Raytheon Company awarded $24.6M for ASARS sensor support, a sole-source contract with a 366-day duration

Contract Overview

Contract Amount: $24,570,511 ($24.6M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2017-09-29

End Date: 2018-09-30

Contract Duration: 366 days

Daily Burn Rate: $67.1K/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 $24.6 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. Contract awarded to Raytheon Company for engineering services related to the Advanced Synthetic Aperture Radar (ASARS) system. 2. The contract is a sole-source award, indicating limited competition. 3. The contract duration is 366 days, ending September 30, 2018. 4. The primary service involves support and sustainment of the ASARS system. 5. The contract type is Cost Plus Fixed Fee (CPFF), which can carry cost overrun risks. 6. The award was made by the Department of the Air Force. 7. The North American Industry Classification System (NAICS) code is 333314 for Optical Instrument and Lens Manufacturing.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging due to its sole-source nature and specific technical support requirements for the ASARS system. Without comparable sole-source contracts for similar advanced sensor sustainment, it's difficult to definitively assess if the $24.6 million price represents excellent value. The Cost Plus Fixed Fee (CPFF) contract type means that costs are reimbursed plus a fixed fee, which can sometimes lead to higher overall costs if not managed closely. Further analysis would require understanding the specific labor hours, material costs, and the fixed fee percentage relative to industry standards for specialized engineering support.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning that the Department of the Air Force did not conduct a competitive bidding process. This typically occurs when a specific contractor possesses unique capabilities, proprietary technology, or is the only source capable of meeting the requirement. The lack of competition limits the government's ability to leverage market forces to achieve the lowest possible price and may result in higher costs compared to a fully competed contract.

Taxpayer Impact: Taxpayers may face higher costs due to the absence of competitive pressure. Without multiple bids, there is less incentive for the contractor to offer the most cost-effective solution.

Public Impact

The primary beneficiaries are the Department of the Air Force, which receives critical support for its advanced radar capabilities. The services delivered ensure the continued operational readiness and effectiveness of the ASARS system. The geographic impact is primarily within the operational theaters where the ASARS system is deployed or supported. Workforce implications include specialized engineering and technical roles required for sensor sustainment and support.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially leading to higher costs for taxpayers.
Cost Plus Fixed Fee (CPFF) contract type can incentivize cost overruns if not closely monitored.
Lack of transparency in the justification for sole-source award.
Limited visibility into the specific breakdown of costs contributing to the total award amount.

Positive Signals

Ensures sustainment of a critical advanced synthetic aperture radar sensor system.
Award to Raytheon Company, a known defense contractor with expertise in aerospace and defense systems.
Contract provides necessary engineering services for operational readiness.

Sector Analysis

The contract falls within the aerospace and defense sector, specifically focusing on the sustainment and support of advanced sensor technology. The market for specialized defense sensor maintenance and engineering services is often characterized by high barriers to entry due to proprietary technology and security requirements. This contract represents a portion of the broader government spending on intelligence, surveillance, and reconnaissance (ISR) capabilities, where advanced radar systems play a crucial role.

Small Business Impact

This contract does not appear to involve small business set-asides, as it was awarded to Raytheon Company, a large prime contractor. There is no information provided regarding subcontracting plans for small businesses. The focus on specialized engineering services for advanced defense systems may limit opportunities for small businesses unless they are part of the prime contractor's supply chain.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Air Force's contracting and program management offices. The Inspector General (IG) of the Department of Defense may also have jurisdiction for audits and investigations into contract performance and cost management, particularly given the CPFF structure. Transparency is limited by the sole-source nature of the award, with specific oversight details not publicly available.

Related Government Programs

Advanced Synthetic Aperture Radar (ASARS) Program
Intelligence, Surveillance, and Reconnaissance (ISR) Systems
Department of Defense Sensor Sustainment Contracts
Aerospace Engineering Services

Risk Flags

Sole-source award
Cost Plus Fixed Fee contract type
Lack of competitive bidding

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $24.6 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 $24.6 million.

What is the period of performance?

Start: 2017-09-29. End: 2018-09-30.

What is the specific justification provided by the Department of the Air Force for awarding this contract on a sole-source basis to Raytheon Company?

The provided data does not include the specific justification for the sole-source award. Typically, sole-source contracts are justified under circumstances such as unique capabilities, proprietary technology, or the unavailability of other sources. For the ASARS system, it is plausible that Raytheon, as the original developer or a key integrator, possesses the specialized knowledge and technical data required for its sustainment and support, making them the only viable source. A full justification would normally be documented and made available through official channels, such as a Justification and Approval (J&A) document, which is not present in the provided data.

How does the Cost Plus Fixed Fee (CPFF) contract structure for this ASARS support contract compare to industry benchmarks for similar defense engineering services?

The Cost Plus Fixed Fee (CPFF) structure reimburses the contractor for allowable costs plus a predetermined fixed fee representing profit. While common in defense contracting for services where cost estimation is difficult, it carries inherent risks of cost overruns. Benchmarking CPFF contracts requires detailed cost data, including labor rates, overhead, material costs, and the fixed fee percentage. Without this granular data, it's challenging to compare directly. However, industry best practices emphasize robust oversight, clear scope definition, and strong negotiation of the fee to mitigate risks associated with CPFF. If the fixed fee is excessively high or if cost controls are weak, taxpayers may bear a disproportionate burden.

What are the key performance indicators (KPIs) used to measure the success of Raytheon's support and sustainment services for the ASARS system under this contract?

The provided data does not specify the Key Performance Indicators (KPIs) for this contract. For sustainment and support contracts of advanced systems like ASARS, typical KPIs often include metrics such as system uptime/availability, response time to reported issues, successful completion of scheduled maintenance, defect resolution rates, and adherence to delivery schedules for any required parts or services. The effectiveness of Raytheon's services would be evaluated against these or similar metrics defined in the contract's Performance Work Statement (PWS) and monitored by the Air Force contracting officer's representative (COR).

What is the historical spending trend for ASARS system support and sustainment, and how does this $24.6 million award fit into that pattern?

The provided data only includes information for this specific contract award of $24.6 million ending in September 2018. It does not offer historical spending data for ASARS system support and sustainment. To understand the trend, one would need to analyze contract awards for this system over multiple fiscal years, looking at the total obligated amounts, contract types, and durations. This would reveal whether spending has been consistent, increasing, or decreasing, and whether this particular award represents a typical expenditure or an outlier.

What are the potential risks associated with the sole-source nature of this contract, beyond just cost implications?

Beyond potential cost inefficiencies, the sole-source nature of this contract carries other risks. It can lead to a lack of innovation, as the incumbent contractor may face less pressure to develop more efficient or advanced support methods. There's also a risk of knowledge capture, where critical technical expertise becomes concentrated within a single company, making it difficult for the government to transition to a different provider in the future. Furthermore, sole-source awards can sometimes be perceived as lacking transparency, potentially impacting public trust and scrutiny, even if legally justified.

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: $27,395,057

Exercised Options: $27,395,057

Current Obligation: $24,570,511

Subaward Activity

Number of Subawards: 1

Total Subaward Amount: $35,505

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