Raytheon Company awarded $31.9M contract for advanced digital voice terminals by the Air Force

Contract Overview

Contract Amount: $31,946,336 ($31.9M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2022-03-10

End Date: 2024-07-31

Contract Duration: 874 days

Daily Burn Rate: $36.6K/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 (RFP).

Place of Performance

Location: FORT WAYNE, ALLEN County, INDIANA, 46808

State: Indiana Government Spending

Plain-Language Summary

Department of Defense obligated $31.9 million to RAYTHEON COMPANY for work described as: VINSON/ADVANCED NARROWBAND DIGITAL VOICE TERMINAL (ANDVT) CRYPTOLOGIC MODERNIZATION (VACM) FULL RATE PRODUCTION (RFP). Key points: 1. Contract awarded as a sole-source delivery order, raising questions about competition and potential cost savings. 2. The contract duration of 874 days suggests a significant, ongoing need for these specialized communication systems. 3. Focus on cryptologic modernization indicates a need for enhanced security in voice communications. 4. The firm fixed-price contract type offers some cost certainty for the government. 5. The absence of small business participation raises concerns about broader economic impact. 6. This award falls under the Radio and Television Broadcasting and Wireless Communications Equipment Manufacturing NAICS code.

Value Assessment

Rating: fair

The contract value of $31.9 million for advanced digital voice terminals appears substantial. Without specific details on the number of units or the exact capabilities being modernized, a direct value-for-money assessment is challenging. However, given the sole-source nature, there's a risk that the pricing may not reflect the most competitive market rates. Benchmarking against similar modernization efforts for secure communication systems would be necessary for a more definitive evaluation.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded as a sole-source delivery order, meaning it was not competed among multiple vendors. This approach is typically used when a specific contractor possesses unique capabilities or when there's a need to maintain compatibility with existing systems. The lack of competition means that the government did not benefit from a bidding process that could drive down prices or foster innovation through diverse proposals.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive bidding. Without a competitive process, there is less assurance that the government secured the best possible price for these critical communication systems.

Public Impact

The primary beneficiaries are the Department of Defense and specifically the Air Force, which will receive modernized cryptologic voice terminals. These terminals are crucial for secure and reliable voice communications, likely supporting critical operational missions. The contract's geographic impact is not specified but likely supports Air Force operations nationwide or globally. The contract may have implications for a specialized workforce within Raytheon Company skilled in secure communications technology.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially leading to higher costs.
Lack of transparency in the procurement process due to sole-source nature.
No indication of small business participation, missing opportunities for economic inclusion.

Positive Signals

Firm fixed-price contract provides cost predictability.
Modernization of cryptologic systems addresses critical security needs.
Award to a known entity (Raytheon) suggests reliance on established capabilities.

Sector Analysis

This contract falls within the broader telecommunications equipment manufacturing sector, specifically focusing on specialized wireless communications and encryption technology. The market for secure military communication systems is often characterized by high barriers to entry due to technological complexity, stringent security requirements, and long-standing relationships with government agencies. Spending in this niche is driven by national security imperatives and the constant need to upgrade against evolving threats, making it a critical but often less transparent segment of the defense industrial base.

Small Business Impact

The contract data indicates that small business participation was not a factor in this award, as the 'sb' field is false and the 'ss' field is false. This sole-source award did not include a small business set-aside. Consequently, there are no direct subcontracting opportunities for small businesses stemming from this specific contract, nor is there an immediate impact on the small business ecosystem related to this particular procurement.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and financial management systems. As a sole-source award, the justification for the procurement method would be subject to review. Transparency is limited due to the non-competitive nature. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected during the performance or award of the contract.

Related Government Programs

Defense Communications Systems
Cryptographic Modernization Programs
Tactical Communication Equipment
Secure Voice Communication Systems
Air Force Procurement

Risk Flags

Sole-source award
Lack of competition
Potential for cost overruns without competitive pressure
No small business participation

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $31.9 million to RAYTHEON COMPANY. VINSON/ADVANCED NARROWBAND DIGITAL VOICE TERMINAL (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 $31.9 million.

What is the period of performance?

Start: 2022-03-10. End: 2024-07-31.

What is the specific nature of the 'advanced digital voice terminal' and its role in Air Force operations?

The 'VINSON/ADVANCED NARROWBAND DIGITAL VOICE TERMINAL (ANDVT) CRYPTOLOGIC MODERNIZATION (VACM)' contract likely pertains to upgrading existing secure voice communication devices used by the Air Force. These terminals are essential for maintaining secure voice channels during operations, ensuring that sensitive information is protected from interception. The 'cryptologic modernization' aspect suggests an enhancement of the encryption capabilities to counter modern threats and maintain classified communication integrity. Their role is critical for command and control, intelligence sharing, and operational coordination, particularly in environments where secure communication is paramount.

Why was this contract awarded on a sole-source basis instead of being competed?

Sole-source awards are typically justified when only one responsible source can provide the required supplies or services. For advanced technological systems like cryptologic modernization, this could be due to proprietary technology, unique manufacturing capabilities, or the need for seamless integration with existing, specialized Air Force infrastructure. Raytheon Company may possess specific patents, unique expertise, or have developed the original system, making them the only viable option for this particular upgrade to ensure compatibility and maintain the integrity of the secure communication network. The government would have had to document the justification for this sole-source determination.

How does the firm fixed-price contract type benefit the government in this context?

A Firm Fixed Price (FFP) contract type is generally advantageous for the government as it shifts the majority of the cost risk to the contractor. Under an FFP agreement, the contractor is obligated to complete the work for a predetermined price, regardless of their actual costs. This provides budget certainty for the Air Force, as the total expenditure is known upfront. While it may lead to a higher initial price compared to cost-reimbursement contracts, it protects the government from cost overruns and simplifies financial management, especially for procurements involving well-defined scopes of work like equipment modernization.

What are the potential risks associated with a sole-source award for advanced communication equipment?

The primary risk of a sole-source award is the potential for inflated pricing due to the lack of competition. Without competing bids, the contractor may not feel the same pressure to offer the most cost-effective solution. Additionally, sole-source awards can stifle innovation, as other companies are not given the opportunity to propose alternative or potentially superior technologies. There's also a risk of vendor lock-in, making it difficult and costly to switch providers in the future. For taxpayers, this can translate to less value for money spent on critical defense systems.

What is the historical spending trend for similar cryptologic modernization efforts within the Department of Defense?

Historical spending on cryptologic modernization within the Department of Defense (DoD) has been substantial and consistent, driven by the perpetual need to stay ahead of evolving threats and technological advancements. Programs aimed at upgrading encryption, secure voice, and data transmission capabilities are ongoing across various branches. While specific figures for 'ANDVT VACM' modernization are not provided, the DoD consistently allocates billions annually to communications and information technology upgrades, including secure systems. This contract, valued at $31.9 million, represents a specific investment within this larger, continuous modernization effort, reflecting the ongoing demand for secure and advanced communication solutions.

What is the significance of the NAICS code 334220 (Radio and Television Broadcasting and Wireless Communications Equipment Manufacturing)?

The North American Industry Classification System (NAICS) code 334220 categorizes establishments primarily engaged in manufacturing radio and television broadcasting and wireless communications equipment. This includes the production of transmitters, transceivers, and other related communication devices. By assigning this code, the government indicates that the contract for the ANDVT terminals falls within this manufacturing sector. It helps in classifying the economic activity associated with the contract and allows for comparisons with other companies and contracts within the same industry segment.

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: $31,946,336

Exercised Options: $31,946,336

Current Obligation: $31,946,336

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