Raytheon Company awarded $162.8M contract for navigation and guidance systems by the Department of Defense

Contract Overview

Contract Amount: $162,872,153 ($162.9M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2006-05-26

End Date: 2013-08-30

Contract Duration: 2,653 days

Daily Burn Rate: $61.4K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: COST PLUS AWARD FEE

Sector: Defense

Place of Performance

Location: EL SEGUNDO, LOS ANGELES County, CALIFORNIA, 90245

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $162.9 million to RAYTHEON COMPANY for work described as: Key points: 1. Contract value represents significant investment in advanced defense technology. 2. Competition dynamics suggest a robust market for specialized defense systems. 3. Contract duration indicates a long-term need for these critical components. 4. The award falls within the broader sector of defense electronics manufacturing. 5. Performance-based contract structure incentivizes contractor efficiency and quality.

Value Assessment

Rating: good

The contract value of $162.8 million over its period of performance appears reasonable given the specialized nature of navigation, detection, and guidance systems. Benchmarking against similar complex defense systems suggests that pricing is likely competitive, especially considering the full and open competition. The Cost Plus Award Fee (CPAF) structure allows for flexibility while incentivizing performance, which can lead to better value if managed effectively.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple bidders had the opportunity to submit proposals. The presence of 3 bidders suggests a healthy level of competition for this type of specialized defense system. This competitive environment is generally favorable for price discovery and ensuring the government receives competitive offers.

Taxpayer Impact: Full and open competition typically leads to better pricing for taxpayers by fostering a competitive bidding process.

Public Impact

The Department of Defense benefits from advanced and reliable navigation and guidance systems for its aircraft and other platforms. This contract supports the manufacturing and integration of critical components for national security. The geographic impact is primarily centered around Raytheon's facilities in California, contributing to the local economy. Workforce implications include employment for engineers, technicians, and manufacturing personnel involved in producing these sophisticated systems.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns in Cost Plus Award Fee contracts if not rigorously managed.
Long contract duration could lead to scope creep or evolving technological requirements not fully captured in initial pricing.
Dependence on a single large contractor for critical defense components can pose supply chain risks.

Positive Signals

Full and open competition suggests a competitive market and potentially better pricing.
The award fee structure incentivizes high performance and quality.
The contract's duration aligns with the expected lifecycle of advanced defense systems.

Sector Analysis

The contract falls within the 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' industry. This sector is characterized by high R&D investment, stringent quality requirements, and significant government procurement. The market size is substantial, driven by defense spending globally. Raytheon is a major player in this segment, and this contract aligns with its core competencies in aerospace and defense electronics.

Small Business Impact

There is no indication of small business set-asides for this contract, nor is there explicit information on subcontracting plans for small businesses. As a large prime contractor, Raytheon may engage small businesses for specific components or services, but the primary award is to a large entity. Further analysis would be needed to determine the extent of small business participation.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Contract Management Agency (DCMA), ensuring compliance with contract terms, quality standards, and delivery schedules. The Cost Plus Award Fee structure necessitates close monitoring of performance metrics to determine award fees. Transparency is generally maintained through contract reporting requirements, though specific details of performance and costs may be sensitive.

Related Government Programs

Defense Navigation Systems
Aerospace Guidance Equipment
Military Electronics Manufacturing
DoD Procurement of Avionics
Defense Contract Management

Risk Flags

Cost Control Risk (CPAF)
Performance Measurement Complexity
Long-Term Technology Evolution
Supply Chain Dependency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $162.9 million to RAYTHEON COMPANY. See the official description on USAspending.

Who is the contractor on this award?

The obligated recipient is RAYTHEON COMPANY.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $162.9 million.

What is the period of performance?

Start: 2006-05-26. End: 2013-08-30.

What is Raytheon Company's track record with similar Department of Defense contracts?

Raytheon Company, now part of RTX Corporation, has a long and extensive history of performing complex defense contracts for the Department of Defense. They are a major prime contractor across numerous defense programs, including missile systems, radar, cybersecurity, and aerospace components. Their track record generally includes successful delivery of advanced technologies, though like any large defense contractor, they have also faced scrutiny over cost, schedule, and performance on specific programs. The company's size and experience suggest a high capability to execute large, technically demanding contracts such as this one for navigation and guidance systems.

How does the $162.8 million award compare to other contracts for similar navigation and guidance systems?

The $162.8 million award for navigation, detection, and guidance systems is a substantial sum, reflecting the complexity and advanced technology involved. To benchmark effectively, one would need to compare it against contracts for similar system types (e.g., inertial navigation, GPS-aided systems, radar-based guidance) awarded to other major defense contractors over comparable timeframes. Factors like system sophistication, integration requirements, quantity, and specific performance parameters heavily influence pricing. Given the 'full and open competition' and multiple bidders, this value is likely within a competitive range for high-end defense avionics, but a detailed comparison would require access to specific technical requirements and market data for comparable systems.

What are the primary risks associated with this Cost Plus Award Fee (CPAF) contract?

The primary risks with a CPAF contract, like this one, revolve around cost control and performance measurement. For the government, there's a risk that costs could escalate beyond initial projections if not managed diligently, as the contractor is reimbursed for allowable costs plus a fee that includes an award component tied to performance. For the contractor, the risk lies in not meeting the performance targets required to earn the maximum award fee. Effective oversight by the Defense Contract Management Agency (DCMA) is crucial to mitigate these risks by ensuring costs are allowable and allocable, and that performance metrics are objective and rigorously assessed.

How effective are navigation and guidance systems in enhancing overall military platform performance?

Navigation and guidance systems are absolutely critical to the effectiveness of modern military platforms, including aircraft, missiles, ships, and ground vehicles. They provide precise positioning, orientation, and trajectory control, enabling platforms to reach targets accurately, operate autonomously, avoid threats, and coordinate complex maneuvers. Advanced systems integrate multiple sensor inputs (e.g., GPS, inertial measurement units, star trackers, terrain mapping) to ensure reliability and accuracy even in GPS-denied environments. The performance of these systems directly impacts mission success, survivability, and the efficient use of resources.

What has been the historical spending trend for navigation and guidance systems within the Department of Defense?

Historical spending on navigation and guidance systems within the Department of Defense has been consistently significant, driven by the continuous need to upgrade and maintain the accuracy and capabilities of military assets. This spending fluctuates based on modernization programs, new platform acquisitions, and the development of counter-measure technologies. Over the past decade, there has been a strong emphasis on enhancing precision, reducing reliance on GPS (due to jamming/spoofing risks), and integrating these systems with other advanced technologies like artificial intelligence and networked warfare capabilities. Contracts like this one represent a portion of that ongoing, substantial investment.

What is the significance of the contract being a 'Definitive Contract'?

A 'Definitive Contract' is a standard, legally binding agreement that specifies all the terms and conditions, including price, quantity, and delivery schedule. Unlike basic ordering agreements or other types of contracts, it represents a firm commitment from both the government and the contractor. For this $162.8 million award, being a definitive contract means the scope, price, and delivery expectations are clearly laid out, providing a solid foundation for the multi-year performance period and reducing ambiguity for both parties involved in this significant procurement.

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: INSTRUMENTS AND LABORATORY EQPT

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 3

Pricing Type: COST PLUS AWARD FEE (R)

Evaluated Preference: NONE

Contractor Details

Address: 2000 EAST EL SEGUNDO BLVD, EL SEGUNDO, CA, 90245

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $108,036,698

Exercised Options: $108,036,698

Current Obligation: $162,872,153

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline