DoD's $42M Global Hawk EISS Upgrade Contract Awarded to Raytheon Raises Cost and Competition Concerns
Contract Overview
Contract Amount: $42,183,729 ($42.2M)
Contractor: Raytheon Company
Awarding Agency: Department of Defense
Start Date: 2017-06-29
End Date: 2022-10-28
Contract Duration: 1,947 days
Daily Burn Rate: $21.7K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: COST PLUS FIXED FEE
Sector: Defense
Official Description: ACAT 1C, GLOBAL HAWK, EISS UPGRADES
Place of Performance
Location: EL SEGUNDO, LOS ANGELES County, CALIFORNIA, 90245
Plain-Language Summary
Department of Defense obligated $42.2 million to RAYTHEON COMPANY for work described as: ACAT 1C, GLOBAL HAWK, EISS UPGRADES Key points: 1. Significant contract value of over $42 million for aircraft manufacturing. 2. Sole-source award to Raytheon Company limits competitive pricing. 3. Potential risks associated with a non-competed, cost-plus contract type. 4. Focus on IT and aircraft manufacturing sectors within the Department of Defense.
Value Assessment
Rating: questionable
The contract type is Cost Plus Fixed Fee, which can lead to higher costs as the contractor is reimbursed for expenses plus a fixed fee. Without competition, it's difficult to benchmark pricing effectively against similar upgrades.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was not competed, meaning the Department of Defense did not solicit bids from multiple vendors. This lack of competition can hinder price discovery and potentially lead to higher costs for taxpayers.
Taxpayer Impact: The absence of competition for this significant upgrade may result in taxpayers paying more than necessary for the EISS upgrades to the Global Hawk aircraft.
Public Impact
Taxpayers may be overpaying due to the sole-source nature of the contract. The Global Hawk program's technological advancement is dependent on this upgrade. Lack of transparency in pricing due to non-competitive award.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award
- Cost-plus contract type
- Lack of competition
- Potential for cost overruns
Positive Signals
- Essential upgrade for Global Hawk program
- Awarded to established defense contractor
Sector Analysis
This contract falls within the Defense sector, specifically aircraft manufacturing and IT upgrades. Defense spending benchmarks for similar sole-source, cost-plus contracts can vary widely, but competition is generally preferred to ensure value.
Small Business Impact
The contract was awarded to Raytheon Company, a large business. There is no indication that small businesses were involved in this specific sole-source award, missing an opportunity for small business participation.
Oversight & Accountability
The sole-source nature of this contract warrants close oversight to ensure costs are reasonable and the scope of work is strictly adhered to. Accountability for performance and cost control is crucial.
Related Government Programs
- Aircraft Manufacturing
- Department of Defense Contracting
- Department of the Air Force Programs
Risk Flags
- Sole-source award limits price competition.
- Cost-plus contract type increases risk of cost overruns.
- Lack of transparency in pricing justification.
- Potential for contractor inefficiency due to fixed fee structure.
- No small business participation noted.
Tags
aircraft-manufacturing, department-of-defense, ca, definitive-contract, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $42.2 million to RAYTHEON COMPANY. ACAT 1C, GLOBAL HAWK, EISS UPGRADES
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 $42.2 million.
What is the period of performance?
Start: 2017-06-29. End: 2022-10-28.
What was the justification for awarding this contract on a sole-source basis instead of competing it?
The justification for a sole-source award typically involves unique capabilities, urgent needs, or a lack of viable alternatives. Without further documentation, it's difficult to ascertain the specific reasons. However, sole-source contracts often bypass competitive processes, potentially leading to higher prices and reduced innovation compared to competed contracts.
How will the Department of Defense ensure cost control and value for money on this Cost Plus Fixed Fee contract without competition?
The Department of Defense can implement robust oversight mechanisms, including detailed audits, performance monitoring, and strict adherence to the contract's fixed fee component. Negotiating clear milestones and deliverables, along with independent cost analysis, can help mitigate risks associated with cost-plus contracts awarded without competition.
What is the expected impact of these EISS upgrades on the operational effectiveness and longevity of the Global Hawk fleet?
EISS upgrades typically aim to enhance the mission capabilities, reliability, and maintainability of aircraft systems. For the Global Hawk, these upgrades likely focus on improving sensor integration, data processing, communication systems, or overall platform resilience, thereby extending its operational lifespan and increasing its effectiveness in intelligence, surveillance, and reconnaissance missions.
Industry Classification
NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft Manufacturing
Product/Service Code: AEROSPACE CRAFT AND STRUCTURAL COMPONENTS
Competition & Pricing
Extent Competed: NOT COMPETED
Solicitation Procedures: ONLY ONE SOURCE
Offers Received: 1
Pricing Type: COST PLUS FIXED FEE (U)
Evaluated Preference: NONE
Contractor Details
Parent Company: RTX Corp
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: $43,239,442
Exercised Options: $43,239,442
Current Obligation: $42,183,729
Actual Outlays: $1,298,014
Subaward Activity
Number of Subawards: 18
Total Subaward Amount: $1,772,290
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2017-06-29
Current End Date: 2022-10-28
Potential End Date: 2022-10-28 00:00:00
Last Modified: 2022-09-20
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