DoD's $90.6M Raytheon Contract for MTS-B Turrets Lacks Competition, Raises Cost Concerns

Contract Overview

Contract Amount: $90,560,477 ($90.6M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2018-02-28

End Date: 2020-07-31

Contract Duration: 884 days

Daily Burn Rate: $102.4K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIXED PRICE INCENTIVE

Sector: Defense

Official Description: MULTI-SPECTRAL TARGETING SYSTEM MODEL B (MTS-B) TURRET UNITS (FRANCE)

Place of Performance

Location: MCKINNEY, COLLIN County, TEXAS, 75071

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $90.6 million to RAYTHEON COMPANY for work described as: MULTI-SPECTRAL TARGETING SYSTEM MODEL B (MTS-B) TURRET UNITS (FRANCE) Key points: 1. Significant spending on specialized targeting systems for foreign military sales. 2. Sole-source award to Raytheon Company limits price discovery and competition. 3. Fixed Price Incentive contract type introduces potential for cost overruns. 4. Lack of small business participation noted in this large prime contract.

Value Assessment

Rating: questionable

The contract's fixed-price incentive structure, coupled with a lack of competition, makes it difficult to benchmark pricing effectively against similar systems. The awarded amount of $90.6 million for 102 units suggests a high per-unit cost.

Cost Per Unit: $887,651

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning Raytheon was the only vendor considered. This significantly limits price discovery and potentially leads to higher costs for the government as competitive pressures are absent.

Taxpayer Impact: The absence of competition in this sole-source award likely results in higher taxpayer costs compared to a competitively bid contract, as the government may not have secured the best possible price.

Public Impact

Taxpayer funds are being used for advanced military hardware destined for a foreign ally. The contract supports a critical defense technology, potentially enhancing allied military capabilities. Lack of transparency due to sole-source award may obscure true value for money.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award
Fixed Price Incentive contract type
No small business participation

Positive Signals

Supports critical defense technology
Awarded to established defense contractor

Sector Analysis

This contract falls within the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' sector, a segment of the defense industrial base focused on specialized components. Spending benchmarks for similar sole-source, high-value targeting systems are difficult to establish due to their unique nature and limited market.

Small Business Impact

The contract data indicates no small business participation, which is common for large prime contracts awarded to major defense manufacturers like Raytheon. This suggests opportunities for small businesses may lie further down the supply chain.

Oversight & Accountability

The sole-source nature of this award warrants scrutiny from oversight bodies to ensure the price paid is fair and reasonable, despite the absence of competition. Transparency regarding the justification for the sole-source award is crucial.

Related Government Programs

Other Aircraft Parts and Auxiliary Equipment Manufacturing
Department of Defense Contracting
Department of the Air Force Programs

Risk Flags

Lack of competition
Potential for cost overruns (FPI contract)
High per-unit cost
Lack of transparency in pricing
No small business participation

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $90.6 million to RAYTHEON COMPANY. MULTI-SPECTRAL TARGETING SYSTEM MODEL B (MTS-B) TURRET UNITS (FRANCE)

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 $90.6 million.

What is the period of performance?

Start: 2018-02-28. End: 2020-07-31.

What was the specific justification provided by the Department of Defense for awarding this contract on a sole-source basis, and were alternative solutions or competitive approaches thoroughly evaluat

The justification for a sole-source award typically centers on unique capabilities, proprietary technology, or urgent needs where only one source can fulfill the requirement. For this MTS-B contract, the DoD would need to demonstrate that Raytheon possesses exclusive rights or essential expertise for these specific turret units, and that no other vendor could meet the technical specifications or delivery timeline. A thorough evaluation of competitive alternatives would be a prerequisite for such an award.

How does the per-unit cost of these MTS-B turret units compare to similar advanced targeting systems, either domestically procured or internationally available through competitive means?

Benchmarking the per-unit cost of $887,651 for the MTS-B turret units is challenging due to the sole-source nature and specific application. However, comparing it to other advanced electro-optical/infrared (EO/IR) targeting pods or systems procured competitively by the DoD or allied nations could reveal significant deviations. If comparable systems are available at a substantially lower cost through competition, it would indicate potential overpricing in this sole-source award.

What are the potential risks associated with the Fixed Price Incentive (FPI) contract type in this sole-source scenario, particularly concerning cost control and contractor performance?

The FPI contract type creates a shared cost risk between the government and the contractor, with incentives tied to achieving target cost and performance objectives. In a sole-source scenario, the government has less leverage to negotiate favorable targets. This increases the risk of cost overruns if the contractor's initial cost estimates are inaccurate or if performance issues arise, as the government may end up paying a higher price than initially anticipated without the benefit of competitive pressure.

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

Solicitation ID: FA862018S2011

Offers Received: 1

Pricing Type: FIXED PRICE INCENTIVE (L)

Evaluated Preference: NONE

Contractor Details

Parent Company: RTX Corp

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: $90,560,477

Exercised Options: $90,560,477

Current Obligation: $90,560,477

Subaward Activity

Number of Subawards: 20

Total Subaward Amount: $6,470,340

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline