Raytheon Company awarded $84.1M contract for search, detection, and navigation systems by the Department of Defense

Contract Overview

Contract Amount: $84,139,177 ($84.1M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2012-02-02

End Date: 2015-06-30

Contract Duration: 1,244 days

Daily Burn Rate: $67.6K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 2

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Defense

Official Description: DDR CONTRACT

Place of Performance

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

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $84.1 million to RAYTHEON COMPANY for work described as: DDR CONTRACT Key points: 1. Contract value of $84.1 million over approximately 3.5 years indicates significant investment in advanced defense systems. 2. The contract type (Cost Plus Incentive Fee) suggests a focus on performance and cost control for complex projects. 3. Awarded by the Defense Contract Management Agency, highlighting specialized oversight for defense-related procurements. 4. The North American Industry Classification System (NAICS) code 334511 points to a specialized manufacturing sector for guidance and navigation instruments. 5. The contract's duration of 1244 days (approx. 3.4 years) suggests a long-term need for these critical defense components. 6. The presence of two bidders indicates a degree of competition, though the specific nature of 'exclusion of sources' warrants further review.

Value Assessment

Rating: good

The contract value of $84.1 million for search, detection, and navigation systems appears reasonable given the specialized nature of defense technology. Benchmarking against similar contracts for advanced guidance and navigation systems would provide a more precise value-for-money assessment. The Cost Plus Incentive Fee structure aims to incentivize efficiency, which can lead to better value if managed effectively. However, without specific performance metrics and final costs, a definitive value assessment is challenging.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded under 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES,' indicating that while competition was sought, certain sources were excluded. This suggests a potentially limited competitive landscape, possibly due to specific technical requirements, security clearances, or existing relationships. With two bidders, the competition level is moderate, but the exclusion of other potential bidders may have impacted price discovery and potentially led to a higher final price than under truly open competition.

Taxpayer Impact: The limited competition may mean taxpayers did not benefit from the lowest possible price achievable through a broader bidding process. The exclusion of sources could indicate a need for specialized capabilities that only a few firms possess, potentially increasing costs.

Public Impact

The Department of Defense is the primary beneficiary, receiving advanced search, detection, and navigation systems crucial for military operations. This contract supports the development and manufacturing of critical components for national security and defense readiness. The contract's impact is likely concentrated within the defense industrial base, particularly in specialized electronics and systems manufacturing. Workforce implications may include employment for engineers, technicians, and manufacturing personnel involved in high-tech defense production.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The 'exclusion of sources' in the competition type raises concerns about whether the full spectrum of potential suppliers was considered, potentially limiting cost savings.
Cost Plus Incentive Fee contracts can sometimes lead to cost overruns if not rigorously managed and monitored by the contracting agency.

Positive Signals

The award to Raytheon Company, a major defense contractor, suggests a high level of technical capability and experience in delivering complex systems.
The contract's duration implies a sustained need for these systems, indicating their importance to ongoing defense strategies.
The specific NAICS code points to a specialized industry segment where innovation and advanced technology are paramount.

Sector Analysis

The contract falls within the 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' sector (NAICS 334511). This is a highly specialized segment of the aerospace and defense industry, characterized by high R&D investment, stringent quality control, and long product development cycles. The market is dominated by a few large, established defense contractors. Spending in this sector is driven by national security needs and technological advancements in military platforms.

Small Business Impact

The data indicates this contract was not set aside for small businesses (ss: false, sb: false). As a large-scale defense procurement likely involving complex technology, it is typical for such contracts to be awarded to prime contractors like Raytheon. Subcontracting opportunities for small businesses may exist within the supply chain, but this contract does not directly promote small business participation as a primary goal.

Oversight & Accountability

The contract is managed by the Defense Contract Management Agency (DCMA), which provides contract administration services to the Department of Defense. Oversight mechanisms would include monitoring performance against contract requirements, ensuring compliance with cost and schedule, and auditing financial expenditures. Transparency is generally maintained through contract award databases, but specific operational details and performance metrics may be considered sensitive.

Related Government Programs

Defense Procurement
Aerospace and Defense Manufacturing
Navigation Systems
Detection Systems
Guidance Systems

Risk Flags

Limited Competition
Cost-Plus Contract Type
Potential for Cost Overruns
Exclusion of Sources

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $84.1 million to RAYTHEON COMPANY. DDR CONTRACT

Who is the contractor on this award?

The obligated recipient is RAYTHEON COMPANY.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $84.1 million.

What is the period of performance?

Start: 2012-02-02. End: 2015-06-30.

What is Raytheon Company's track record with similar Department of Defense contracts?

Raytheon Company, now part of RTX Corporation, has a long and extensive history of contracting with the Department of Defense, spanning decades. They are a major defense contractor known for producing a wide array of defense systems, including radar, missiles, aircraft components, and cybersecurity solutions. Their track record includes numerous large-scale, complex contracts similar to this one, often involving advanced technology development and manufacturing. While specific performance details for individual contracts are often proprietary or subject to ongoing review, Raytheon generally possesses a strong reputation for technical capability and delivery within the defense sector. However, like any large contractor, they have also faced scrutiny and challenges on specific programs related to cost, schedule, or performance, underscoring the importance of robust oversight for all defense contracts.

How does the $84.1 million contract value compare to similar procurements for navigation and detection systems?

The $84.1 million contract value for search, detection, and navigation systems is substantial, reflecting the advanced and specialized nature of such defense technologies. To benchmark this value effectively, comparisons would need to be made with contracts for similar systems awarded to other major defense contractors within the last few years. Factors such as system complexity, technological sophistication (e.g., AI integration, sensor fusion), quantity ordered, and contract type (e.g., fixed-price vs. cost-plus) significantly influence pricing. Without access to a detailed database of comparable contracts with specific technical parameters and pricing, it is difficult to definitively state whether $84.1 million represents excellent, fair, or concerning value. However, given the typical costs associated with developing and manufacturing cutting-edge defense electronics, this figure appears within a plausible range for a significant program.

What are the primary risks associated with a Cost Plus Incentive Fee (CPIF) contract of this magnitude?

Cost Plus Incentive Fee (CPIF) contracts, like the one awarded to Raytheon, carry inherent risks primarily related to cost control and potential for overruns. The core risk is that the contractor may not achieve the target cost, leading to higher final prices for the government, although the incentive fee structure aims to mitigate this by rewarding cost savings. Another risk is the potential for scope creep or inefficient resource allocation if the incentive targets are not clearly defined or if the government's oversight is insufficient. For the government, there's a risk of paying more than necessary if the contractor is highly effective at managing costs and achieving targets, as the incentive fee is paid out. Effective management requires robust government oversight to monitor costs, performance, and the achievement of incentive targets to ensure value for taxpayer money.

How effective is the 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES' approach in ensuring optimal pricing for taxpayers?

The 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES' approach represents a compromise between achieving broad competition and meeting specific, often stringent, requirements. While it aims for open competition, the exclusion of certain sources inherently limits the pool of potential bidders. This limitation can reduce competitive pressure, potentially leading to higher prices than if all qualified sources were allowed to compete. The effectiveness in ensuring optimal pricing for taxpayers depends heavily on the justification for excluding sources. If exclusions are based on essential, non-negotiable technical capabilities or security requirements, the reduced competition might be unavoidable. However, if exclusions are less critical, taxpayers may bear a higher cost due to a less robust bidding environment. The presence of only two bidders further suggests that the competitive landscape was narrow.

What are the implications of the NAICS code 334511 for the type of technology and expertise involved?

The North American Industry Classification System (NAICS) code 334511, 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing,' signifies that this contract involves highly specialized and technologically advanced equipment. Companies operating under this code typically design, develop, and manufacture complex systems such as radar, sonar, GPS receivers, inertial navigation systems, flight control computers, and related instrumentation. This requires significant expertise in areas like electrical engineering, software development, signal processing, materials science, and systems integration. The technology involved is often critical for military platforms (aircraft, ships, ground vehicles) and is subject to rigorous testing and certification to ensure reliability and performance in demanding operational environments. Contracts in this sector often involve substantial research and development components.

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: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 2

Pricing Type: COST PLUS INCENTIVE FEE (V)

Evaluated Preference: NONE

Contractor Details

Parent Company: RTX Corp (UEI: 001344142)

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: $84,829,622

Exercised Options: $84,829,622

Current Obligation: $84,139,177

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline