Raytheon Company awarded $152.6M for Miniature Airborne GPS Receivers, a sole-source contract

Contract Overview

Contract Amount: $152,561,464 ($152.6M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2016-08-12

End Date: 2026-01-31

Contract Duration: 3,459 days

Daily Burn Rate: $44.1K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: MINIATURIZED AIRBORNE GPS RECEIVER (MAGR) 2000

Place of Performance

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

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $152.6 million to RAYTHEON COMPANY for work described as: MINIATURIZED AIRBORNE GPS RECEIVER (MAGR) 2000 Key points: 1. Contract awarded to a single vendor, raising questions about price competitiveness. 2. Long contract duration suggests a need for ongoing support or development. 3. The contract type (Cost Plus Fixed Fee) can incentivize cost overruns. 4. Focus on navigation systems highlights critical defense infrastructure needs. 5. Geographic concentration in California may indicate specific operational requirements.

Value Assessment

Rating: questionable

Benchmarking the value for this specific contract is challenging due to its sole-source nature and specialized equipment. Without competitive bids, it's difficult to ascertain if the pricing reflects market rates or represents a fair value for the government. The Cost Plus Fixed Fee structure, while common for R&D or uncertain scope projects, carries inherent risks of cost escalation compared to fixed-price contracts. Further analysis would require comparing unit costs or performance metrics against similar, competitively procured systems if available.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award. This typically occurs when only one vendor possesses the necessary technology, security clearances, or capability to fulfill the requirement. The lack of competition means the government did not benefit from a bidding process that could drive down prices and encourage innovation among multiple suppliers. This approach is often justified for highly specialized or proprietary systems where alternatives are non-existent.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive pressure. Without alternative bids, there is less assurance that the price reflects the lowest possible cost for the required goods or services.

Public Impact

The Department of the Air Force benefits from advanced navigation capabilities for its aircraft. Aircrews receive enhanced situational awareness and mission effectiveness through reliable GPS. The contract supports advanced technology development and manufacturing within the aerospace sector. Workforce implications include specialized engineering and manufacturing roles, primarily in California.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price discovery and potential cost savings.
Cost-plus contract type introduces risk of cost overruns.
Long contract duration may not adapt well to rapidly evolving technology.
Lack of competition could stifle innovation from other potential suppliers.

Positive Signals

Ensures access to critical, potentially unique, navigation technology.
Provides long-term support and sustainment for essential defense systems.
Raytheon is an established defense contractor with relevant expertise.

Sector Analysis

The Miniature Airborne GPS Receiver (MAGR) market is a niche within the broader aerospace and defense electronics sector. This contract falls under the 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' industry code. Spending in this area is driven by military modernization efforts and the need for precise navigation in complex operational environments. Comparable spending benchmarks would involve other advanced avionics and navigation system procurements, often characterized by high R&D costs and specialized manufacturing requirements.

Small Business Impact

This contract does not appear to include specific small business set-asides. As a sole-source award to a large prime contractor, the potential for small business subcontracting opportunities exists but is not explicitly mandated by the contract structure itself. The impact on the small business ecosystem would depend on Raytheon's subcontracting strategy and whether they engage smaller, specialized firms for components or services.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Air Force's contracting and program management offices. Accountability measures would be tied to contract performance clauses, delivery schedules, and adherence to cost ceilings. Transparency may be limited due to the sole-source nature and potential classification of certain technical details. Inspector General (IG) jurisdiction would apply to investigations of fraud, waste, or abuse.

Related Government Programs

Airborne Navigation Systems
GPS Receivers
Defense Avionics
Aerospace Electronics Manufacturing
Military GPS Modernization

Risk Flags

Sole-source award
Cost-plus contract type
Potential for cost overruns
Lack of competitive pricing benchmarks

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $152.6 million to RAYTHEON COMPANY. MINIATURIZED AIRBORNE GPS RECEIVER (MAGR) 2000

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 $152.6 million.

What is the period of performance?

Start: 2016-08-12. End: 2026-01-31.

What is Raytheon Company's track record with similar defense contracts, particularly in navigation systems?

Raytheon Company, now RTX, has a long and extensive history of developing and supplying advanced defense systems, including navigation and guidance technologies. They are a major prime contractor for the U.S. Department of Defense across various branches. Their portfolio includes a wide range of avionics, radar systems, and electronic warfare capabilities. For GPS-related systems, Raytheon has been involved in developing and producing receivers for various platforms, including aircraft and missiles. Their track record generally indicates significant technical expertise and program execution capabilities, though like any large defense contractor, they have faced scrutiny on specific programs regarding cost, schedule, and performance. The MAGR program itself builds upon decades of GPS technology development, an area where Raytheon has consistently been a key player.

How does the $152.6 million total award compare to historical spending on similar navigation systems?

Comparing the $152.6 million award for the Miniature Airborne GPS Receiver (MAGR) to historical spending on similar systems requires careful consideration of the specific capabilities, technology generation, and contract type. As a sole-source award for a specialized component, direct comparisons to broadly competed, multi-vendor procurements can be misleading. However, historical data indicates that advanced military navigation systems, especially those requiring high reliability, security, and integration into complex platforms, represent significant investments. The duration of this contract (2016-2026) suggests a long-term sustainment or upgrade program, spreading the cost over many years. Without access to specific unit costs or detailed performance specifications, a precise value-for-money comparison is difficult, but the total value aligns with the typical investment scale for critical, long-lifecycle defense electronics.

What are the primary risks associated with a sole-source, cost-plus fixed fee contract for advanced avionics?

A sole-source award for advanced avionics like the MAGR presents two primary risk categories. Firstly, the sole-source nature eliminates competitive pressure, potentially leading to higher prices than might be achieved in a bidding environment. The government lacks the leverage of alternative suppliers to negotiate better terms. Secondly, the Cost Plus Fixed Fee (CPFF) contract type carries inherent risks. While the fixed fee provides the contractor with an incentive to control costs to maximize their profit margin on the fee, the government bears the risk of cost overruns. If the contractor's actual costs exceed initial estimates, the government pays those costs, plus the agreed-upon fixed fee. This structure can be less predictable in terms of final expenditure compared to fixed-price contracts, especially for programs with evolving technical requirements or unforeseen challenges.

How effective is the Department of Defense in ensuring value for money on sole-source contracts for specialized equipment?

The Department of Defense (DoD) employs several mechanisms to ensure value for money on sole-source contracts, though challenges remain. For sole-source awards, the DoD typically requires a Justification and Approval (J&A) process that must demonstrate why full and open competition is not feasible. This often involves detailed market research and technical assessments. Pricing is scrutinized through mechanisms like should-cost analysis, should-cost/will-cost estimates, and comparison to historical data or independent government cost estimates. Contract types are chosen to align risk and incentive, with CPFF used when cost uncertainty is high. However, the inherent lack of competition means that the government's negotiating position is weaker, and vigilance in cost analysis and oversight is crucial to mitigate potential overspending. Program Executive Offices (PEOs) and Defense Contract Management Agency (DCMA) play key roles in oversight.

What are the historical spending patterns for airborne GPS receivers within the Department of the Air Force?

Historical spending patterns for airborne GPS receivers within the Department of the Air Force (and DoD broadly) show a consistent and significant investment over decades. Early GPS procurements focused on basic receiver functionality, evolving towards more sophisticated, secure, and jam-resistant systems. Spending has been driven by the need to equip a vast fleet of aircraft across various mission types, from fighters and bombers to transport and reconnaissance platforms. Contracts have often been awarded to major defense contractors like Raytheon, Rockwell Collins (now Collins Aerospace), and BAE Systems. Spending has also been influenced by modernization programs, upgrades to existing systems, and the development of next-generation receivers (like M-Code capable units) to counter evolving threats and improve accuracy. The total lifecycle cost, including sustainment and upgrades, often runs into billions of dollars across the force.

What is the typical lifespan and upgrade cycle for military airborne GPS receiver systems?

The typical lifespan and upgrade cycle for military airborne GPS receiver systems are generally long, often spanning 15-30 years or more, reflecting the lengthy service life of military aircraft platforms. However, the technology within these systems evolves much faster. Initial procurements might focus on basic GPS capabilities, but subsequent upgrades are crucial to incorporate enhanced security features (like M-Code), improved anti-jamming capabilities, greater accuracy, and better integration with other avionics systems. The MAGR contract's duration (2016-2026) suggests a program that encompasses initial fielding, sustainment, and potentially incremental upgrades over a decade. This reflects a common strategy where the hardware platform is designed for longevity, while software and firmware are updated more frequently to maintain operational relevance and security against emerging threats.

Industry Classification

NAICS: Manufacturing › Navigational, Measuring, Electromedical, and Control Instruments Manufacturing › Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing

Product/Service Code: COMM/DETECT/COHERENT RADIATION

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: RTX Corp

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: $152,561,464

Exercised Options: $152,561,464

Current Obligation: $152,561,464

Actual Outlays: $2,643,952

Subaward Activity

Number of Subawards: 12

Total Subaward Amount: $1,563,769

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA880713D0001

IDV Type: IDC

Timeline