DoD Awards Raytheon $61.7M for APG-73 Radar Upgrade, Facing Potential Cost Overruns

Contract Overview

Contract Amount: $61,712,608 ($61.7M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2020-03-06

End Date: 2025-03-31

Contract Duration: 1,851 days

Daily Burn Rate: $33.3K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: CET 19-984, USMC APG-73 RADAR REPLACEMENT AND IMPROVEMENT PROGRAM PHASE2

Place of Performance

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

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $61.7 million to RAYTHEON COMPANY for work described as: CET 19-984, USMC APG-73 RADAR REPLACEMENT AND IMPROVEMENT PROGRAM PHASE2 Key points: 1. Significant contract value for a critical defense system upgrade. 2. Raytheon Company, a major defense contractor, holds the award. 3. Potential for cost overruns due to Cost Plus Fixed Fee contract type. 4. The Defense sector sees substantial investment in modernization programs.

Value Assessment

Rating: questionable

The Cost Plus Fixed Fee (CPFF) contract type introduces risk for cost overruns, as the contractor is reimbursed for all allowable costs plus a fixed fee. Without strong oversight, this can lead to prices exceeding initial estimates.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, suggesting a competitive bidding process. However, the specific award type (Delivery Order) and CPFF structure may limit price discovery and control.

Taxpayer Impact: Taxpayer funds are being used for a critical defense system upgrade. The CPFF contract type necessitates vigilant oversight to ensure cost efficiency and prevent unnecessary expenditure.

Public Impact

Enhances the operational capabilities of the US Marine Corps' aircraft. Supports national defense by modernizing essential radar systems. Potential impact on future defense procurement strategies for similar systems.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Fixed Fee contract type
Long contract duration (over 1800 days)
No small business participation noted

Positive Signals

Full and open competition awarded
Critical system modernization

Sector Analysis

This contract falls within the Engineering Services sector, specifically related to defense electronics. Spending benchmarks for radar system upgrades can vary widely based on complexity and technology, but $61.7M is a substantial investment.

Small Business Impact

There is no indication of small business participation in this contract. This suggests that the prime contractor, Raytheon, is handling the entire scope of work, potentially missing opportunities for subcontracting to smaller, specialized firms.

Oversight & Accountability

The contract requires robust oversight from the Defense Contract Management Agency (DCMA) due to its CPFF structure and long duration. Monitoring cost expenditures, performance, and adherence to specifications is crucial for accountability.

Related Government Programs

Engineering Services
Department of Defense Contracting
Defense Contract Management Agency Programs

Risk Flags

Cost overrun potential due to CPFF
Long contract duration increases risk exposure
Lack of small business involvement
Potential for scope creep without strict management

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $61.7 million to RAYTHEON COMPANY. CET 19-984, USMC APG-73 RADAR REPLACEMENT AND IMPROVEMENT PROGRAM PHASE2

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 $61.7 million.

What is the period of performance?

Start: 2020-03-06. End: 2025-03-31.

What specific performance improvements are expected from the APG-73 radar replacement and improvement program?

The APG-73 radar replacement and improvement program is expected to enhance the USMC's situational awareness, target detection, and tracking capabilities. This modernization aims to counter evolving threats and maintain operational superiority by incorporating advanced radar technologies and potentially improving reliability and maintainability over older systems.

What are the primary risks associated with the Cost Plus Fixed Fee (CPFF) contract type for this program?

The primary risk with a CPFF contract is the potential for cost overruns, as the contractor is reimbursed for all allowable costs plus a fixed fee. This can incentivize less cost-conscious behavior if not managed with stringent oversight. There's also a risk that the fixed fee may not adequately compensate the contractor for unforeseen complexities, leading to disputes or reduced effort.

How will the effectiveness of the upgraded APG-73 radar system be measured and validated post-delivery?

Effectiveness will be measured through rigorous testing and evaluation (T&E) protocols, including ground tests, flight tests, and operational assessments conducted by the USMC. Key performance parameters (KPPs) defined in the contract, such as detection range, accuracy, reliability, and integration with other aircraft systems, will be validated against mission requirements.

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: 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: $61,712,608

Exercised Options: $61,712,608

Current Obligation: $61,712,608

Subaward Activity

Number of Subawards: 36

Total Subaward Amount: $3,691,973

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