DoD's $201.5M GPS Receiver Card Program Faces Limited Competition, Raising Cost Concerns

Contract Overview

Contract Amount: $201,509,372 ($201.5M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2020-11-06

End Date: 2023-11-27

Contract Duration: 1,116 days

Daily Burn Rate: $180.6K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 4

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Defense

Official Description: GLOBAL POSITIONING SYSTEM MILITARY USERS EQUIPMENT MINIATURE SERIAL INTERFACE RECEIVER CARD PROGRAM WITH NEXT GENERATION APPLICATION SPECIFIC INTEGRATED CIRCUIT INCREMENT 2

Place of Performance

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

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $201.5 million to RAYTHEON COMPANY for work described as: GLOBAL POSITIONING SYSTEM MILITARY USERS EQUIPMENT MINIATURE SERIAL INTERFACE RECEIVER CARD PROGRAM WITH NEXT GENERATION APPLICATION SPECIFIC INTEGRATED CIRCUIT INCREMENT 2 Key points: 1. The program awarded to Raytheon Company for GPS receiver cards highlights a lack of robust competition. 2. The use of a Cost Plus Incentive Fee contract type may incentivize cost overruns. 3. Limited competition raises concerns about potential overpayment and reduced value for taxpayer dollars. 4. The sector is dominated by large defense contractors, potentially limiting opportunities for smaller, innovative firms.

Value Assessment

Rating: questionable

The contract's Cost Plus Incentive Fee structure, while allowing for shared savings, can lead to higher final costs if not tightly managed. Benchmarking against similar GPS receiver components is difficult without more granular cost data, but the overall value is questionable given the limited competition.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded under a limited competition framework, suggesting that not all potential sources were solicited. This lack of full and open competition likely impacted price discovery, potentially leading to a higher price than if multiple vendors had competed.

Taxpayer Impact: Limited competition can result in taxpayers paying more for goods and services than necessary, as competitive pressures that drive down costs are reduced.

Public Impact

Ensures critical GPS capabilities for military operations, enhancing navigation and targeting. Potential for increased costs impacts the overall defense budget and allocation of resources. The reliance on a single primary contractor could pose supply chain risks. Lack of transparency in pricing due to limited competition may erode public trust.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition
Cost-plus contract type
Lack of small business participation
Long contract duration

Positive Signals

Provides essential military GPS functionality
Contract awarded to a known defense prime

Sector Analysis

The defense electronics sector is characterized by high R&D costs and long product lifecycles. Spending benchmarks for similar navigation systems are often proprietary, but programs of this scale typically involve significant investment in specialized components and integration.

Small Business Impact

The data indicates no specific small business set-aside or participation. Large defense contracts often bypass small businesses due to stringent requirements and established relationships between primes and the government, limiting opportunities for innovation and competition.

Oversight & Accountability

The contract's Cost Plus Incentive Fee structure requires robust oversight to ensure cost controls and performance targets are met. The Department of Defense's contracting officers and auditors play a crucial role in monitoring expenditures and contractor performance.

Related Government Programs

Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing
Department of Defense Contracting
Department of the Air Force Programs

Risk Flags

Potential for cost overruns due to CPIF contract type.
Risk of inflated pricing due to limited competition.
Lack of transparency in cost justification.
Dependency on a single contractor for critical technology.
Limited opportunities for small business innovation.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $201.5 million to RAYTHEON COMPANY. GLOBAL POSITIONING SYSTEM MILITARY USERS EQUIPMENT MINIATURE SERIAL INTERFACE RECEIVER CARD PROGRAM WITH NEXT GENERATION APPLICATION SPECIFIC INTEGRATED CIRCUIT INCREMENT 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 $201.5 million.

What is the period of performance?

Start: 2020-11-06. End: 2023-11-27.

What specific technological advancements justify the program's cost, and how are these advancements being validated?

The program aims to integrate next-generation application-specific integrated circuits (ASICs) for enhanced GPS capabilities. Validation likely involves rigorous testing and certification processes to ensure performance, reliability, and security standards are met. However, without detailed technical documentation, it's difficult to assess if these advancements uniquely justify the expenditure compared to alternative solutions or upgrades.

How does the limited competition impact the long-term sustainment and upgradeability of these GPS receiver cards?

Limited competition can lead to vendor lock-in, making future sustainment and upgrades more expensive and less flexible. The sole provider may have less incentive to innovate or offer competitive pricing for ongoing support. This could necessitate costly sole-source procurements for parts or services, potentially hindering the adoption of newer, more cost-effective technologies.

What measures are in place to ensure the cost-effectiveness and value for money given the contract type and competitive landscape?

The Cost Plus Incentive Fee (CPIF) structure includes incentives for cost savings, theoretically promoting efficiency. However, effective oversight is critical to prevent cost overruns. The contracting officer must diligently monitor performance metrics and expenditures, ensuring the contractor meets targets and that the final price reflects fair value, especially given the limited competitive environment.

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: 4

Pricing Type: COST PLUS INCENTIVE FEE (V)

Evaluated Preference: NONE

Contractor Details

Parent Company: Rockwell Collins Australia PTY Limited

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

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: $201,509,372

Exercised Options: $201,509,372

Current Obligation: $201,509,372

Actual Outlays: $77,719

Subaward Activity

Number of Subawards: 36

Total Subaward Amount: $19,787,539

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline