DoD's $50.8M JSTARS radar contract awarded to Raytheon Company raises value and competition concerns

Contract Overview

Contract Amount: $50,819,882 ($50.8M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2016-03-24

End Date: 2018-01-31

Contract Duration: 678 days

Daily Burn Rate: $75.0K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: JSTARS RECAP -RADAR RISK REDUCTION

Place of Performance

Location: MCKINNEY, COLLIN County, TEXAS, 75070

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $50.8 million to RAYTHEON COMPANY for work described as: JSTARS RECAP -RADAR RISK REDUCTION Key points: 1. The contract's value appears high relative to its duration and scope. 2. Lack of competition suggests potential for inflated pricing and reduced innovation. 3. The cost-plus fixed fee structure may incentivize cost overruns. 4. Performance context is limited due to the absence of competitive benchmarks. 5. This contract falls within the specialized radar systems manufacturing sector. 6. The sole-source award limits opportunities for small businesses. 7. Oversight is crucial given the non-competitive nature of the award.

Value Assessment

Rating: questionable

The contract's total value of $50.8 million over approximately two years (678 days) warrants scrutiny. Without competitive bids, it's difficult to benchmark the pricing against market rates or similar contracts. The cost-plus fixed fee (CPFF) award type, while sometimes necessary for R&D, can lead to higher overall costs compared to fixed-price contracts if not managed tightly. The absence of comparable contract data makes a precise value-for-money assessment challenging, but the lack of competition is a significant red flag for potential overpayment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning Raytheon Company was the only bidder considered. This typically occurs when only one source is capable of meeting the agency's needs, often due to proprietary technology or unique capabilities. However, the lack of a competitive bidding process means the Department of Defense did not benefit from price discovery through multiple offers, potentially leading to a higher price than if the contract had been competed.

Taxpayer Impact: Taxpayers may have paid a premium for this system due to the absence of competitive pressure. The government missed an opportunity to leverage market forces to secure a more cost-effective solution.

Public Impact

The primary beneficiary is the Department of the Air Force, which receives advanced radar technology. The contract supports the JSTARS (Joint Surveillance Target Attack Radar System) program, enhancing intelligence, surveillance, and reconnaissance capabilities. The geographic impact is primarily within the United States, with potential deployment to operational theaters. Workforce implications include specialized engineering and manufacturing roles at Raytheon and its subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competition and potentially inflates costs.
Cost-plus fixed fee contract type can incentivize higher spending.
Lack of transparency in pricing due to non-competitive nature.
Limited data available for independent value-for-money assessment.
Potential for vendor lock-in with specialized technology.

Positive Signals

Awarded to a known defense contractor with established capabilities.
Supports critical national security intelligence, surveillance, and reconnaissance (ISR) missions.
Contract duration provides a defined period for development and delivery.
Fixed fee component provides some cost certainty for the contractor.

Sector Analysis

This 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, often characterized by high barriers to entry due to technological complexity and significant R&D investment. The market is dominated by a few large prime contractors. Comparable spending benchmarks are difficult to establish publicly due to the proprietary nature of such systems and the limited number of competitors.

Small Business Impact

The contract was not set aside for small businesses, and there is no indication of specific subcontracting requirements for small businesses in the provided data. As a sole-source award to a large prime contractor, it is unlikely to directly benefit the small business ecosystem unless Raytheon actively engages them as subcontractors. The lack of a competitive bidding process further reduces opportunities for small businesses to enter the supply chain for this specific program.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and financial management oversight bodies, potentially including the Defense Contract Management Agency (DCMA) and the Inspector General (IG). Given the sole-source nature and CPFF structure, rigorous oversight of costs, performance, and adherence to contract terms would be essential to ensure accountability and prevent waste. Transparency is limited by the non-competitive award, making public scrutiny more challenging.

Related Government Programs

JSTARS Program
Airborne Radar Systems
Intelligence, Surveillance, and Reconnaissance (ISR) Platforms
Defense Manufacturing Contracts
Department of Defense Procurement

Risk Flags

Sole-source award
Lack of competition
Cost-plus contract type
Limited public data for benchmarking

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $50.8 million to RAYTHEON COMPANY. JSTARS RECAP -RADAR RISK REDUCTION

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 $50.8 million.

What is the period of performance?

Start: 2016-03-24. End: 2018-01-31.

What is Raytheon Company's track record with similar sole-source defense contracts?

Raytheon Company, now part of RTX, has a long history of securing large defense contracts, including sole-source awards, particularly in specialized areas like radar and sensor technology. While specific details on all sole-source awards are not publicly itemized, their extensive portfolio suggests significant experience navigating non-competitive procurement processes. However, the frequency or nature of past sole-source awards does not inherently validate the value or necessity of any single contract. Independent analysis of cost, performance, and justification for sole-source awards remains critical, regardless of the contractor's size or established presence.

How does the cost-plus fixed fee (CPFF) structure compare to other contract types in terms of value for money?

Cost-Plus Fixed Fee (CPFF) contracts are often used when the scope of work is not precisely defined or involves significant research and development, making fixed-price contracts impractical. In a CPFF contract, the contractor is reimbursed for allowable costs plus a fixed fee representing profit. While this structure provides flexibility, it carries a higher risk of cost overruns compared to fixed-price contracts, as the government bears the brunt of cost increases. Value for money is highly dependent on robust government oversight to control costs and ensure the fixed fee remains reasonable for the work performed. Without strong oversight, CPFF contracts can be less cost-effective than competitive fixed-price agreements.

What are the primary risks associated with sole-source defense procurements like this one?

The primary risks associated with sole-source defense procurements include lack of price competition, which can lead to inflated costs and reduced value for taxpayer money. Without competing bids, the government loses the benefit of market forces driving innovation and efficiency. There's also a risk of vendor lock-in, where the government becomes dependent on a single supplier, potentially limiting future options and negotiating power. Furthermore, the justification for a sole-source award must be exceptionally strong to ensure it's truly necessary and not a result of poor planning or market research. Oversight is critical to mitigate these risks.

Can the performance of the JSTARS radar system be benchmarked against similar systems from other countries or commercial applications?

Benchmarking the performance of specialized military systems like the JSTARS radar against international counterparts or commercial applications is challenging due to classified capabilities, unique operational requirements, and differing technological standards. While general advancements in radar technology are observable globally, direct performance comparisons are often restricted by security classifications and the specific mission parameters of military platforms. Commercial radar systems, while advanced, typically serve different purposes and operate under different constraints. Therefore, performance benchmarks are likely confined to internal military assessments or comparisons with previous generations of the same system.

What historical spending patterns exist for the JSTARS program or similar radar systems within the Department of Defense?

Historical spending on the JSTARS program and related airborne radar systems within the Department of Defense has been substantial, reflecting the high cost and technological complexity of these platforms. The program has undergone various upgrades and sustainment efforts over decades, involving significant investment. Specific figures vary depending on the contract actions, fiscal years, and whether funding is for procurement, research and development, or sustainment. Generally, advanced ISR platforms represent a major budgetary category, with contracts often running into hundreds of millions or even billions of dollars over their lifecycle. This particular $50.8 million contract represents a segment of that broader, long-term investment.

What is the justification provided for awarding this contract as sole-source?

The provided data does not include the specific justification for awarding this contract as sole-source. Typically, sole-source justifications are required under specific circumstances outlined in federal acquisition regulations, such as when only one responsible source is available or capable of meeting the agency's needs, or in cases of urgent and compelling need. Without access to the official justification document (e.g., a Justification and Approval - J&A), it is impossible to assess the validity of the sole-source determination for this Raytheon contract.

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

Address: 2501 W UNIVERSITY DR, MCKINNEY, TX, 75070

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: $50,819,883

Exercised Options: $50,819,882

Current Obligation: $50,819,882

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline