DoD's $1B Electronics Contract with Raytheon: A Decade of Sole-Source Acquisition
Contract Overview
Contract Amount: $1,005,928,660 ($1.0B)
Contractor: Raytheon Company
Awarding Agency: Department of Defense
Start Date: 2005-06-23
End Date: 2014-12-31
Contract Duration: 3,478 days
Daily Burn Rate: $289.2K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: COST PLUS AWARD FEE
Sector: Defense
Official Description: RDTE/ELECTRONICS&COMMUNICATION EQ-ENG/MANUF DEV ELECTRONICS AND COMMUNICATION EQUIP
Place of Performance
Location: SUDBURY, MIDDLESEX County, MASSACHUSETTS, 01776
Plain-Language Summary
Department of Defense obligated $1.01 billion to RAYTHEON COMPANY for work described as: RDTE/ELECTRONICS&COMMUNICATION EQ-ENG/MANUF DEV ELECTRONICS AND COMMUNICATION EQUIP Key points: 1. Significant investment in advanced electronics and communication equipment. 2. Sole-source award to Raytheon raises questions about competition and pricing. 3. Long contract duration (nearly 10 years) suggests critical, ongoing needs. 4. Focus on search, detection, and navigation systems highlights defense applications.
Value Assessment
Rating: questionable
The contract's value of over $1 billion over nearly a decade, awarded on a cost-plus basis, makes direct pricing comparisons difficult without detailed cost breakdowns. The lack of competition further complicates value assessment.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was not competed, indicating a sole-source award. This limits price discovery and potentially leads to higher costs for taxpayers compared to a competitive environment.
Taxpayer Impact: The absence of competition likely resulted in higher costs for taxpayers over the contract's lifespan.
Public Impact
Impacts national defense capabilities through advanced electronics. Potential for taxpayer overspending due to sole-source award. Long-term reliance on a single contractor for critical systems. Limited visibility into the specific technologies developed and their ultimate cost.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award
- Cost-plus contract type
- Long contract duration
- Lack of small business participation
Positive Signals
- Supports critical defense capabilities
- Established relationship with a major defense contractor
Sector Analysis
This contract falls within the Research, Development, Test, and Evaluation (RDTE) sector, specifically focusing on electronics and communication equipment manufacturing. Defense spending in this area is substantial, often involving complex, high-value contracts.
Small Business Impact
The data indicates no small business participation in this contract. This suggests that the prime contractor, Raytheon, handled the entirety of the work, potentially missing opportunities for small business innovation and economic contribution.
Oversight & Accountability
The sole-source nature of this large, long-duration contract warrants scrutiny regarding its justification and whether adequate oversight was in place to ensure fair pricing and performance.
Related Government Programs
- Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing
- Department of Defense Contracting
- Department of the Air Force Programs
Risk Flags
- Sole-source award lacks competitive pricing pressure.
- Cost-plus contract type can lead to cost overruns.
- Long duration may indicate a lack of innovation or market shifts.
- No small business participation limits broader economic benefits.
- Potential for contractor lock-in due to specialized systems.
Tags
search-detection-navigation-guidance-aer, department-of-defense, ma, definitive-contract, billion-dollar
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $1.01 billion to RAYTHEON COMPANY. RDTE/ELECTRONICS&COMMUNICATION EQ-ENG/MANUF DEV ELECTRONICS AND COMMUNICATION EQUIP
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 $1.01 billion.
What is the period of performance?
Start: 2005-06-23. End: 2014-12-31.
What was the justification for awarding this significant contract on a sole-source basis, and were alternative competitive strategies considered?
Sole-source awards are typically justified when only one responsible source can provide the required supplies or services. For this contract, the justification likely centered on unique capabilities or proprietary technology held by Raytheon. However, without detailed documentation, it's difficult to ascertain if alternative competitive strategies were thoroughly explored or if market research was insufficient.
How did the cost-plus award fee structure impact the final cost to taxpayers, given the lack of competition?
Cost-plus contracts, especially with award fees, can incentivize contractors to incur costs, as the government reimburses them plus a fee. Without competition, there's less pressure on the contractor to minimize costs. The award fee component adds another layer of complexity, potentially rewarding performance but also requiring robust oversight to ensure the fees are justified and don't inflate the overall price.
What specific search, detection, navigation, guidance, and control systems were developed or manufactured under this contract, and what is their current operational status?
The contract broadly covers 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing.' Specific details on the systems developed are likely classified or proprietary. Understanding the exact nature of these systems and their operational effectiveness is crucial for assessing the long-term value and necessity of this substantial investment.
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: NOT COMPETED
Solicitation Procedures: ONLY ONE SOURCE
Offers Received: 1
Pricing Type: COST PLUS AWARD FEE (R)
Evaluated Preference: NONE
Contractor Details
Address: 528 BOSTON POST RD, SUDBURY, MA, 01776
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business
Financial Breakdown
Contract Ceiling: $912,380,722
Exercised Options: $475,409,343
Current Obligation: $1,005,928,660
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2005-06-23
Current End Date: 2014-12-31
Potential End Date: 2014-12-31 00:00:00
Last Modified: 2016-11-01
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