DoD awards Raytheon $50.1M for Advanced Synthetic Radar Sensor System support, a sole-source contract

Contract Overview

Contract Amount: $50,110,738 ($50.1M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2023-11-01

End Date: 2025-04-30

Contract Duration: 546 days

Daily Burn Rate: $91.8K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: ENGINEERING SERVICES FOR SUPPORT AND SUSTAINMENT OF THE ADVANCED SYNTHETIC RADAR SENSOR SYSTEM (ASARS-2A)

Place of Performance

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

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $50.1 million to RAYTHEON COMPANY for work described as: ENGINEERING SERVICES FOR SUPPORT AND SUSTAINMENT OF THE ADVANCED SYNTHETIC RADAR SENSOR SYSTEM (ASARS-2A) Key points: 1. Contract awarded on a sole-source basis, raising questions about price competition. 2. Significant duration of 546 days suggests a long-term need for these specialized services. 3. The contract type (Cost Plus Fixed Fee) can incentivize cost overruns. 4. High value indicates critical importance of the ASARS-2A system to Air Force operations. 5. Lack of competition may limit opportunities for other capable firms and potentially increase costs. 6. Performance period extends into mid-2025, requiring ongoing resource allocation.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to its sole-source nature and specialized technical requirements. The Cost Plus Fixed Fee (CPFF) contract type, while common for complex R&D or services where costs are uncertain, carries inherent risks of cost escalation. Without competitive bids, it's difficult to definitively assess if the fixed fee represents fair value for the contractor's effort or if the overall cost aligns with market rates for similar specialized engineering support. The awarded amount of $50.1M over approximately 18 months suggests a substantial investment, but the absence of comparative pricing data makes a precise value-for-money assessment difficult.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning the Department of the Air Force did not conduct a competitive bidding process. This typically occurs when only one responsible source is available or when urgency or specific capabilities necessitate a direct award. The lack of competition means that taxpayers did not benefit from the price discovery mechanisms inherent in a multi-bidder scenario, potentially leading to higher costs than if multiple firms had competed.

Taxpayer Impact: Sole-source awards limit the government's ability to secure the best possible price through competition. Taxpayers may bear a higher cost for these critical engineering services due to the absence of market pressure on the contractor to offer the most competitive pricing.

Public Impact

The primary beneficiaries are the Department of the Air Force, ensuring the continued operational readiness and sustainment of the Advanced Synthetic Radar Sensor System (ASARS-2A). Services delivered include essential engineering support and sustainment for a critical defense sensor system. The geographic impact is primarily within the operational theaters where the ASARS-2A system is deployed or supported, with the contractor's work likely centered in California. Workforce implications include the employment of specialized engineers and technical personnel required for advanced radar system maintenance and development.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially increasing costs for taxpayers.
Cost Plus Fixed Fee contract type can incentivize higher spending if not closely managed.
Lack of transparency in the justification for sole-sourcing.
Potential for scope creep in CPFF contracts if not rigorously monitored.
Limited visibility into alternative solutions or innovative approaches from other vendors.

Positive Signals

Ensures continued operational capability of a critical defense asset (ASARS-2A).
Award to a known entity (Raytheon) may leverage existing expertise and infrastructure.
Contract duration provides stability for sustainment efforts.
Fixed fee component provides some cost certainty compared to pure cost-reimbursement.

Sector Analysis

The defense sector relies heavily on specialized engineering services for the development, sustainment, and upgrade of complex sensor systems like the ASARS-2A. This contract falls within the broader aerospace and defense engineering services market, which is characterized by high barriers to entry due to technical expertise, security clearances, and established relationships with government agencies. Spending in this area is driven by national security priorities and the need to maintain technological superiority. Comparable spending benchmarks are difficult to establish precisely due to the unique nature of the ASARS-2A system, but significant investments are typical for advanced military hardware sustainment.

Small Business Impact

This contract was awarded to Raytheon Company and does not appear to include specific small business set-aside provisions. As a sole-source award to a large prime contractor, there is no direct indication of subcontracting opportunities for small businesses within this specific award document. The impact on the small business ecosystem is therefore indirect; while Raytheon may engage small businesses in its supply chain, this contract itself does not prioritize small business participation.

Oversight & Accountability

Oversight for this contract will be managed by the Department of the Air Force, likely through contracting officers and program managers responsible for the ASARS-2A system. Accountability measures are embedded within the Cost Plus Fixed Fee structure, requiring the contractor to justify costs against the agreed-upon fixed fee. Transparency is limited due to the sole-source nature of the award, with justifications for the procurement approach typically residing within internal government documentation. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Airborne Radar Systems
Intelligence, Surveillance, and Reconnaissance (ISR) Platforms
Advanced Sensor Technology
Defense Logistics and Sustainment
Aerospace Engineering Services

Risk Flags

Sole-source award
Cost Plus Fixed Fee contract type
Lack of competitive bidding
Potential for cost overruns

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $50.1 million to RAYTHEON COMPANY. ENGINEERING SERVICES FOR SUPPORT AND SUSTAINMENT OF THE ADVANCED SYNTHETIC RADAR SENSOR SYSTEM (ASARS-2A)

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 $50.1 million.

What is the period of performance?

Start: 2023-11-01. End: 2025-04-30.

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 indicates the contract was 'NOT COMPETED'. Typically, sole-source justifications for defense contracts revolve around factors such as unique capabilities possessed by only one contractor, urgent and compelling needs where competition is not feasible, or when the system is a follow-on to a previously competed effort where only the original contractor possesses the necessary knowledge and tooling. For the ASARS-2A system, it's probable that Raytheon is the sole developer or possesses proprietary knowledge essential for its sustainment, making competitive procurement impractical or detrimental to operational readiness. A formal Justification for Other than Full and Open Competition (JOFOC) would contain the detailed rationale.

How does the Cost Plus Fixed Fee (CPFF) contract type compare to other contract types in terms of risk and potential cost efficiency for the government?

Cost Plus Fixed Fee (CPFF) contracts are often used when the scope of work is well-defined but the costs are uncertain, common in research, development, or complex services. The government agrees to pay the contractor's actual costs plus a predetermined fixed fee, which represents the contractor's profit. This structure shifts some cost risk to the government, as actual costs can exceed initial estimates. Compared to Firm-Fixed-Price (FFP) contracts, CPFF offers less cost certainty for the government but can be more appropriate for high-risk, innovative projects where FFP might stifle creativity or lead to unrealistic initial bids. Compared to Cost Plus Incentive Fee (CPIF) or Cost Plus Award Fee (CPAF), CPFF provides a fixed profit margin, potentially offering less incentive for the contractor to control costs aggressively than incentive-based fee structures.

What are the key performance metrics or deliverables expected under this engineering services contract for the ASARS-2A system?

The provided data describes the contract as 'ENGINEERING SERVICES FOR SUPPORT AND SUSTAINMENT OF THE ADVANCED SYNTHETIC RADAR SENSOR SYSTEM (ASARS-2A)'. While specific performance metrics are not detailed in the summary, typical deliverables for such sustainment contracts include system maintenance, repair, troubleshooting, technical support, software updates, hardware upgrades, logistics support, and potentially performance analysis or reliability improvements. Key performance indicators (KPIs) would likely focus on system uptime, Mean Time Between Failures (MTBF), Mean Time To Repair (MTTR), response times for technical support, and successful implementation of required updates or modifications to ensure the ASARS-2A system meets its operational requirements.

What is the historical spending trend for engineering services related to the ASARS-2A system or similar radar systems within the Department of Defense?

Historical spending data for the ASARS-2A system specifically is not provided in the summary. However, the Department of Defense (DoD) consistently allocates significant funds towards the sustainment and modernization of its advanced sensor and radar systems. Such systems, crucial for intelligence, surveillance, and reconnaissance (ISR) missions, require ongoing engineering support due to their complexity and operational tempo. Annual spending on sustainment for major defense platforms can range from millions to billions of dollars, depending on the system's criticality, age, and technological sophistication. Contracts for similar advanced radar systems often involve long-term sustainment agreements, reflecting the extended lifecycle of military hardware.

What are the potential risks associated with the 546-day duration of this contract and its extension into April 2025?

A contract duration of 546 days (approximately 18 months) for engineering services indicates a substantial and ongoing requirement. Potential risks include the possibility of technological obsolescence if the ASARS-2A system's underlying technology evolves rapidly, making the current sustainment approach less effective or efficient over time. There's also a risk of cost escalation if market rates for specialized labor or components increase significantly during the contract period, particularly under a CPFF structure. Furthermore, a long duration might reduce the government's flexibility to pivot to new technologies or alternative solutions if they emerge. Effective program management and regular reviews are crucial to mitigate these risks and ensure continued value.

Industry Classification

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

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

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: FA852818R0023

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: $55,464,653

Exercised Options: $53,617,979

Current Obligation: $50,110,738

Subaward Activity

Number of Subawards: 1

Total Subaward Amount: $31,110

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA852820D0023

IDV Type: IDC

Timeline