Raytheon Company awarded $35.5M contract for communications equipment, with a significant portion allocated for future delivery orders

Contract Overview

Contract Amount: $35,463,672 ($35.5M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2023-02-21

End Date: 2028-02-20

Contract Duration: 1,825 days

Daily Burn Rate: $19.4K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Other

Official Description: MMPU SW CLS

Place of Performance

Location: MARLBOROUGH, MIDDLESEX County, MASSACHUSETTS, 01752

State: Massachusetts Government Spending

Plain-Language Summary

Department of Defense obligated $35.5 million to RAYTHEON COMPANY for work described as: MMPU SW CLS Key points: 1. The contract's value suggests a substantial need for specialized communications equipment. 2. The 'Other Communications Equipment Manufacturing' sector is critical for defense and national security. 3. A Cost Plus Fixed Fee contract type can lead to cost overruns if not managed carefully. 4. The long duration of the contract (5 years) indicates a sustained requirement. 5. The lack of competition raises questions about potential price efficiencies. 6. The contract's geographic focus on Massachusetts may indicate a specific operational need or facility.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without specific details on the equipment procured. However, the $35.5 million total contract value, spread over five years, suggests a significant investment. The Cost Plus Fixed Fee (CPFF) pricing structure, while common for complex or evolving requirements, carries inherent risks of cost escalation. Without comparable contract data for similar communications equipment, it's difficult to definitively assess value for money. The fixed fee component provides some cost certainty for the contractor's profit, but the variable cost component requires close oversight.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. This approach is typically used when a specific vendor possesses unique capabilities, proprietary technology, or when there is an urgent need that precludes a competitive process. The lack of competition means that the government did not benefit from the price discovery that typically occurs in a competitive bidding environment, potentially leading to higher costs.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive pressure to drive down prices. The government's negotiating position is also weakened without alternative sources.

Public Impact

The Department of Defense, specifically the Air Force, is the primary beneficiary, receiving critical communications equipment. This contract supports the operational readiness and technological advancement of military communications systems. The contract's impact is primarily within the defense sector, ensuring secure and reliable communication channels for military operations. While not explicitly stated, the contract likely supports specialized technical roles within the defense industrial base.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially increasing costs for taxpayers.
Cost Plus Fixed Fee structure requires diligent oversight to manage cost overruns.
Lack of transparency in the specific equipment procured makes independent value assessment difficult.
Long contract duration could lock the government into a specific technology or vendor.

Positive Signals

Award to a known entity (Raytheon Company) suggests a level of established capability.
The contract addresses a clear need for communications equipment within the Department of Defense.
The fixed fee component provides a defined profit margin for the contractor.

Sector Analysis

The 'Other Communications Equipment Manufacturing' sector is a vital component of the broader defense industrial base, encompassing a wide range of electronic and telecommunications hardware. This contract likely falls within a niche segment of this market, possibly involving specialized military-grade communication systems. The total addressable market for such specialized equipment can be substantial, driven by ongoing modernization efforts and operational requirements within defense agencies. Comparable spending benchmarks are difficult to establish without knowing the specific nature of the equipment, but defense spending on communications technology is consistently high.

Small Business Impact

This contract does not appear to have a small business set-aside component, nor is there an indication of significant subcontracting opportunities for small businesses based on the provided data. The award to a large prime contractor like Raytheon Company suggests that the primary focus is on established capabilities rather than fostering small business participation through this specific procurement vehicle. Further analysis of subcontracting plans would be needed to determine the extent of small business involvement.

Oversight & Accountability

Oversight for this contract will likely be managed by the Department of the Air Force contracting and program management offices. Given the Cost Plus Fixed Fee structure, rigorous financial oversight and auditing will be crucial to ensure costs are reasonable and allocable. Transparency regarding the specific deliverables and performance metrics will be key to accountability. While no specific Inspector General jurisdiction is mentioned, the DoD IG would have oversight authority over potential fraud, waste, or abuse.

Related Government Programs

Defense Communications Systems
Military Electronic Equipment
Air Force Procurement
Sole-Source Defense Contracts
Communications Equipment Manufacturing

Risk Flags

Sole-source award
Cost Plus Fixed Fee contract type
Lack of detailed equipment specification
Potential for cost overruns

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $35.5 million to RAYTHEON COMPANY. MMPU SW CLS

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 $35.5 million.

What is the period of performance?

Start: 2023-02-21. End: 2028-02-20.

What specific type of communications equipment is being procured under this contract, and what are its intended applications?

The provided data indicates the contract falls under the 'Other Communications Equipment Manufacturing' NAICS code (334290). However, the specific type of equipment is not detailed. Given the awardee (Raytheon Company) and the agency (Department of Defense), it is highly probable that this equipment pertains to advanced, secure, and potentially ruggedized communication systems designed for military operations. This could include tactical radios, satellite communication terminals, encrypted data links, or specialized network infrastructure components. The intended applications would likely support command and control, intelligence, surveillance, and reconnaissance (ISR) missions, ensuring reliable communication in challenging operational environments.

How does the $35.5 million total contract value compare to historical spending on similar communications equipment by the Department of Defense?

Without specific details on the equipment type, a direct comparison is difficult. However, the Department of Defense consistently invests billions annually in communications and electronic systems. For instance, historical spending on tactical radios, satellite communications, and network-centric warfare systems often runs into hundreds of millions or even billions of dollars per year across various programs. A $35.5 million contract for a specific set of equipment, especially if it's a niche or specialized system, could represent a moderate investment within the broader DoD communications portfolio. To provide a precise comparison, one would need to identify comparable contract vehicles for similar equipment categories and analyze their award values over recent fiscal years.

What are the primary risks associated with a Cost Plus Fixed Fee (CPFF) contract for communications equipment, and how are they mitigated?

The primary risk of a CPFF contract is cost overrun, as the contractor is reimbursed for all allowable costs plus a fixed fee. If the contractor's costs exceed initial estimates, the government bears the burden. This is particularly relevant for complex or technologically evolving equipment where unforeseen challenges can arise. Mitigation strategies include robust government oversight of contractor expenditures, detailed cost accounting standards, clear definition of allowable costs, and strong program management to monitor progress and identify potential issues early. The fixed fee provides an incentive for the contractor to control costs to some extent, as their profit is capped, but the primary control mechanism remains diligent government administration and auditing.

Given the sole-source nature of this award, what steps can the government take to ensure fair pricing and prevent potential contractor overreach?

When a sole-source award is necessary, the government typically employs several strategies to ensure fair pricing. This includes conducting thorough price and cost analyses, which may involve requesting detailed cost breakdowns from the contractor, using historical pricing data for similar items, and employing independent cost estimation models. The government may also negotiate the fixed fee and profit margins. Furthermore, establishing clear performance metrics and delivery schedules, coupled with strong contract administration, helps ensure the contractor delivers value. For future procurements, the agency should continuously explore the market to identify potential sources that could compete, thereby reducing reliance on sole-source awards.

What is Raytheon Company's track record in delivering communications equipment to the Department of Defense, particularly for the Air Force?

Raytheon Company (now RTX) has a long and extensive track record of providing a wide array of defense systems, including sophisticated communications equipment, to the Department of Defense and its various branches, including the Air Force. They are known for their expertise in areas such as radar, missiles, command and control systems, and electronic warfare, all of which often integrate complex communication functionalities. While specific details of past performance on contracts identical to this one are not provided, Raytheon's general history suggests they possess the technical capabilities and manufacturing capacity to fulfill such requirements. Performance reviews and past delivery orders on similar contracts would offer a more granular assessment.

Industry Classification

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

Product/Service Code: IT AND TELECOM - INFORMATION TECHNOLOGY AND TELECOMMUNICATIONS › IT AND TELECOM - END USER

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: $57,498,387

Exercised Options: $46,572,326

Current Obligation: $35,463,672

Subaward Activity

Number of Subawards: 4

Total Subaward Amount: $703,523

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