DoD's $80.3M HTS CLS Contract with Raytheon: Sole-Source Award Raises Oversight Concerns

Contract Overview

Contract Amount: $80,347,626 ($80.3M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2023-06-01

End Date: 2030-11-30

Contract Duration: 2,739 days

Daily Burn Rate: $29.3K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: HIGH SPEED ANTI-RADIATION MISSILE (HARM) TARGETING SYSTEM (HTS) CONTRACT LOGISTICS SUPPORT (CLS)

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $80.3 million to RAYTHEON COMPANY for work described as: HIGH SPEED ANTI-RADIATION MISSILE (HARM) TARGETING SYSTEM (HTS) CONTRACT LOGISTICS SUPPORT (CLS) Key points: 1. Significant contract value for specialized missile targeting system support. 2. Sole-source award to Raytheon Company limits competitive pricing. 3. Long contract duration (2023-2030) necessitates ongoing scrutiny. 4. Focus on repair and maintenance within the defense sector.

Value Assessment

Rating: questionable

The contract value of $80.3 million for logistics support of the HTS system is substantial. Without competitive bidding, it's difficult to assess if this price is optimal compared to potential market alternatives or previous contract periods.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award to Raytheon Company. This lack of competition limits price discovery and may result in higher costs for the government.

Taxpayer Impact: The absence of competition for this significant contract raises concerns about potential overspending and the efficient use of taxpayer funds.

Public Impact

Ensures continued operational readiness of critical Air Force assets. Supports advanced defense technology maintenance and sustainment. Potential for increased costs due to lack of competitive pressure. Long-term commitment may lock in pricing without market adjustments.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award
Long contract duration
Lack of price competition
Limited small business participation

Positive Signals

Essential support for critical defense systems
Experienced contractor
Firm Fixed Price contract type

Sector Analysis

This contract falls within the defense sector, specifically supporting electronic and precision equipment repair and maintenance for the Air Force's High Speed Anti-Radiation Missile (HARM) Targeting System. Defense sector contracts often involve specialized technologies and long-term sustainment requirements.

Small Business Impact

The data indicates that small business participation was not a factor in this contract award (sb: false). Further analysis would be needed to determine if subcontracting opportunities were explored or if the nature of the work inherently limited small business involvement.

Oversight & Accountability

The sole-source nature of this contract warrants close oversight from the Department of Defense to ensure fair pricing and effective performance. Regular reviews of performance metrics and cost justifications are crucial for accountability.

Related Government Programs

Electronic and Precision Equipment Repair and Maintenance
Department of Defense Contracting
Department of the Air Force Programs

Risk Flags

Sole-source award limits competition and price discovery.
Long contract duration increases risk of price escalation.
Potential for contractor lock-in and resistance to innovation.
Lack of transparency regarding specific justification for sole-source.
No stated small business participation.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $80.3 million to RAYTHEON COMPANY. HIGH SPEED ANTI-RADIATION MISSILE (HARM) TARGETING SYSTEM (HTS) CONTRACT LOGISTICS SUPPORT (CLS)

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 $80.3 million.

What is the period of performance?

Start: 2023-06-01. End: 2030-11-30.

What is the justification for the sole-source award, and what steps are being taken to ensure fair and reasonable pricing?

The justification for a sole-source award typically involves unique capabilities or proprietary technology held by the contractor. The Department of Defense should have a documented rationale, such as the HTS system's specific requirements only being met by Raytheon. To ensure fair pricing, mechanisms like cost realism analyses, benchmarking against similar services (if available), and negotiation of profit margins are essential, though challenging without competition.

What are the potential risks associated with the long duration (nearly 7 years) of this contract, especially given the sole-source nature?

The long duration increases the risk of price escalation beyond market rates due to the lack of competitive pressure. It also ties the government to a single provider, potentially hindering the adoption of newer, more cost-effective technologies or support methods that might emerge. Furthermore, performance issues or contractor instability over such a long period could significantly disrupt critical operations.

How will the effectiveness of the HTS Targeting System's logistics support be measured and ensured throughout the contract's lifecycle?

Effectiveness will be measured through key performance indicators (KPIs) outlined in the contract, such as system availability rates, response times for repairs, turnaround times for parts, and overall mission readiness impact. Regular performance reviews, contractor reporting, and potentially government-led audits of maintenance procedures and spare parts inventory will be crucial to ensure the support remains effective and meets the Air Force's operational needs.

Industry Classification

NAICS: Other Services (except Public Administration) › Electronic and Precision Equipment Repair and Maintenance › Electronic and Precision Equipment Repair and Maintenance

Product/Service Code: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: FA855622R0001

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: RTX Corp

Address: 1151 E HERMANS RD, TUCSON, AZ, 85756

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: $131,149,728

Exercised Options: $82,271,690

Current Obligation: $80,347,626

Subaward Activity

Number of Subawards: 11

Total Subaward Amount: $7,219,332

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline