Raytheon Company awarded $34.3M for ASARS sensor support, a sole-source contract with a high per-unit cost

Contract Overview

Contract Amount: $34,345,941 ($34.3M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2016-09-29

End Date: 2017-09-30

Contract Duration: 366 days

Daily Burn Rate: $93.8K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: IGF::OT::IGF ENGINEERING SERVICES FOR SUPPORT AND SUSTAINMENT OF THE ADVANCED SYNTHETIC APERTURE RADAR SENSOR (ASARS) SYSTEM.

Place of Performance

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

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $34.3 million to RAYTHEON COMPANY for work described as: IGF::OT::IGF ENGINEERING SERVICES FOR SUPPORT AND SUSTAINMENT OF THE ADVANCED SYNTHETIC APERTURE RADAR SENSOR (ASARS) SYSTEM. Key points: 1. The contract's sole-source nature raises concerns about potential overpayment and lack of competitive pressure. 2. High per-unit costs suggest a need for further investigation into pricing and market alternatives. 3. The contract duration of 366 days is relatively short, indicating a focus on immediate support needs. 4. The 'Optical Instrument and Lens Manufacturing' NAICS code suggests specialized technical services. 5. The contract was awarded as a Delivery Order under a larger contract vehicle. 6. The absence of small business set-aside indicates a focus on large prime contractors.

Value Assessment

Rating: questionable

The per-unit cost of $93,841 appears high when compared to typical maintenance and support contracts for complex sensor systems. Without access to detailed cost breakdowns or comparable sole-source procurements, it is difficult to definitively benchmark value. However, the lack of competition inherently limits the government's ability to secure the most favorable pricing, suggesting potential for reduced value for money.

Cost Per Unit: $93,841

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. This typically occurs when only one vendor possesses the necessary capabilities, technology, or is the incumbent provider of a critical system. The lack of competition means the government did not benefit from the price discovery mechanisms inherent in a competitive bidding process.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as there is no competitive pressure to drive down prices. This necessitates robust government oversight to ensure fair and reasonable pricing.

Public Impact

The primary beneficiaries are the Department of the Air Force, ensuring the operational readiness of the Advanced Synthetic Aperture Radar Sensor (ASARS) system. Services delivered include support and sustainment for the ASARS system, crucial for intelligence, surveillance, and reconnaissance (ISR) missions. The geographic impact is primarily within the operational theaters where the ASARS system is deployed, likely global. Workforce implications may involve specialized technical personnel required for sensor maintenance and operation, potentially including engineers and technicians.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing, potentially increasing costs for taxpayers.
High per-unit cost warrants further investigation into cost reasonableness.
Lack of small business participation may limit opportunities for smaller innovative firms in this specialized sector.

Positive Signals

Contract ensures sustainment of a critical ISR asset, supporting national security objectives.
Award to Raytheon Company, a known defense contractor, suggests access to established expertise.
Delivery order structure allows for focused procurement of specific support needs.

Sector Analysis

The contract falls within the defense sector, specifically related to advanced sensor technology and sustainment. The market for such specialized systems is often dominated by a few large defense contractors due to high barriers to entry, including intellectual property, research and development costs, and security clearances. Comparable spending benchmarks are difficult to establish without detailed system specifications and service level agreements, but contracts for advanced ISR systems can range from millions to billions of dollars.

Small Business Impact

This contract was not set aside for small businesses, nor does it appear to have specific subcontracting requirements for small businesses mentioned in the provided data. The nature of advanced sensor support and sustainment often requires specialized capabilities and clearances typically held by larger, established defense contractors, limiting direct opportunities for small businesses as prime contractors on such awards.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Air Force's contracting and program management offices. Accountability measures would be defined by the terms of the Delivery Order and the underlying contract vehicle. Transparency is limited due to the sole-source nature and the proprietary information often associated with advanced defense systems. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Advanced Synthetic Aperture Radar Sensor (ASARS) System
Intelligence, Surveillance, and Reconnaissance (ISR) Systems
Department of Defense Sensor Procurement and Sustainment
Raytheon Company Defense Contracts

Risk Flags

Sole-source award
High per-unit cost
Lack of competition

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $34.3 million to RAYTHEON COMPANY. IGF::OT::IGF ENGINEERING SERVICES FOR SUPPORT AND SUSTAINMENT OF THE ADVANCED SYNTHETIC APERTURE RADAR SENSOR (ASARS) SYSTEM.

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 $34.3 million.

What is the period of performance?

Start: 2016-09-29. End: 2017-09-30.

What is the track record of Raytheon Company in providing support and sustainment for similar advanced sensor systems?

Raytheon Company, now part of RTX, has a long and extensive track record in developing, manufacturing, and sustaining advanced defense systems, including radar and sensor technologies. They are a major prime contractor for the U.S. Department of Defense and have been involved in numerous programs requiring complex technical support and lifecycle sustainment. Their experience with systems like the ASARS is likely substantial, given their broad portfolio in areas such as airborne radar, electronic warfare, and intelligence, surveillance, and reconnaissance (ISR) platforms. This includes managing complex supply chains, providing field support, and ensuring system readiness over extended operational periods. Their historical performance on similar contracts would be a key factor in the government's decision to award sole-source contracts, assuming they possess unique capabilities or proprietary knowledge essential for the system's upkeep.

How does the per-unit cost of $93,841 compare to similar contracts for advanced sensor sustainment?

The per-unit cost of $93,841 for the sustainment of the ASARS system is a significant figure that warrants careful comparison. Benchmarking this against similar contracts is challenging without specific details on the scope of services, system complexity, and contract type (e.g., cost-plus vs. fixed-price). However, for specialized defense systems, per-unit costs for sustainment can vary widely. If this unit cost represents a full year of support for a single sensor system, it could be considered high if simpler systems or less intensive support are involved. Conversely, if it reflects highly specialized, round-the-clock technical support for a cutting-edge, complex sensor with limited production numbers, the cost might be more justifiable. The sole-source nature of this award further complicates direct comparison, as competitive bidding typically drives down costs. A detailed cost-reimbursement analysis or comparison with other sole-source sustainment contracts for comparable ISR assets would be necessary for a definitive assessment.

What are the primary risks associated with a sole-source award for critical system sustainment?

The primary risks associated with a sole-source award for critical system sustainment include potential for inflated pricing due to the lack of competition, reduced incentive for the contractor to innovate or improve efficiency, and a risk of vendor lock-in. Without competitive pressure, the government may pay more than necessary for services. Furthermore, if the sole-source provider experiences financial difficulties or decides to exit the market, the government could face significant challenges in finding an alternative provider for a specialized system. There's also a risk that the contractor may not prioritize the government's needs as highly as they would in a competitive environment. Robust contract management, including detailed performance metrics and fair pricing negotiations, is crucial to mitigate these risks.

What is the historical spending pattern for ASARS system support and sustainment by the Department of Defense?

Analyzing historical spending patterns for the ASARS system support and sustainment is crucial for understanding the long-term cost trajectory and identifying any significant deviations. Without access to specific historical contract data beyond this single award, a comprehensive analysis is not possible. However, the fact that this is a Delivery Order suggests it is part of a larger, potentially indefinite-delivery/indefinite-quantity (IDIQ) contract or a basic ordering agreement. Such vehicles are often used for ongoing support requirements. Typical patterns for complex defense systems involve consistent annual spending for sustainment, maintenance, upgrades, and spare parts. Spending can fluctuate based on operational tempo, system upgrades, and the age of the equipment. A review of previous Delivery Orders under the parent contract, or similar contracts awarded over the past 5-10 years, would reveal trends in total obligated amounts, contract types, and competition levels, providing context for the current $34.3 million award.

What are the implications of the 'Optical Instrument and Lens Manufacturing' NAICS code for this contract?

The North American Industry Classification System (NAICS) code 333314, 'Optical Instrument and Lens Manufacturing,' provides insight into the nature of the services procured. This code typically covers establishments primarily engaged in manufacturing optical instruments (e.g., telescopes, microscopes, binoculars) and optical components (e.g., lenses, prisms, mirrors). For a contract focused on 'support and sustainment' of the ASARS system, this NAICS code suggests that the services may involve not only routine maintenance and repair but also potentially the manufacturing or refurbishment of specialized optical components, calibration, or the development of related optical technologies. It implies a need for highly specialized technical expertise and potentially access to manufacturing facilities or advanced fabrication capabilities, aligning with the complex nature of synthetic aperture radar sensors.

Industry Classification

NAICS: Manufacturing › Commercial and Service Industry Machinery Manufacturing › Optical Instrument and Lens Manufacturing

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES

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: 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: $35,369,238

Exercised Options: $35,369,238

Current Obligation: $34,345,941

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA852814D0023

IDV Type: IDC

Timeline