Raytheon Company awarded $6.1M contract for communications equipment, with limited competition

Contract Overview

Contract Amount: $6,102,417 ($6.1M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2022-09-28

End Date: 2027-04-30

Contract Duration: 1,675 days

Daily Burn Rate: $3.6K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Other

Official Description: HARDWARE BUY #2

Place of Performance

Location: MARLBOROUGH, MIDDLESEX County, MASSACHUSETTS, 01752

State: Massachusetts Government Spending

Plain-Language Summary

Department of Defense obligated $6.1 million to RAYTHEON COMPANY for work described as: HARDWARE BUY #2 Key points: 1. Contract awarded on a sole-source basis, raising questions about price discovery and potential for overpayment. 2. The contract type (Cost Plus Fixed Fee) can incentivize cost overruns, requiring robust oversight. 3. Limited competition suggests potential risks related to contractor lock-in and reduced innovation. 4. The duration of the contract (nearly 5 years) indicates a long-term need for these communications equipment. 5. The specific product code (334290) points to a niche manufacturing area within the communications sector. 6. The award is a delivery order under a larger contract vehicle, suggesting a pre-existing relationship.

Value Assessment

Rating: questionable

Benchmarking the value of this $6.1 million contract is challenging due to the sole-source award and the specific nature of the communications equipment. Without competitive bids, it's difficult to ascertain if the pricing reflects fair market value. The Cost Plus Fixed Fee structure, while common for complex procurements, carries inherent risks of cost escalation if not meticulously managed and audited. Further analysis would require comparing this award to similar sole-source procurements for comparable equipment, which may be scarce.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, Raytheon Company, was solicited. This approach bypasses the typical competitive bidding process, which is designed to foster price discovery and ensure the government receives the best value. The lack of competition here means taxpayers may not have benefited from potentially lower prices that could have emerged from a more open bidding environment.

Taxpayer Impact: Sole-source awards limit the government's ability to leverage market competition to secure the most cost-effective solutions, potentially leading to higher expenditures for taxpayers.

Public Impact

The Department of the Air Force is the primary beneficiary, receiving critical communications equipment. This contract supports the operational readiness and communication capabilities of Air Force personnel. The geographic impact is primarily within Massachusetts, where Raytheon Company is located. The contract likely supports specialized manufacturing jobs within the defense industrial base.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and may lead to higher costs.
Cost Plus Fixed Fee contract type can incentivize cost overruns.
Lack of transparency in the procurement process due to sole-sourcing.
Potential for contractor lock-in given the long-term nature of the award.
Specific equipment details are not publicly available, hindering independent value assessment.

Positive Signals

Award to an established defense contractor (Raytheon Company) with a track record.
Delivery order under an existing contract vehicle suggests a streamlined process.
Contract duration indicates a sustained need for the equipment.
The equipment is likely critical for Air Force operations.

Sector Analysis

This contract falls within the 'Other Communications Equipment Manufacturing' sector, a specialized segment of the broader electronics and defense industry. The market for such specialized equipment is often characterized by a limited number of highly capable manufacturers, making sole-source or limited competition awards more common. The total federal spending on this specific product code (334290) would provide context, but is not readily available. However, overall federal spending on communications equipment is substantial, supporting national security and critical infrastructure.

Small Business Impact

There is no indication that this contract includes a small business set-aside. Given the sole-source nature of the award to a large prime contractor like Raytheon Company, the likelihood of significant subcontracting opportunities for small businesses is uncertain without further details. The contract does not appear to be structured to specifically benefit the small business ecosystem.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Air Force's contracting and program management offices. The Cost Plus Fixed Fee structure necessitates rigorous financial oversight to monitor costs and ensure the fixed fee remains appropriate. Transparency is limited due to the sole-source nature. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Defense Communications Systems
Air Force Procurement
Communications Equipment Manufacturing
Sole-Source Contracts
Cost-Plus Contracts

Risk Flags

Sole-source award
Cost Plus Fixed Fee contract type
Lack of competitive bidding
Potential for cost overruns
Limited transparency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $6.1 million to RAYTHEON COMPANY. HARDWARE BUY #2

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 $6.1 million.

What is the period of performance?

Start: 2022-09-28. End: 2027-04-30.

What is Raytheon Company's track record with the Department of Defense for similar communications equipment contracts?

Raytheon Company, now part of RTX, has a long and extensive history of contracting with the Department of Defense, including for various communications systems and electronic warfare equipment. They are a major defense contractor with numerous awards across different branches of the military. Analyzing their past performance on similar sole-source or limited-competition contracts for specialized communications hardware would be crucial. This would involve reviewing past contract values, performance reviews (e.g., CPARS), and any instances of cost overruns or disputes. While specific data on 'Other Communications Equipment Manufacturing' awards is not detailed here, Raytheon's overall profile suggests significant experience, but also necessitates scrutiny to ensure fair pricing and effective delivery on this particular $6.1 million award.

How does the pricing of this contract compare to market rates for similar communications equipment?

Directly comparing the pricing of this $6.1 million contract to market rates is difficult due to its sole-source nature and the specific, potentially niche, 'Other Communications Equipment Manufacturing' classification. Without competitive bids, there's no market benchmark established for this specific procurement. To assess value, one would need to identify comparable sole-source contracts awarded by the government or commercial entities for similar technical specifications and quantities. Additionally, analyzing the cost breakdown within the Cost Plus Fixed Fee structure, if available, could provide insights into the reasonableness of the underlying costs. However, the lack of open competition inherently limits the ability to definitively state if the price is competitive.

What are the primary risks associated with a sole-source, Cost Plus Fixed Fee contract for communications equipment?

The primary risks associated with this contract structure are twofold. Firstly, the sole-source award eliminates the competitive pressure that typically drives down prices and encourages innovation. This means the government may be paying a premium without the benefit of multiple vendor proposals. Secondly, the Cost Plus Fixed Fee (CPFF) contract type, while offering flexibility for evolving requirements, can incentivize the contractor to incur higher costs, as the fee is fixed regardless of the final cost. The government bears the risk of cost overruns beyond the estimated cost. Effective oversight, detailed cost tracking, and robust negotiation are critical to mitigate these risks and ensure the government receives good value for its investment in this $6.1 million procurement.

What is the expected effectiveness and performance of the communications equipment being procured?

The effectiveness and performance of the communications equipment procured under this $6.1 million contract are expected to meet the specific operational requirements of the Department of the Air Force. As a sole-source award to Raytheon Company, it is presumed that this equipment is either uniquely suited to the Air Force's needs, or that Raytheon possesses unique capabilities to produce it. The contract's duration (ending April 2027) suggests a need for reliable and sustained performance over several years. However, without detailed specifications of the equipment and its intended use, a precise assessment of its effectiveness is not possible from the provided data. Performance metrics and acceptance criteria would typically be detailed within the contract's statement of work.

How does this contract's value and duration compare to historical federal spending on similar communications equipment?

Comparing this $6.1 million contract to historical federal spending requires access to detailed spending databases filtered by the specific product code (334290) or similar classifications. Federal spending on communications equipment is substantial, supporting various agencies and defense needs. A contract of $6.1 million over nearly five years is a moderate-sized award within the broader federal procurement landscape for technology and defense systems. However, its significance is amplified by the sole-source nature. Historical analysis would ideally reveal the frequency of sole-source awards in this category, average contract values, and typical durations. Without such comparative data, it's difficult to definitively place this contract within a historical spending context beyond its individual parameters.

Industry Classification

NAICS: Manufacturing › Communications Equipment Manufacturing › Other Communications Equipment Manufacturing

Product/Service Code: HARDWARE AND ABRASIVES

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: $6,102,417

Exercised Options: $6,102,417

Current Obligation: $6,102,417

Subaward Activity

Number of Subawards: 1

Total Subaward Amount: $358,903

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: FA873521D0001

IDV Type: IDC

Timeline