DoD's $330M Raytheon Contract for Taiwan Support Raises Concerns Over Competition and Value

Contract Overview

Contract Amount: $329,536,507 ($329.5M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2012-11-09

End Date: 2017-11-09

Contract Duration: 1,826 days

Daily Burn Rate: $180.5K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: IGF::OT::IGF TAIWAN SRP FOLLOW ON SUPPORT (FOS)

Place of Performance

Location: MARLBOROUGH, MIDDLESEX County, MASSACHUSETTS, 01752

State: Massachusetts Government Spending

Plain-Language Summary

Department of Defense obligated $329.5 million to RAYTHEON COMPANY for work described as: IGF::OT::IGF TAIWAN SRP FOLLOW ON SUPPORT (FOS) Key points: 1. Significant spending on a sole-source contract for critical defense systems. 2. Lack of competition may have led to inflated pricing. 3. Long contract duration and cost-plus structure increase financial risk. 4. Focus on specialized navigation and guidance systems highlights sector importance.

Value Assessment

Rating: questionable

The contract's cost-plus fixed fee structure, combined with a lack of competition, makes a definitive value assessment difficult. Without competitive bids, it's hard to benchmark against market rates or similar systems.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

This contract was not available for competition, suggesting a sole-source or limited source award. This significantly restricts price discovery and potentially leads to higher costs for taxpayers.

Taxpayer Impact: The absence of competition likely resulted in a higher price than could have been achieved through a competitive bidding process, impacting taxpayer funds.

Public Impact

Taxpayers may have overpaid due to the lack of competitive bidding. The contract supports critical defense capabilities for Taiwan, impacting geopolitical stability. Long-term support contracts can tie agency resources for extended periods.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award
Cost-plus contract type
Lack of transparency in pricing
Long contract duration

Positive Signals

Supports critical defense systems
Long-term relationship with a key contractor

Sector Analysis

This contract falls within the Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing sector. Spending in this area is crucial for national defense and technological advancement, often involving high R&D costs and specialized manufacturing.

Small Business Impact

There is no indication that small businesses were involved in this contract, as it was awarded to a large prime contractor. Opportunities for small business subcontracting were not specified.

Oversight & Accountability

The contract's sole-source nature warrants closer oversight to ensure fair pricing and prevent potential waste. Accountability for cost overruns in cost-plus contracts is essential.

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

Lack of competition
Cost-plus contract type
Potential for cost overruns
Limited transparency in pricing
Long contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $329.5 million to RAYTHEON COMPANY. IGF::OT::IGF TAIWAN SRP FOLLOW ON SUPPORT (FOS)

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 $329.5 million.

What is the period of performance?

Start: 2012-11-09. End: 2017-11-09.

What was the justification for awarding this contract on a limited/sole-source basis, and were alternative competitive strategies considered?

The justification for a limited or sole-source award is crucial for understanding why competition was bypassed. Agencies typically cite factors like unique capabilities, urgent needs, or lack of viable alternatives. Without this information, it's difficult to assess if taxpayer funds were used efficiently or if a more competitive approach could have yielded better pricing and innovation.

How does the final cost compare to initial estimates, and what mechanisms were in place to control costs under the cost-plus fixed fee structure?

Cost-plus contracts carry inherent risks of cost overruns. Understanding the variance between estimated and final costs, along with the effectiveness of any cost control mechanisms or incentives, is vital. Robust oversight is needed to ensure the contractor is managing expenses diligently and that the fixed fee remains reasonable relative to the work performed.

What is the long-term strategic value and operational necessity of these specific systems for Taiwan, and how does this contract align with broader defense objectives?

Assessing the strategic value requires understanding the operational context and Taiwan's defense needs. This contract's alignment with broader U.S. defense policy and objectives in the region is key. Evaluating the necessity of these particular systems, and whether they represent the most effective or cost-efficient solution, provides insight into the contract's overall effectiveness.

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: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Rockwell Collins Australia PTY Limited

Address: 528 BOSTON POST RD, SUDBURY, MA, 01776

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: $341,330,775

Exercised Options: $329,536,507

Current Obligation: $329,536,507

Subaward Activity

Number of Subawards: 2

Total Subaward Amount: $163,446

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline