DoD Awards Raytheon $2.73B for AN/TPY-2 Radar Production, Extending to 2032

Contract Overview

Contract Amount: $2,732,984,085 ($2.7B)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2020-06-26

End Date: 2032-08-31

Contract Duration: 4,449 days

Daily Burn Rate: $614.3K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: KSA FMS ARMY NAVY TRANSPORTABLE RADAR SURVEILLANCE AND CONTROL MODEL 2 (AN/TPY-2) PRODUCTION

Place of Performance

Location: WOBURN, MIDDLESEX County, MASSACHUSETTS, 01801

State: Massachusetts Government Spending

Plain-Language Summary

Department of Defense obligated $2.73 billion to RAYTHEON COMPANY for work described as: KSA FMS ARMY NAVY TRANSPORTABLE RADAR SURVEILLANCE AND CONTROL MODEL 2 (AN/TPY-2) PRODUCTION Key points: 1. Significant investment in advanced radar technology for missile defense. 2. Sole-source award to Raytheon Company raises questions about price discovery. 3. Long contract duration (12 years) presents potential for cost overruns. 4. Focus on surveillance and control systems highlights critical national security needs.

Value Assessment

Rating: questionable

The contract's firm fixed price structure with a sole-source award to Raytheon raises concerns about whether the government secured the best possible price. Without competitive bidding, it's difficult to benchmark against similar contracts.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award to Raytheon Company. This lack of competition limits price discovery and may lead to higher costs for taxpayers.

Taxpayer Impact: The sole-source nature of this large contract means taxpayers may be paying a premium without the benefit of competitive pricing.

Public Impact

Enhances national missile defense capabilities. Supports critical surveillance and control operations. Long-term commitment to a specific technology. Potential for follow-on contracts and sustainment costs.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award
Long contract duration
Lack of competition
Potential for cost escalation

Positive Signals

Critical defense capability
Established technology provider
Firm fixed price contract

Sector Analysis

This contract falls within the 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' sector. Spending in this area is often driven by national security requirements and technological advancements, with significant investments in radar and surveillance systems.

Small Business Impact

The data indicates this is a large prime contract awarded to Raytheon Company, a major defense contractor. There is no explicit information provided regarding subcontracting opportunities for small businesses on this specific award.

Oversight & Accountability

The long-term nature of this sole-source contract warrants close oversight to ensure Raytheon meets performance requirements and that costs remain justified throughout the contract's lifecycle. Regular reviews of pricing and performance are essential.

Related Government Programs

Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing
Department of Defense Contracting
Missile Defense Agency Programs

Risk Flags

Sole-source award limits competitive pricing.
Long contract duration increases risk of cost overruns.
Potential for technological obsolescence over 12 years.
Lack of transparency in price negotiation.
Dependency on a single supplier.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $2.73 billion to RAYTHEON COMPANY. KSA FMS ARMY NAVY TRANSPORTABLE RADAR SURVEILLANCE AND CONTROL MODEL 2 (AN/TPY-2) PRODUCTION

Who is the contractor on this award?

The obligated recipient is RAYTHEON COMPANY.

Which agency awarded this contract?

Awarding agency: Department of Defense (Missile Defense Agency).

What is the total obligated amount?

The obligated amount is $2.73 billion.

What is the period of performance?

Start: 2020-06-26. End: 2032-08-31.

What is the justification for awarding this contract on a sole-source basis, and what steps were taken to ensure fair and reasonable pricing?

The justification for a sole-source award typically involves unique capabilities, proprietary technology, or the absence of viable alternatives. To ensure fair and reasonable pricing, the government would likely conduct a thorough cost analysis of Raytheon's proposed price, comparing it against historical data, independent cost estimates, and market research where possible. However, without competition, the government's leverage in price negotiation is significantly reduced.

What are the potential risks associated with a 12-year firm fixed-price contract for advanced radar systems, particularly given the sole-source nature?

A 12-year firm fixed-price contract carries risks of cost escalation for the contractor if material or labor costs increase unexpectedly, potentially leading to requests for equitable adjustments or performance issues. For the government, the primary risk is paying above market rates due to the lack of competition. Furthermore, technological obsolescence could become a factor over such a long period, requiring potential modifications or upgrades that may not have been fully anticipated in the initial pricing.

How does the AN/TPY-2 radar system contribute to overall missile defense effectiveness, and what is the expected operational lifespan beyond this production contract?

The AN/TPY-2 radar is a crucial component of missile defense systems, providing long-range surveillance, detection, and tracking of ballistic missiles. Its effectiveness lies in its ability to provide early warning and precise targeting data. While this contract covers production through August 2032, the operational lifespan of the fielded systems will likely extend well beyond that, necessitating ongoing sustainment, maintenance, and potential upgrade contracts to ensure continued effectiveness against evolving threats.

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: COMM/DETECT/COHERENT RADIATION

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: HQ014719R0019

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: RTX Corp

Address: 225 PRESIDENTIAL WAY, WOBURN, MA, 01801

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: $2,743,629,090

Exercised Options: $2,743,629,090

Current Obligation: $2,732,984,085

Subaward Activity

Number of Subawards: 3140

Total Subaward Amount: $3,181,490,976

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline