Raytheon Company awarded $28.7M for advanced digital voice terminal modernization by the Air Force

Contract Overview

Contract Amount: $28,723,848 ($28.7M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2022-12-07

End Date: 2026-02-28

Contract Duration: 1,179 days

Daily Burn Rate: $24.4K/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 $28.7 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 for modernization of cryptologic equipment, indicating a need for enhanced communication security. 2. The sole-source nature of this award warrants scrutiny regarding potential cost efficiencies and market alternatives. 3. A long contract duration of nearly 4 years suggests a significant, ongoing requirement for these specialized terminals. 4. The firm-fixed-price structure aims to transfer cost risk to the contractor, but requires careful baseline management. 5. This contract falls under the Radio and Television Broadcasting and Wireless Communications Equipment Manufacturing NAICS code. 6. The award is a delivery order against a previously established contract, implying a continuing relationship with Raytheon.

Value Assessment

Rating: fair

The contract value of $28.7 million for the modernization of digital voice terminals appears to be a significant investment. Without specific benchmarks for similar modernization efforts or detailed cost breakdowns, it is difficult to definitively assess value for money. The firm-fixed-price contract type suggests an attempt to control costs, but the absence of competition makes direct price comparison challenging. Further analysis would require understanding the scope of modernization and comparing it to industry standards for similar technological upgrades.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award. This approach is often used when a specific contractor possesses unique capabilities, intellectual property, or when there is a critical need that cannot be met through a competitive process. The lack of competition means that the government did not explore potential cost savings or alternative solutions that might have been available from other vendors. This raises questions about whether the government secured the best possible price and terms.

Taxpayer Impact: Sole-source awards can potentially lead to higher costs for taxpayers as the absence of competition limits price negotiation leverage and the incentive for contractors to offer their most competitive pricing.

Public Impact

The primary beneficiaries are the Department of Defense and specifically the Air Force, who will receive modernized cryptologic communication equipment. The services delivered involve the upgrade and production of advanced digital voice terminals, enhancing secure communication capabilities. The geographic impact is likely concentrated within Air Force operational units, potentially worldwide, depending on deployment. Workforce implications may include specialized manufacturing and technical support roles within Raytheon and its supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition for a significant contract value raises concerns about potential overpricing and missed opportunities for cost savings.
The sole-source nature requires robust government oversight to ensure the contractor is meeting all performance requirements and delivering value.
The long contract duration could lead to complacency or scope creep if not actively managed.
Dependence on a single supplier for critical communication modernization could pose a long-term strategic risk.

Positive Signals

The firm-fixed-price contract type helps to mitigate cost overrun risks for the government.
The award is a delivery order against an existing contract, suggesting a pre-existing relationship and potentially streamlined procurement.
Modernizing cryptologic capabilities is crucial for maintaining secure communications in a dynamic threat environment.
Raytheon is a well-established defense contractor with significant experience in this domain.

Sector Analysis

This contract falls within the defense sector, specifically focusing on advanced communications and cryptologic equipment manufacturing. The market for such specialized defense technology is often characterized by high barriers to entry, significant research and development costs, and a limited customer base, primarily government entities. Comparable spending benchmarks are difficult to establish without more specific details on the technology's capabilities and the scope of modernization, but investments in secure communication systems are a consistent priority for defense agencies.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb: false'. Furthermore, the 'ss' (small business subcontracting) indicator is also false. This suggests that small businesses are unlikely to be directly involved as prime contractors or through mandatory subcontracting plans on this specific award. The impact on the small business ecosystem is therefore minimal for this particular contract, though Raytheon may engage small businesses as part of its broader supply chain.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Air Force's contracting and program management offices. As a delivery order against a larger contract, existing oversight mechanisms are likely leveraged. Transparency is generally maintained through contract award databases, but detailed performance metrics and cost justifications for sole-source awards are often less publicly accessible. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Defense Communications Modernization Programs
Cryptologic Systems Development
Secure Communications Equipment Procurement
Air Force Radio and Wireless Equipment Contracts

Risk Flags

Sole-source award requires justification and scrutiny.
Long contract duration necessitates diligent oversight.
Potential for cost overruns if not managed effectively despite FFP.
Dependence on a single supplier for critical technology.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $28.7 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 $28.7 million.

What is the period of performance?

Start: 2022-12-07. End: 2026-02-28.

What is the specific nature of the 'cryptologic modernization' being performed on the ANDVT terminals?

The "ANDVT Cryptologic Modernization (VACM)" likely refers to upgrading the encryption algorithms, key management systems, and potentially the physical security features of the Advanced Narrowband Digital Voice Terminals (ANDVT). This modernization is crucial to ensure that the voice communications remain secure against evolving threats and to comply with current cryptographic standards. Modernization efforts often involve replacing outdated encryption modules with newer, more robust ones, enhancing resistance to decryption attempts, and potentially improving the efficiency of secure voice transmission over limited bandwidth networks, which is characteristic of narrowband systems.

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 Raytheon's ANDVT modernization, this could be due to several factors: proprietary technology or intellectual property related to the ANDVT system that only Raytheon possesses; a requirement for compatibility with existing, unique Air Force infrastructure where Raytheon is the sole provider; or a critical, urgent need where the time required for a full competitive procurement would be detrimental to national security. The government must provide a justification for sole-source awards, often citing specific FAR (Federal Acquisition Regulation) clauses that permit such actions.

What are the potential risks associated with a sole-source contract for critical defense communication equipment?

The primary risk of a sole-source contract is the potential for inflated pricing due to the lack of competitive pressure. Without competing bids, the government may not achieve the most cost-effective solution. Additionally, there's a risk of vendor lock-in, where the government becomes overly reliant on a single supplier, potentially limiting future flexibility and innovation. Quality control and performance can also be a concern if the contractor perceives less urgency to meet stringent standards without competitive oversight. Finally, sole-source awards can face public and congressional scrutiny regarding fairness and value for taxpayer money.

How does the firm-fixed-price (FFP) contract type mitigate risk for this modernization effort?

A Firm-Fixed-Price (FFP) contract is designed to provide the government with cost certainty. Under an FFP contract, the price is set and not subject to adjustment based on the contractor's cost experience. This shifts the risk of cost overruns from the government to the contractor. For Raytheon's ANDVT modernization, this means Raytheon is responsible for managing its costs to deliver the modernized terminals within the agreed-upon price. This contract type incentivizes the contractor to control costs efficiently and perform the work effectively to maintain profitability, thereby protecting the government from unexpected cost increases.

What is the historical spending context for Raytheon Company with the Department of Defense, particularly in communications equipment?

Raytheon Company (now part of RTX Corporation) is a major defense contractor with a long history of significant contract awards from the Department of Defense across various domains, including aerospace, defense, and intelligence systems. Their portfolio frequently includes advanced communication systems, electronic warfare, sensors, and integrated defense solutions. Historical spending data would likely show billions of dollars in contracts awarded to Raytheon over many years for a wide array of products and services. Specific to communications equipment, Raytheon has consistently been a key supplier of secure communication systems, radios, and related technologies to the U.S. military, reflecting their established expertise and market position in this sector.

What are the implications of the contract duration (1179 days) for the modernization project?

A contract duration of 1179 days, approximately 3.2 years, for a modernization project indicates a substantial and phased effort. This extended timeline suggests that the modernization is not a simple upgrade but likely involves complex technical challenges, extensive testing, integration with existing systems, and potentially a phased rollout across various Air Force units. Such a duration allows for thorough development and implementation but also necessitates robust program management to ensure milestones are met, costs remain controlled, and the technology remains relevant throughout the project lifecycle. It also implies a sustained need for these capabilities within the Air Force.

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: $28,723,848

Exercised Options: $28,723,848

Current Obligation: $28,723,848

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