Raytheon Company awarded $273M for MQ-9 Reaper program production, a sole-source contract

Contract Overview

Contract Amount: $27,319,212 ($27.3M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2017-06-20

End Date: 2019-11-01

Contract Duration: 864 days

Daily Burn Rate: $31.6K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: MTS-B/DAS-1A PRODUCTION FOR SPAF AND FRANCE MQ-9 REAPER PROGRAMS

Place of Performance

Location: MCKINNEY, COLLIN County, TEXAS, 75071

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $27.3 million to RAYTHEON COMPANY for work described as: MTS-B/DAS-1A PRODUCTION FOR SPAF AND FRANCE MQ-9 REAPER PROGRAMS Key points: 1. Contract awarded to Raytheon Company for critical MQ-9 Reaper program components. 2. This contract supports both U.S. Air Force (SPAF) and international (France) MQ-9 programs. 3. The contract value is substantial, indicating significant investment in drone technology. 4. Fixed-price contract type suggests cost certainty for the government. 5. The sole-source nature raises questions about potential price efficiencies and market alternatives. 6. Contract duration spans over two years, ensuring sustained production.

Value Assessment

Rating: fair

The contract value of $273.2 million for the MTS-B/DAS-1A production for the MQ-9 Reaper program is significant. Without specific details on the units produced or the exact nature of the components, a direct value-for-money assessment is challenging. However, as a sole-source award, there is a reduced opportunity for competitive benchmarking to ensure optimal pricing. The fixed-price nature provides some cost predictability, but the absence of competition could lead to higher-than-market prices.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one bidder, Raytheon Company, was considered. This approach is typically justified when a unique capability or proprietary technology is involved, or in cases of urgent need where competition is not feasible. The lack of competition limits the government's ability to explore alternative solutions or leverage market dynamics to achieve lower prices.

Taxpayer Impact: Taxpayers may not benefit from the cost savings that typically arise from a competitive bidding process. The absence of multiple bids means there was no direct pressure on Raytheon to offer its lowest possible price.

Public Impact

The U.S. Air Force benefits from the continued production of essential components for its MQ-9 Reaper surveillance and attack aircraft. France, as an international partner, receives critical technology for its own MQ-9 program, enhancing its defense capabilities. The contract supports the operational readiness and technological advancement of unmanned aerial vehicle (UAV) programs. Production activities likely contribute to jobs within Raytheon's supply chain, particularly in Texas where the contract is managed.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potential taxpayer savings.
Lack of transparency in the justification for sole-source procurement.
Potential for cost overruns if competitive pressures are absent.

Positive Signals

Supports critical national defense and international security programs.
Fixed-price contract offers cost predictability.
Ensures continued availability of essential components for advanced drone technology.

Sector Analysis

This contract falls within the aerospace and defense sector, specifically focusing on the manufacturing of components for unmanned aerial vehicles (UAVs). The MQ-9 Reaper is a significant platform in modern military operations for intelligence, surveillance, and reconnaissance (ISR) and strike missions. Spending in this area is driven by evolving geopolitical landscapes and the increasing reliance on advanced drone technology by both the U.S. and allied nations. Comparable spending benchmarks would involve other major defense contracts for UAV platforms and their associated systems.

Small Business Impact

This contract was not set aside for small businesses, nor does it appear to have specific subcontracting requirements for small businesses mentioned in the provided data. As a sole-source award to a large prime contractor, the direct impact on the small business ecosystem is likely minimal unless Raytheon actively engages small businesses within its supply chain for this specific production run. Further investigation into Raytheon's subcontracting plans would be needed to assess any indirect benefits.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and program management offices, specifically within the Department of the Air Force. As a definitive contract, it is subject to standard federal procurement regulations and oversight. Inspector General investigations could be initiated if any fraud, waste, or abuse is suspected. Transparency is limited due to the sole-source nature, but contract award details are generally available through federal procurement databases.

Related Government Programs

MQ-9 Reaper Program
Unmanned Aerial Vehicle (UAV) Production
Defense Production Contracts
Foreign Military Sales (FMS) - France
Aerospace Component Manufacturing

Risk Flags

Sole-source award
Lack of competitive bidding
Potential for price inflation

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $27.3 million to RAYTHEON COMPANY. MTS-B/DAS-1A PRODUCTION FOR SPAF AND FRANCE MQ-9 REAPER PROGRAMS

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 $27.3 million.

What is the period of performance?

Start: 2017-06-20. End: 2019-11-01.

What specific components are being produced under the MTS-B/DAS-1A designation, and why is Raytheon the sole provider?

The MTS-B/DAS-1A likely refers to specific sensor or mission systems for the MQ-9 Reaper drone, such as the Multi-Spectral Targeting System (MTS) variants or Distributed Aperture System (DAS). Raytheon is a primary developer and manufacturer of these advanced electro-optical/infrared (EO/IR) sensor systems. The sole-source justification would typically stem from proprietary technology, unique integration capabilities with the MQ-9 platform, or the need for specialized expertise that only Raytheon possesses. Without access to the specific contract's justification for other than full and open competition (JOFOC), the precise technical and business reasons remain proprietary to the government and contractor.

How does the $273.2 million contract value compare to historical spending on similar MQ-9 Reaper components or systems?

Historical spending data for the MQ-9 Reaper program indicates significant and consistent investment over many years. The $273.2 million awarded to Raytheon for MTS-B/DAS-1A production represents a substantial, but not unprecedented, expenditure for major system components. For instance, previous awards for MQ-9 production, upgrades, or associated sensor packages have often been in the hundreds of millions of dollars. This specific award reflects the ongoing need for these advanced ISR capabilities as the MQ-9 remains a key platform for the Air Force and allied nations. Benchmarking against prior sole-source awards for similar complex systems is crucial for assessing value, though direct comparisons require detailed unit cost and quantity data.

What are the primary risks associated with a sole-source contract of this magnitude for defense systems?

The primary risks associated with a sole-source contract of this magnitude include a lack of competitive pressure, which can lead to inflated prices and reduced innovation. Without competing bids, the government has less leverage to negotiate favorable terms or ensure the most cost-effective solution. There's also a risk of vendor lock-in, where the government becomes overly reliant on a single supplier, making future transitions or sourcing difficult and potentially more expensive. Furthermore, the absence of multiple bidders can obscure potential performance issues or quality control lapses that might be identified during a competitive evaluation. Ensuring robust oversight and clear performance metrics becomes even more critical in sole-source scenarios.

What is the expected impact of this contract on the MQ-9 Reaper program's operational readiness and future development?

This contract is crucial for maintaining and enhancing the operational readiness of the MQ-9 Reaper fleet for both the U.S. Air Force and allied partners like France. The MTS-B/DAS-1A systems are advanced sensor payloads that provide critical intelligence, surveillance, and reconnaissance (ISR) capabilities. Continued production ensures that existing aircraft are equipped with up-to-date technology and that new aircraft deliveries can be properly outfitted. This sustained production also supports the ongoing development and integration of new capabilities for the MQ-9 platform, ensuring its relevance in evolving threat environments and its continued role as a premier unmanned combat aerial vehicle.

How has federal spending on MQ-9 Reaper related programs evolved over the past five years, and what does this award signify?

Federal spending on MQ-9 Reaper related programs has been consistently high over the past five years, reflecting its strategic importance. The program consistently receives significant funding for aircraft procurement, upgrades, sustainment, and associated systems like sensors and communication links. This $273.2 million award for MTS-B/DAS-1A production is indicative of the ongoing commitment to maintaining and enhancing the MQ-9's capabilities. It signifies that the demand for these advanced ISR and strike platforms remains strong, both domestically and internationally, and that the U.S. government is willing to invest substantial sums to ensure its continued availability and technological edge.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Other Aircraft Parts and Auxiliary Equipment Manufacturing

Product/Service Code: COMM/DETECT/COHERENT RADIATION

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 2501 W UNIVERSITY DR, MCKINNEY, TX, 75070

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: $27,319,212

Exercised Options: $27,319,212

Current Obligation: $27,319,212

Subaward Activity

Number of Subawards: 5

Total Subaward Amount: $226,306

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline