance the security and potentially the capabilities of these existing systems to meet current and future threats. The technologies and standards developed or implemented under this contract could influence future requirements for secure voice communications, particularly in tactical and strategic military operations, potentially setting a benchmark for similar upgrades across different platforms or services.

How does the 'Radio and Television Broadcasting and Wireless Communications Equipment Manufacturing' NAICS code align with the 'cryptologic modernization' description?

The NAICS code 334220, 'Radio and Television Broadcasting and Wireless Communications Equipment Manufacturing,' broadly covers the production of equipment used in wireless communication. While 'cryptologic modernization' specifically refers to enhancing the security and encryption capabilities of these systems, the underlying hardware often involves radio transmitters, receivers, and related digital processing components. Therefore, the manufacturing of the physical terminals and the integration of advanced cryptographic modules fall under this manufacturing sector. The code captures the production aspect of the communication hardware, which is then enhanced with the specialized cryptographic technology.

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: Rockwell Collins Australia PTY Limited

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: $32,605,710

Exercised Options: $32,605,710

Current Obligation: $32,605,710

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