Raytheon Company awarded $385M for ASARS 2B Operationalization EMD, a sole-source definitive contract

Contract Overview

Contract Amount: $385,336,034 ($385.3M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2019-02-25

End Date: 2025-12-31

Contract Duration: 2,501 days

Daily Burn Rate: $154.1K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: ASARS 2B OPERATIONALIZATION EMD

Place of Performance

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

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $385.3 million to RAYTHEON COMPANY for work described as: ASARS 2B OPERATIONALIZATION EMD Key points: 1. Contract awarded to Raytheon Company for a significant sum, indicating a substantial investment in the ASARS 2B system. 2. The contract type is Cost Plus Fixed Fee, which can lead to cost overruns if not managed carefully. 3. The duration of the contract is 2501 days, suggesting a long-term development and operationalization effort. 4. This contract is a sole-source award, raising questions about the potential for competitive pricing and value. 5. The North American Industry Classification System (NAICS) code 334511 points to the manufacturing of search, detection, and navigation systems. 6. The contract is for the EMD (Engineering and Manufacturing Development) phase, indicating it's for initial development and testing. 7. The award is managed by the Department of the Air Force, a key branch within the Department of Defense.

Value Assessment

Rating: questionable

The contract's Cost Plus Fixed Fee structure, combined with its sole-source nature, presents a risk for cost control. Without competitive benchmarking, it is difficult to definitively assess value for money. The significant dollar amount suggests a critical system, but the lack of competition hinders a robust comparison to market rates or alternative solutions. Further analysis would be needed to understand the cost drivers and ensure efficiency.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. This approach is typically used when only one vendor possesses the necessary capabilities, technology, or intellectual property. The lack of competition means there was no opportunity for price discovery through a bidding process, potentially leading to higher costs for the government.

Taxpayer Impact: Taxpayers may not be receiving the best possible price due to the absence of competitive pressure. The government's negotiating position is weakened without alternative offers to consider.

Public Impact

The primary beneficiaries are the Department of the Air Force and potentially other Department of Defense entities requiring advanced airborne surveillance capabilities. The contract will deliver the operationalization of the ASARS 2B system, likely involving development, testing, and integration of advanced sensor technology. The geographic impact is primarily within the United States, with potential deployment of the system to operational theaters globally. Workforce implications include employment for engineers, technicians, and support staff at Raytheon Company and its subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potential for cost savings.
Cost Plus Fixed Fee contract type can incentivize cost overruns if not rigorously managed.
Long contract duration (2501 days) increases exposure to potential scope creep and evolving requirements.
Lack of transparency in the sole-source justification makes it difficult to assess the necessity of this specific award.
EMD phase contracts can be prone to unforeseen technical challenges impacting cost and schedule.

Positive Signals

Award to a major defense contractor (Raytheon) suggests access to established expertise and technology.
Focus on operationalization implies a move towards fielding a critical capability.
Definitive contract structure provides a framework for the long-term effort.
The specific system (ASARS 2B) likely addresses a critical intelligence, surveillance, and reconnaissance (ISR) requirement for the Air Force.

Sector Analysis

The contract falls within the aerospace and defense sector, specifically focusing on advanced sensor and system manufacturing. The market for such systems is characterized by high barriers to entry due to specialized technology, significant R&D investment, and long development cycles. Comparable spending benchmarks are difficult to establish precisely due to the unique nature of EMD contracts and sole-source awards, but investments in advanced ISR capabilities by major defense agencies typically run into hundreds of millions of dollars.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb: false'. There is no explicit information regarding subcontracting plans for small businesses. The focus on a sole-source EMD contract for a specialized system may limit opportunities for broad small business participation, unless Raytheon proactively engages them for specific components or services.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Air Force's contracting and program management offices. Accountability measures are inherent in the Cost Plus Fixed Fee structure, requiring detailed cost reporting and justification. Transparency is limited due to the sole-source nature, but contract modifications and performance reviews would be subject to internal oversight. Inspector General jurisdiction would apply to investigations of fraud, waste, or abuse.

Related Government Programs

Airborne Surveillance Systems
Intelligence, Surveillance, and Reconnaissance (ISR) Platforms
Advanced Sensor Technology Development
Department of Defense Research and Development Programs
Air Force Acquisition Programs

Risk Flags

Sole-source award
Cost Plus Fixed Fee contract type
Long contract duration
Lack of competitive benchmarking

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $385.3 million to RAYTHEON COMPANY. ASARS 2B OPERATIONALIZATION EMD

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 $385.3 million.

What is the period of performance?

Start: 2019-02-25. End: 2025-12-31.

What is the specific justification for awarding this contract on a sole-source basis?

The provided data does not include the specific justification for the sole-source award. Typically, sole-source contracts are awarded when only one responsible source is available or capable of meeting the government's requirements. This could be due to unique technology, proprietary information, or a lack of viable alternatives identified through market research. Without the official justification document, it's impossible to definitively state why this contract was not competed. However, for advanced systems like ASARS 2B, it's common for a single prime contractor to possess the necessary intellectual property and development expertise, especially during the Engineering and Manufacturing Development (EMD) phase.

How does the Cost Plus Fixed Fee (CPFF) structure compare to other contract types for EMD phases?

Cost Plus Fixed Fee (CPFF) contracts are common for EMD phases because they allow for flexibility in development where exact costs are difficult to predict. The government agrees to pay the contractor's actual allowable costs plus a fixed fee representing profit. While this structure accommodates uncertainty, it carries a risk of cost overruns if the contractor's costs exceed initial estimates, as the fee remains fixed. Other contract types for EMD could include Cost Plus Incentive Fee (CPIF), which incentivizes cost control, or Firm-Fixed-Price (FFP) if requirements are exceptionally well-defined, though FFP is rare for EMD. CPFF places more cost risk on the government compared to FFP but offers more flexibility than FFP.

What are the potential risks associated with the 2501-day contract duration?

A contract duration of 2501 days (approximately 6.8 years) presents several potential risks. Firstly, it increases the likelihood of requirement changes due to evolving technological landscapes or strategic priorities within the Department of Defense. Managing scope creep over such a long period can be challenging and lead to cost increases. Secondly, long-term contracts can sometimes lead to complacency or reduced urgency from the contractor if not actively managed. Thirdly, economic factors like inflation or changes in material costs over nearly seven years can impact the overall cost-effectiveness if not adequately accounted for in the contract terms. Finally, maintaining consistent oversight and program management continuity over such an extended period requires dedicated resources and sustained focus.

What is the significance of the ASARS 2B system for the Department of the Air Force?

The ASARS 2B (Advanced Synthetic Aperture Radar System 2B) is a crucial component for intelligence, surveillance, and reconnaissance (ISR) capabilities within the Department of the Air Force. Its operationalization and development are likely aimed at enhancing the Air Force's ability to gather real-time or near-real-time imagery and data from airborne platforms, regardless of weather or time of day. Such systems are vital for battlefield awareness, target identification, and strategic intelligence gathering. The investment in its EMD phase signifies a commitment to modernizing and improving the Air Force's ISR assets to maintain operational superiority and support mission objectives in complex environments.

Are there any comparable spending benchmarks for similar EMD contracts in the defense sector?

Finding precise comparable spending benchmarks for EMD contracts, especially sole-source ones, is challenging due to the unique nature of each system's development and the proprietary information involved. However, EMD phases for major defense systems, particularly advanced sensor or platform development, frequently involve investments ranging from tens of millions to several hundred million dollars, aligning with the $385 million awarded here. For instance, development programs for new aircraft components, advanced radar systems, or complex electronic warfare suites often fall within this financial bracket. The key differentiator here is the sole-source award, which removes the competitive pressure that typically helps establish market-based benchmarks.

Industry Classification

NAICS: Manufacturing › Navigational, Measuring, Electromedical, and Control Instruments Manufacturing › Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing

Product/Service Code: COMM/DETECT/COHERENT RADIATION

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: $385,636,223

Exercised Options: $385,636,223

Current Obligation: $385,336,034

Actual Outlays: $19,382,431

Subaward Activity

Number of Subawards: 215

Total Subaward Amount: $32,261,857

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline