Raytheon Company awarded $28.3M for Digital Airport Surveillance Radar, a sole-source contract with significant duration

Contract Overview

Contract Amount: $28,301,280 ($28.3M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2021-03-16

End Date: 2026-02-28

Contract Duration: 1,810 days

Daily Burn Rate: $15.6K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: DIGITAL AIRPORT SURVEILLNACE RADAR

Place of Performance

Location: MARLBOROUGH, MIDDLESEX County, MASSACHUSETTS, 01752

State: Massachusetts Government Spending

Plain-Language Summary

Department of Defense obligated $28.3 million to RAYTHEON COMPANY for work described as: DIGITAL AIRPORT SURVEILLNACE RADAR Key points: 1. Contract awarded on a cost-plus-fixed-fee basis, which can lead to cost overruns if not managed carefully. 2. The contract duration of 1810 days (nearly 5 years) suggests a long-term need for the services or equipment. 3. The absence of competition raises concerns about potential overpayment and lack of innovation. 4. The product service code (PSC) is not specified, making direct comparison to similar procurements difficult. 5. The contract is a delivery order under a larger contract vehicle, indicating potential for future task orders. 6. The base year value is $15.6M, with the total potential value reaching $28.3M, showing significant growth potential.

Value Assessment

Rating: questionable

The contract's cost-plus-fixed-fee structure, combined with a sole-source award, presents a risk for value for money. Without competitive bidding, it is difficult to benchmark pricing against market rates or similar contracts. The significant increase from the base value to the potential total value warrants scrutiny to ensure cost efficiencies are maintained throughout the contract's life.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning there was no open competition. This typically occurs when only one vendor can provide the required goods or services, or for reasons of urgency or national security. The lack of multiple bidders limits price discovery and may result in higher costs for the government.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive pressure. Without a competitive process, there is less incentive for the contractor to offer the lowest possible price.

Public Impact

The Department of the Air Force benefits from the acquisition of advanced digital airport surveillance radar systems. These systems are crucial for enhancing air traffic control safety and efficiency within military airfields. The contract supports the modernization of critical infrastructure for national defense operations. The geographic impact is primarily within Massachusetts, where the contractor is located, but the operational impact is global for Air Force operations.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potential for cost savings.
Cost-plus-fixed-fee contract type can incentivize higher costs if not closely monitored.
Long contract duration increases exposure to potential cost escalations and performance issues.
Lack of detailed performance metrics in the provided data makes assessing effectiveness challenging.

Positive Signals

Award to a known entity (Raytheon Company) suggests a potentially reliable supplier for critical defense technology.
The contract addresses a specific need for advanced surveillance radar, indicating a focus on operational capability.
The contract is a delivery order, which implies it's part of a pre-existing framework, potentially streamlining acquisition.

Sector Analysis

The defense sector, particularly within aerospace and defense manufacturing, is characterized by high technological complexity and significant government investment. Contracts for radar systems fall under the 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' industry. This market often involves a limited number of large prime contractors capable of delivering such sophisticated technology, leading to a higher prevalence of sole-source or limited-competition awards for specialized systems.

Small Business Impact

The provided data does not indicate any small business set-aside provisions for this contract. As a sole-source award to a large prime contractor, the likelihood of significant subcontracting opportunities for small businesses is uncertain without further details on the contract's structure and the prime contractor's subcontracting plan.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Air Force's contracting and program management offices. Given the sole-source nature and cost-plus-fixed-fee structure, rigorous oversight of costs, performance, and adherence to contract terms is essential. The Inspector General's office for the Department of Defense may also conduct audits or investigations into the contract's execution.

Related Government Programs

Air Traffic Control Systems
Defense Radar Systems
Aeronautical Navigation Equipment
Military Surveillance Technology

Risk Flags

Sole-source award
Cost-plus-fixed-fee contract type
Long contract duration
Potential for cost overruns

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $28.3 million to RAYTHEON COMPANY. DIGITAL AIRPORT SURVEILLNACE RADAR

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 $28.3 million.

What is the period of performance?

Start: 2021-03-16. End: 2026-02-28.

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 sole-source and limited-competition contracts with the Department of Defense and other government agencies for advanced defense systems, including radar technology. Their track record often involves complex, high-value procurements where they are a recognized leader in specific technological areas. While this indicates capability, sole-source awards to large, established contractors like Raytheon necessitate robust government oversight to ensure fair pricing and prevent potential cost overruns. Analysis of past performance on similar contracts would involve reviewing contract award data for cost variances, delivery performance, and any documented issues or successes to gauge the effectiveness and value derived from such arrangements.

How does the cost-plus-fixed-fee structure compare to other contract types for radar systems?

The cost-plus-fixed-fee (CPFF) contract type, used here, reimburses the contractor for allowable costs plus a fixed fee representing profit. This contrasts with fixed-price contracts, where the price is set upfront, and cost-reimbursement contracts, which cover costs but may have different profit structures. CPFF is often used when the scope of work is not precisely defined or involves significant uncertainty, such as in research and development or complex system integration. For radar systems, CPFF can be advantageous for the government if it allows for flexibility in adapting to evolving technological requirements. However, it shifts much of the cost risk to the government, making diligent oversight of allowable costs and contractor performance critical to prevent budget overruns and ensure value for money compared to potentially more cost-certain fixed-price arrangements.

What are the primary risks associated with a sole-source award for critical defense technology like surveillance radar?

The primary risks associated with a sole-source award for critical defense technology are diminished price competition, potential for inflated costs, and reduced incentive for innovation. Without competing bids, the government loses the opportunity to leverage market forces to secure the best possible price. This can lead to the contractor charging higher prices than might be achievable in a competitive environment. Furthermore, the lack of competition can reduce the contractor's motivation to innovate or improve efficiency, as there is no direct threat from competitors. For critical systems like surveillance radar, this also raises concerns about long-term sustainment costs and the potential for vendor lock-in, making it difficult and expensive to switch providers in the future.

What is the typical lifecycle cost for digital airport surveillance radar systems?

The lifecycle cost for digital airport surveillance radar systems can vary significantly based on factors such as system complexity, intended operational environment (e.g., military vs. civilian, weather conditions), manufacturer, and the duration of the support and maintenance contract. Beyond the initial procurement cost, which can range from millions to tens of millions of dollars, significant expenses are associated with installation, integration, software updates, hardware maintenance, spare parts, and personnel training. For a system like the one procured by the Air Force, with a potential value of $28.3 million over nearly five years, the total lifecycle cost could easily double or triple that amount over a 10-20 year operational lifespan, considering ongoing sustainment and upgrades.

How does the $28.3M contract value compare to overall Air Force spending on radar systems?

The $28.3 million contract value for Digital Airport Surveillance Radar represents a specific investment within the broader category of Air Force spending on radar and surveillance systems. The Air Force, as a major branch of the U.S. military, invests billions of dollars annually in advanced technologies, including a wide array of radar systems for different applications such as air defense, intelligence, surveillance, reconnaissance (ISR), and air traffic control. While $28.3 million is a substantial sum for a single contract, it is a relatively small fraction of the total Air Force budget dedicated to aviation technology and defense systems. Benchmarking this specific contract against the overall radar spending requires access to aggregated budget data and procurement reports for the Air Force's radar portfolio.

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

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: RTX Corp

Address: 1001 BOSTON POST RD E, MARLBOROUGH, MA, 01752

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: $29,895,585

Exercised Options: $28,301,280

Current Obligation: $28,301,280

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: FA873020D0039

IDV Type: IDC

Timeline