DoD's $205M Radar Modernization Program awarded to Raytheon faces limited competition concerns

Contract Overview

Contract Amount: $205,398,810 ($205.4M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2020-06-12

End Date: 2025-08-31

Contract Duration: 1,906 days

Daily Burn Rate: $107.8K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: RADAR MODERNIZATION PROGRAM (RMP)

Place of Performance

Location: EL SEGUNDO, LOS ANGELES County, CALIFORNIA, 90245

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $205.4 million to RAYTHEON COMPANY for work described as: RADAR MODERNIZATION PROGRAM (RMP) Key points: 1. The $205.4 million contract for radar modernization is a significant investment in defense technology. 2. Raytheon Company is the sole awardee, raising questions about competitive pricing and innovation. 3. The contract's cost-plus-fixed-fee structure may incentivize cost overruns. 4. Engineering services (NAICS 541330) are critical for complex defense systems like radar. 5. The long duration (1906 days) suggests a complex, multi-year project.

Value Assessment

Rating: questionable

The contract is a Cost Plus Fixed Fee (CPFF) type, which can lead to higher costs compared to fixed-price contracts if not managed carefully. Benchmarking CPFF contracts for similar engineering services is difficult without more specific cost breakdowns.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award. This limits price discovery and potentially reduces the government's ability to secure the best value through competitive bidding.

Taxpayer Impact: The lack of competition may result in taxpayers paying a premium for these engineering services, as there is no market pressure to drive down costs.

Public Impact

Modernization of radar systems is crucial for national security and maintaining a technological edge. The long-term nature of the contract impacts budget planning for the Department of the Air Force. Potential for cost overruns in CPFF contracts could divert funds from other critical defense needs. Dependence on a single contractor for a critical system raises long-term supply chain and supportability questions.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competition.
Cost-plus-fixed-fee contract type.
Long contract duration.
No small business participation noted.

Positive Signals

Addresses critical radar modernization needs.
Awarded to a known defense contractor.
Clear end date for project.

Sector Analysis

The Department of Defense, specifically the Air Force, is investing heavily in advanced technology. Engineering services for complex systems like radar are a significant part of this spending. Benchmarks for similar large-scale defense engineering contracts vary widely based on scope and technology.

Small Business Impact

There is no indication of small business participation in this contract. Given the sole-source nature and the specialized engineering services required, it's possible that small businesses were not considered or subcontracted for this specific award.

Oversight & Accountability

The Department of the Air Force is responsible for overseeing this contract. The CPFF structure necessitates robust oversight to manage costs and ensure performance objectives are met. Accountability for cost and schedule will be critical.

Related Government Programs

Engineering Services
Department of Defense Contracting
Department of the Air Force Programs

Risk Flags

Sole-source award limits competitive pricing.
Cost-plus-fixed-fee contract increases cost risk.
Potential for contractor cost overruns.
Lack of small business participation.
Long contract duration may lead to scope creep or changing requirements.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $205.4 million to RAYTHEON COMPANY. RADAR MODERNIZATION PROGRAM (RMP)

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 $205.4 million.

What is the period of performance?

Start: 2020-06-12. End: 2025-08-31.

What specific factors justified a sole-source award for this critical radar modernization program, and were alternative competitive strategies explored?

Justification for sole-source awards typically involves unique capabilities, urgent needs, or lack of viable alternatives. Without detailed documentation, it's difficult to assess if alternative competitive strategies were thoroughly explored. The government must demonstrate that competition was not feasible or would not result in the best value to justify this approach.

How will the Department of the Air Force ensure cost control and prevent potential overruns within the Cost Plus Fixed Fee structure of this contract?

Effective cost control in CPFF contracts relies on stringent government oversight, detailed performance metrics, and regular audits. The Air Force must establish clear milestones, monitor expenditures closely, and actively manage the contractor's performance to mitigate risks of cost overruns and ensure the fixed fee remains appropriate.

What is the projected impact of this radar modernization on the Air Force's operational capabilities and readiness, and how does it align with broader defense strategies?

The modernization aims to enhance radar detection, tracking, and targeting capabilities, directly improving operational effectiveness and readiness. This investment likely aligns with strategic goals to maintain technological superiority and address evolving threats in contested environments, ensuring the Air Force can execute its missions effectively.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services

Product/Service Code: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Rockwell Collins Australia PTY Limited

Address: 2000 E EL SEGUNDO BLVD, EL SEGUNDO, CA, 90245

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

Financial Breakdown

Contract Ceiling: $205,398,810

Exercised Options: $205,398,810

Current Obligation: $205,398,810

Actual Outlays: $4,092,641

Subaward Activity

Number of Subawards: 117

Total Subaward Amount: $22,991,385

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline