DoD awards Raytheon $138.7M for Reaper MQ-9 sensor support, raising value-for-money questions due to sole-source nature

Contract Overview

Contract Amount: $138,707,161 ($138.7M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2019-01-01

End Date: 2023-08-30

Contract Duration: 1,702 days

Daily Burn Rate: $81.5K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: CLS SUPPORT AND SERVICES APPLICABLE TO THE REAPER MQ-9 SENSOR PROGRAM

Place of Performance

Location: MCKINNEY, COLLIN County, TEXAS, 75071

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $138.7 million to RAYTHEON COMPANY for work described as: CLS SUPPORT AND SERVICES APPLICABLE TO THE REAPER MQ-9 SENSOR PROGRAM Key points: 1. The contract's value-for-money is questionable given the lack of competition. 2. Competition dynamics are absent, as this was a sole-source award. 3. Risk indicators include potential for overpricing and reduced innovation without competitive pressure. 4. Performance context is tied to the critical MQ-9 Reaper sensor program, vital for intelligence and surveillance. 5. Sector positioning places this within the defense manufacturing industry, specifically targeting sensor systems.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging without competitive bids. The $138.7 million award for sensor support services over nearly five years suggests a significant investment. However, the absence of a competitive process means there's no clear market validation of the pricing. Without comparable sole-source contracts or detailed cost breakdowns, it's difficult to definitively assess if the government received optimal value. The cost-plus-fixed-fee structure, while common in complex defense procurements, can also lead to higher costs if not managed diligently.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning Raytheon was the only vendor considered. The justification for sole-sourcing is not provided in the data, but typically it involves unique capabilities or proprietary technology. The lack of competition means there were no other bidders to drive down prices or offer alternative solutions. This limits the government's ability to explore the full range of market offerings and potentially secure more favorable terms.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as there is no competitive pressure to ensure the most economical price. This can result in less efficient use of public funds compared to contracts awarded through full and open competition.

Public Impact

The primary beneficiaries are the Department of Defense, specifically units utilizing the MQ-9 Reaper drone for intelligence, surveillance, and reconnaissance missions. The services delivered are critical for maintaining and supporting the sensor systems on the MQ-9 Reaper, ensuring its operational readiness. The geographic impact is primarily within the operational theaters where the MQ-9 Reaper is deployed globally. Workforce implications include the potential for continued employment for specialized technical and support personnel at Raytheon and its subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated costs.
Sole-source award limits opportunities for other capable small businesses.
Potential for cost overruns inherent in cost-plus contracts.
Dependence on a single contractor for critical sensor support.

Positive Signals

Ensures continued support for a vital intelligence asset (MQ-9 Reaper).
Leverages Raytheon's established expertise in sensor technology.
Provides long-term stability for a critical defense capability.

Sector Analysis

This contract falls within the aerospace and defense sector, specifically focusing on the manufacturing and support of advanced sensor systems for unmanned aerial vehicles. The market for such specialized components is often dominated by a few key players due to high research and development costs and stringent qualification requirements. Comparable spending benchmarks are difficult to ascertain without more specific details on the sensor technology and support services, but defense spending on ISR platforms and their associated systems represents a significant portion of the overall defense budget.

Small Business Impact

The data indicates that small business participation was not a primary focus, as the contract was sole-sourced and the prime contractor is Raytheon Company, a large defense firm. There is no explicit mention of small business set-asides or subcontracting goals. This sole-source award may limit opportunities for small businesses that could have competed for portions of the work or provided specialized support services. The impact on the small business ecosystem is likely minimal in terms of direct award, but it highlights the challenges small businesses face in accessing large, sole-source defense contracts.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor compliance with terms and conditions. Accountability measures are embedded within the Cost Plus Fixed Fee (CPFF) contract structure, requiring detailed reporting and justification of costs. Transparency is limited due to the sole-source nature and the proprietary information often associated with defense systems. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

MQ-9 Reaper Unmanned Aerial Vehicle Program
Defense Intelligence, Surveillance, and Reconnaissance (ISR) Systems
Aerospace Sensor Manufacturing
Unmanned Aircraft Systems (UAS) Support Contracts

Risk Flags

Sole-source award lacks competitive justification.
Potential for uncompetitive pricing.
Limited transparency in contract award process.
High value contract without clear performance metrics provided.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $138.7 million to RAYTHEON COMPANY. CLS SUPPORT AND SERVICES APPLICABLE TO THE REAPER MQ-9 SENSOR PROGRAM

Who is the contractor on this award?

The obligated recipient is RAYTHEON COMPANY.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $138.7 million.

What is the period of performance?

Start: 2019-01-01. End: 2023-08-30.

What is Raytheon Company's track record with the Department of Defense, particularly on sole-source contracts?

Raytheon Company has a long and extensive history of contracting with the Department of Defense, often securing significant sole-source awards due to its established position as a major defense contractor. The company is a key provider of various defense systems, including sensors, missiles, and radar technology. While sole-source awards are common for specialized or proprietary systems where only one vendor can meet the requirement, they often draw scrutiny regarding price reasonableness and competition. Raytheon's track record includes numerous large-value contracts, some of which have been sole-sourced due to the unique nature of the technology or the critical need for specific capabilities. Analyzing past sole-source awards to Raytheon could provide insights into pricing trends and the government's negotiation strategies in similar situations, though specific performance metrics and cost efficiencies can vary widely.

How does the $138.7 million cost compare to similar sensor support contracts for UAVs?

Directly comparing the $138.7 million cost for MQ-9 Reaper sensor support to similar contracts is challenging without more granular data on the specific services rendered and the technology involved. However, the duration of the contract (approximately 4.7 years) suggests an average annual cost of roughly $29.5 million. This figure needs to be contextualized by the complexity and criticality of the MQ-9's sensor suite, which is vital for its intelligence, surveillance, and reconnaissance (ISR) mission. Sole-source awards, by their nature, lack a competitive benchmark, making it difficult to ascertain if this represents a fair market price. Broader industry trends show significant investment in UAV sensor technology, with costs varying widely based on sensor type (e.g., electro-optical, infrared, radar, signals intelligence) and the level of integration and support required. Without access to detailed cost breakdowns or comparable competitive bids for similar systems, a definitive value assessment remains difficult.

What are the primary risks associated with a sole-source award for critical defense sensor support?

The primary risks associated with a sole-source award for critical defense sensor support, such as that for the MQ-9 Reaper, revolve around cost, innovation, and vendor lock-in. Without competition, there is a reduced incentive for the contractor to offer the most competitive pricing, potentially leading to higher costs for the government and taxpayers. The lack of alternative providers can also stifle innovation, as the sole source may not face pressure to develop more advanced or cost-effective solutions. Furthermore, the government becomes heavily reliant on a single vendor, creating a risk of vendor lock-in, where switching providers in the future could be prohibitively expensive or technically challenging. This dependence can weaken the government's negotiating position in subsequent contract actions and potentially impact the long-term sustainment and modernization of the critical sensor systems.

How effective is the MQ-9 Reaper sensor program, and does this contract contribute to its overall mission success?

The MQ-9 Reaper's sensor program is generally considered highly effective and has been a cornerstone of U.S. intelligence, surveillance, and reconnaissance (ISR) capabilities for many years. Its ability to loiter for extended periods over target areas, equipped with advanced sensors like electro-optical/infrared (EO/IR) and sometimes radar or signals intelligence payloads, provides crucial real-time data for military operations and national security. This contract, providing support and services for these sensors, is directly linked to the program's mission success. By ensuring the continued functionality, maintenance, and potential upgrades of the sensor systems, the contract directly contributes to the Reaper's ability to perform its vital ISR functions. The effectiveness of the Reaper program hinges on the reliability and performance of its sensor suite, making the support provided under this contract essential for maintaining operational readiness and mission accomplishment.

What are the historical spending patterns for MQ-9 Reaper sensor support, and how does this award fit within that trend?

Historical spending on MQ-9 Reaper sensor support, while not detailed in the provided data, can be inferred to be substantial given the platform's long service life and critical role. The MQ-9 has been operational for over a decade, and its sensor systems are complex and require ongoing maintenance, upgrades, and specialized support. Awards for such support are typically multi-year, often sole-sourced due to the specialized nature of the technology and the prime contractor's role in system integration. This $138.7 million award, spanning nearly five years, aligns with the expectation of significant, long-term investment in maintaining and supporting the Reaper's ISR capabilities. It suggests a continued commitment by the Department of Defense to leveraging the MQ-9 platform, and by extension, its sensor systems, for ongoing intelligence gathering and operational support missions. Future spending will likely depend on the platform's continued relevance and the evolution of sensor technology.

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: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: FA852818R0003

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Rockwell Collins Australia PTY Limited

Address: 2501 W UNIVERSITY DR, MCKINNEY, TX, 75071

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: $245,712,037

Exercised Options: $182,298,094

Current Obligation: $138,707,161

Actual Outlays: $6,041,338

Subaward Activity

Number of Subawards: 23

Total Subaward Amount: $1,916,385

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline