Raytheon Company awarded $66M for AN/ALQ-128 Group B upgrade, a significant investment in defense electronics

Contract Overview

Contract Amount: $65,989,651 ($66.0M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2019-06-25

End Date: 2023-05-31

Contract Duration: 1,436 days

Daily Burn Rate: $46.0K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: ENGINEERING SERVICES, AN/ALQ-128 GROUP B UPGRADE

Place of Performance

Location: FORT WAYNE, ALLEN County, INDIANA, 46808

State: Indiana Government Spending

Plain-Language Summary

Department of Defense obligated $66.0 million to RAYTHEON COMPANY for work described as: ENGINEERING SERVICES, AN/ALQ-128 GROUP B UPGRADE Key points: 1. Value for money assessed through comparison with similar engineering service contracts. 2. Competition dynamics indicate a full and open process, potentially driving competitive pricing. 3. Risk indicators include contract type (Cost Plus Fixed Fee) which shifts some risk to the government. 4. Performance context is tied to the AN/ALQ-128 system's operational readiness and upgrade requirements. 5. Sector positioning within defense electronics, focusing on specialized avionics and electronic warfare systems.

Value Assessment

Rating: fair

The contract value of $66 million for engineering services related to the AN/ALQ-128 Group B upgrade appears substantial. Benchmarking against similar complex electronic system upgrades within the Department of Defense is crucial for a definitive value assessment. The Cost Plus Fixed Fee (CPFF) contract type, while common for R&D and complex services, can lead to higher costs for the government if not managed closely, as contractor profit is guaranteed and costs can escalate.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, suggesting that multiple qualified vendors had the opportunity to bid. The number of bidders is not specified, but a broad competition generally fosters price discovery and can lead to more favorable terms for the government. The open nature of the competition is a positive indicator for achieving a fair market price.

Taxpayer Impact: A full and open competition process is beneficial for taxpayers as it maximizes the pool of potential offerors, increasing the likelihood of receiving competitive bids and potentially lower overall costs for the government.

Public Impact

The primary beneficiaries are the Department of Defense, specifically units utilizing the AN/ALQ-128 electronic warfare system, ensuring enhanced operational capabilities. Services delivered include engineering, design, development, and integration for the Group B upgrade of the AN/ALQ-128 system. Geographic impact is likely concentrated around military bases and operational theaters where the AN/ALQ-128 is deployed. Workforce implications involve specialized engineers, technicians, and program managers within Raytheon Company and potentially its subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Fixed Fee contract type can incentivize cost overruns if not rigorously monitored.
The duration of the contract (over 3 years) increases the potential for scope creep or unforeseen technical challenges.
Dependence on a single contractor for a critical system upgrade may pose long-term supply chain risks.

Positive Signals

Awarded through full and open competition, indicating a robust bidding process.
Raytheon Company is a well-established defense contractor with significant experience in electronic warfare systems.
The upgrade addresses specific system enhancements, likely improving the effectiveness and longevity of the AN/ALQ-128.

Sector Analysis

The defense electronics sector is characterized by high R&D investment, long product lifecycles, and stringent performance requirements. Contracts like this are vital for maintaining technological superiority in electronic warfare, a critical component of modern military operations. Spending in this sub-sector often involves complex systems integration and specialized engineering expertise, with major players like Raytheon dominating.

Small Business Impact

There is no indication that this contract included small business set-asides, nor is there information on subcontracting plans specifically benefiting small businesses. As a large prime contract awarded to a major defense corporation, the direct impact on the small business ecosystem may be limited unless Raytheon actively engages small businesses for specialized components or services.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and program management offices. The Defense Microelectronics Activity (DMEA) served as the servicing agency. Accountability measures are inherent in the CPFF structure, requiring detailed cost reporting and performance metrics. Transparency is generally maintained through contract award databases, though specific performance details may be sensitive.

Related Government Programs

AN/ALQ-128 Electronic Warfare System
Defense Avionics Upgrades
Electronic Warfare Systems Engineering
Department of Defense Aircraft Modernization Programs

Risk Flags

Cost Plus Fixed Fee contract type carries inherent cost overrun risk for the government.
Potential for contractor performance issues on complex, long-duration engineering projects.
Dependence on a single contractor for critical system upgrades.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $66.0 million to RAYTHEON COMPANY. ENGINEERING SERVICES, AN/ALQ-128 GROUP B UPGRADE

Who is the contractor on this award?

The obligated recipient is RAYTHEON COMPANY.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Microelectronics Activity).

What is the total obligated amount?

The obligated amount is $66.0 million.

What is the period of performance?

Start: 2019-06-25. End: 2023-05-31.

What is Raytheon Company's track record with similar electronic warfare system upgrades?

Raytheon Company, now part of RTX, has a long and extensive history in developing and upgrading electronic warfare (EW) systems for various military platforms. They are a prime contractor for numerous advanced EW suites, including systems for fighter jets, bombers, and reconnaissance aircraft. Their experience spans decades, encompassing research, development, production, and sustainment of complex EW technologies. This includes upgrades to radar warning receivers, jammers, and countermeasures. The AN/ALQ-128 system itself has seen various iterations and upgrades over its service life, with Raytheon often involved in these enhancements. Their established expertise in this domain suggests a strong capability to execute the AN/ALQ-128 Group B upgrade effectively, though specific performance on past, directly comparable upgrades would require deeper analysis of program data.

How does the $66 million contract value compare to other AN/ALQ-128 upgrade efforts or similar EW system enhancements?

The $66 million award for the AN/ALQ-128 Group B upgrade represents a significant investment, but its value proposition must be assessed in context. Comparing it directly to other AN/ALQ-128 upgrade efforts is challenging without access to historical contract data for that specific system. However, for complex electronic warfare system upgrades on military platforms, contract values can range widely from tens of millions to hundreds of millions of dollars, depending on the scope, technology involved, and number of units to be modified. Factors like the specific Group B enhancements (e.g., software updates, hardware integration, new sensor capabilities) and the total number of systems being upgraded influence the overall cost. A benchmark against similar EW system modernization programs for other aircraft types or defense platforms would provide a more robust comparison point for assessing whether this $66 million represents a fair market price for the services rendered.

What are the primary risks associated with a Cost Plus Fixed Fee (CPFF) contract for this type of engineering service?

The primary risk associated with a Cost Plus Fixed Fee (CPFF) contract for engineering services like the AN/ALQ-128 upgrade is the potential for cost overruns, which are borne by the government. In a CPFF structure, the contractor is reimbursed for all allowable costs incurred, plus a predetermined fixed fee representing their profit. While the fee is fixed, the total cost is not. This can incentivize contractors to incur higher costs, as their profit margin (the fixed fee) remains constant regardless of the final project cost. Effective government oversight, rigorous cost tracking, and clear definition of work are essential to mitigate this risk. Without strong management, the government may end up paying significantly more than initially anticipated if costs escalate beyond projections.

How does the 'full and open competition' award mechanism impact the overall effectiveness and cost of this upgrade?

Awarding the AN/ALQ-128 Group B upgrade through 'full and open competition' is generally a positive indicator for both effectiveness and cost. This mechanism maximizes the number of potential bidders, including small businesses and non-traditional defense contractors, thereby fostering a competitive environment. Increased competition typically drives down prices as contractors vie for the award. It also encourages innovation as companies propose diverse technical solutions. For the government, this process increases the likelihood of selecting the best value proposal, considering both technical merit and cost. The effectiveness is enhanced by potentially accessing a wider range of expertise, while cost savings are realized through competitive pressures, ultimately benefiting taxpayers.

What are the potential implications of this contract on the future development and sustainment of the AN/ALQ-128 system?

This contract signifies a continued commitment by the Department of Defense to the AN/ALQ-128 electronic warfare system, indicating its ongoing relevance and the need for modernization. The engineering services provided for the Group B upgrade will likely enhance the system's capabilities, potentially extending its operational lifespan and improving its effectiveness against evolving threats. This investment could also lay the groundwork for future upgrades or integration with newer systems. For Raytheon, it reinforces their position as a key provider for this platform, potentially leading to follow-on sustainment contracts, spare parts provisioning, and further development work. The success of this upgrade could influence decisions regarding the system's long-term sustainment strategy and potential replacement timelines.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services

Product/Service Code: RESEARCH AND DEVELOPMENT › C – National Defense R&D Services

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Solicitation ID: HQ072715R0001

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: RTX Corp

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: $65,989,651

Exercised Options: $65,989,651

Current Obligation: $65,989,651

Actual Outlays: $4,676,140

Subaward Activity

Number of Subawards: 19

Total Subaward Amount: $3,225,868

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HQ072716D0006

IDV Type: IDC

Timeline