Raytheon Company awarded $111.6M contract for Space Fence system by Department of Defense

Contract Overview

Contract Amount: $111,614,560 ($111.6M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2011-01-26

End Date: 2012-07-26

Contract Duration: 547 days

Daily Burn Rate: $204.0K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: SPACE FENCE

Place of Performance

Location: SUDBURY, MIDDLESEX County, MASSACHUSETTS, 01776

State: Massachusetts Government Spending

Plain-Language Summary

Department of Defense obligated $111.6 million to RAYTHEON COMPANY for work described as: SPACE FENCE Key points: 1. Contract awarded via full and open competition, suggesting a competitive bidding process. 2. The contract is for Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing. 3. Firm Fixed Price contract type indicates predictable costs for the government. 4. The contract duration is 547 days, suggesting a defined project timeline. 5. The award was made by the Department of the Air Force, a key branch within the DoD. 6. The North American Industry Classification System (NAICS) code 334511 points to specialized instrument manufacturing.

Value Assessment

Rating: good

The contract value of $111.6 million for a system like Space Fence appears reasonable given the complexity of space surveillance technology. Benchmarking against similar large-scale defense systems would provide further context, but the firm fixed-price nature offers cost certainty. The award to a single contractor, Raytheon Company, suggests they were deemed the best value provider through the competitive process.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under a full and open competition, indicating that all responsible sources were permitted to submit bids. The presence of two bids suggests a moderate level of competition for this specialized system. While two bidders is better than one, a higher number of bidders could potentially drive prices lower.

Taxpayer Impact: A competitive process, even with two bidders, is generally favorable for taxpayers as it encourages contractors to offer their best pricing and technical solutions to win the award.

Public Impact

The primary beneficiaries are the Department of Defense and the U.S. Air Force, who will receive the Space Fence system. The system is designed for space surveillance, enhancing the nation's ability to track objects in orbit. This contributes to national security by providing critical data on space situational awareness. The contract supports jobs within the aerospace and defense manufacturing sector, specifically in Massachusetts where the award was made.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if unforeseen technical challenges arise, despite the firm fixed-price structure.
Dependence on a single contractor for a critical national security system.
The limited number of bidders (2) might indicate high barriers to entry or a concentrated market for such specialized technology.

Positive Signals

Firm Fixed Price contract type provides cost predictability.
Awarded through full and open competition, ensuring a fair process.
The contractor, Raytheon Company, is a well-established defense contractor with relevant expertise.

Sector Analysis

The Space Fence system falls within the broader defense electronics and aerospace manufacturing sector. This sector is characterized by high R&D investment, long product development cycles, and significant government procurement. The market for space surveillance and tracking systems is specialized, with a limited number of major players capable of undertaking such complex projects. Spending in this area is driven by national security imperatives and the increasing importance of space domain awareness.

Small Business Impact

There is no indication of a small business set-aside for this contract, and the prime contractor is Raytheon Company, a large business. Subcontracting opportunities for small businesses may exist, but they are not explicitly detailed in the provided data. The nature of this high-tech, large-scale defense system often involves specialized components and services that may be beyond the capabilities of many small businesses.

Oversight & Accountability

Oversight for this contract would typically be managed by the Department of the Air Force contracting and program management offices. As a Department of Defense contract, it is also subject to oversight from the DoD Inspector General. Transparency is generally maintained through contract award databases and reporting requirements, though specific performance metrics and detailed oversight activities are not publicly disclosed.

Related Government Programs

Space Surveillance Network
Missile Defense Systems
Satellite Ground Systems
Aerospace Defense Contracts

Risk Flags

Potential for cost overruns
Contractor performance risk
Technological obsolescence
Limited competition concerns

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $111.6 million to RAYTHEON COMPANY. SPACE FENCE

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 $111.6 million.

What is the period of performance?

Start: 2011-01-26. End: 2012-07-26.

What is the specific capability and purpose of the Space Fence system being procured?

The Space Fence system is a ground-based radar system designed to detect, track, and identify man-made objects in Earth orbit. Its primary purpose is to enhance Space Situational Awareness (SSA) by providing a more comprehensive and accurate catalog of orbital debris and active satellites. This improved tracking capability is crucial for collision avoidance of operational satellites, space traffic management, and national security, allowing the U.S. military to better understand and protect its assets in space from potential threats or accidental collisions.

How does the firm fixed-price contract type benefit the Department of Defense in this context?

A Firm Fixed Price (FFP) contract type is highly beneficial for the Department of Defense in this context because it shifts the majority of the cost risk to the contractor, Raytheon Company. Under an FFP agreement, the price is set at the outset and is not subject to adjustment based on the contractor's actual costs. This provides the DoD with significant cost certainty and predictability, making budgeting more straightforward. It incentivizes the contractor to manage their costs efficiently and to perform the work within the agreed-upon budget to maximize their profit margin, thereby aligning the contractor's financial interests with the government's need for cost control.

What are the potential risks associated with a sole-source or limited competition award for advanced defense systems?

While this contract was awarded under full and open competition, if it had been sole-source or limited, potential risks would include higher prices due to lack of competitive pressure, reduced innovation as contractors may not feel compelled to offer their most advanced solutions, and a potential for vendor lock-in. For advanced defense systems, this could also mean a reliance on a single entity's technological roadmap and potential vulnerabilities if that entity faces financial or operational difficulties. Limited competition can also raise concerns about whether the government truly received the best possible value and technological solution available in the market.

Can we compare the per-unit cost or cost-effectiveness of this Space Fence system to similar international or commercial systems?

Direct per-unit cost comparisons for highly specialized defense systems like Space Fence are challenging due to unique specifications, operational requirements, and the classified nature of some performance data. Commercial space surveillance systems exist, but they often operate with different objectives and scales. International military systems may offer some comparative insights, but differences in technology, scope, and procurement processes make direct benchmarking difficult. The $111.6 million award represents the total contract value for the system's development and potentially initial deployment phases, rather than a simple per-unit cost. Assessing cost-effectiveness would require analyzing the system's operational lifespan, its contribution to mission success (e.g., satellite protection, threat detection), and its performance relative to its objectives over time.

What is Raytheon Company's track record with similar large-scale defense system contracts?

Raytheon Company, now part of RTX, has a long and extensive track record of successfully delivering complex defense systems for the U.S. military and international partners. They are a major player in radar technology, missile defense, command and control systems, and aerospace manufacturing. Their experience includes developing and producing sophisticated surveillance and tracking systems, electronic warfare capabilities, and integrated air and missile defense platforms. While specific contract performance details are often proprietary, Raytheon's sustained position as a prime contractor for numerous high-value defense programs indicates a generally strong capability and history in managing large, technologically advanced projects.

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: RESEARCH AND DEVELOPMENT › C – National Defense R&D Services

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 528 BOSTON POST RD, SUDBURY, MA, 05

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: $111,614,560

Exercised Options: $111,614,560

Current Obligation: $111,614,560

Contract Characteristics

Cost or Pricing Data: NO

Timeline