Raytheon Company awarded $26.9M for AN/TPY-2 radar system development by Missile Defense Agency

Contract Overview

Contract Amount: $26,905,789 ($26.9M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2025-01-02

End Date: 2026-10-31

Contract Duration: 667 days

Daily Burn Rate: $40.3K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS AWARD FEE

Sector: Defense

Official Description: US AN/TPY-2 DEVELOPMENT

Place of Performance

Location: WOBURN, MIDDLESEX County, MASSACHUSETTS, 01801

State: Massachusetts Government Spending

Plain-Language Summary

Department of Defense obligated $26.9 million to RAYTHEON COMPANY for work described as: US AN/TPY-2 DEVELOPMENT Key points: 1. Contract focuses on the development of a critical radar system, indicating a need for advanced defense capabilities. 2. The award to Raytheon Company suggests a reliance on established defense contractors for specialized systems. 3. The contract duration of 667 days points to a medium-term development effort. 4. The 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' NAICS code highlights the specialized nature of the work. 5. The contract type 'COST PLUS AWARD FEE' implies performance incentives tied to specific award criteria. 6. The absence of small business set-aside flags suggests this contract is not specifically targeted towards smaller enterprises.

Value Assessment

Rating: fair

Benchmarking the value of this specific development contract is challenging without more detailed cost breakdowns and performance metrics. The 'COST PLUS AWARD FEE' structure allows for flexibility but can also lead to cost overruns if not managed tightly. Comparing it to similar radar system development contracts would provide better insight into whether the pricing is competitive for the scope of work. The total award amount of $26.9 million for a 667-day development period requires careful scrutiny of the deliverables and milestones.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award. This approach is often used when a specific contractor possesses unique capabilities, proprietary technology, or when urgency dictates a rapid award to an existing provider. The lack of competition means that the Missile Defense Agency did not explore alternative solutions or pricing from other potential vendors, which could potentially lead to higher costs than a competitive process.

Taxpayer Impact: Taxpayers may not be receiving the best possible price due to the absence of competitive bidding. The government relies on the contractor's proposed costs and the agency's negotiation skills to ensure fair value.

Public Impact

The primary beneficiaries are the U.S. military, specifically units requiring advanced radar detection and tracking capabilities for missile defense. The services delivered involve the continued development and enhancement of the AN/TPY-2 radar system, a key component of missile defense architecture. The geographic impact is national, supporting U.S. defense infrastructure, with potential deployment implications globally. Workforce implications include specialized engineering, technical, and program management roles within Raytheon Company and its potential subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price discovery and potentially increases costs for taxpayers.
Cost-plus award fee contracts can incentivize spending if not rigorously overseen.
Development contracts carry inherent risks of schedule delays and cost overruns.
Reliance on a single contractor for critical defense technology could pose supply chain risks.

Positive Signals

Award to Raytheon, a known defense contractor, suggests access to established expertise and technology.
Focus on AN/TPY-2 development indicates investment in critical national security capabilities.
The contract duration allows for focused development efforts.

Sector Analysis

The defense sector, particularly within missile defense, is characterized by high technological complexity and significant government investment. The AN/TPY-2 radar system is a sophisticated piece of equipment crucial for threat detection and tracking. Spending in this area is driven by evolving geopolitical threats and the need for advanced military capabilities. Comparable spending benchmarks would involve other large-scale radar system development or sustainment contracts within the Department of Defense, often running into tens or hundreds of millions of dollars.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by the 'ss' field being false. Consequently, there are no direct subcontracting requirements mandated for small businesses within this specific award. The prime contractor, Raytheon, will likely manage its own supply chain, and while they may engage small businesses, it is not a contractual obligation stemming from this particular contract.

Oversight & Accountability

Oversight for this contract will be managed by the Missile Defense Agency (MDA) within the Department of Defense. The 'COST PLUS AWARD FEE' structure necessitates close monitoring of expenditures and performance against defined award criteria to ensure value for money. Accountability measures will be tied to the achievement of developmental milestones and the successful enhancement of the AN/TPY-2 system. Transparency may be limited due to the sole-source nature and the classified aspects often associated with defense technology.

Related Government Programs

Missile Defense Systems
Radar Technology Development
Advanced Sensor Systems
Department of Defense Research and Development

Risk Flags

Sole-source award
Cost-plus contract type
Developmental nature of contract

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $26.9 million to RAYTHEON COMPANY. US AN/TPY-2 DEVELOPMENT

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 $26.9 million.

What is the period of performance?

Start: 2025-01-02. End: 2026-10-31.

What is the specific technical objective of this AN/TPY-2 radar system development contract?

This contract focuses on the development and enhancement of the AN/TPY-2 radar system, a key component of the Ballistic Missile Defense System. The specific technical objectives likely involve improving its detection range, tracking accuracy, discrimination capabilities against various types of ballistic missiles, and potentially its integration with other defense platforms. Development efforts could include software upgrades, hardware modifications, or testing of new functionalities to counter evolving threats. The 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' NAICS code suggests a broad scope within radar technology.

How does the 'COST PLUS AWARD FEE' contract type influence contractor behavior and cost control?

The 'COST PLUS AWARD FEE' (CPAF) contract type allows the contractor to recover allowable costs plus a fixed fee, with the potential for an additional award fee based on performance against pre-defined criteria. This structure incentivizes the contractor to meet or exceed performance targets, as achieving these goals can lead to higher overall compensation. However, it also requires robust government oversight to ensure that costs are reasonable and that the award fee criteria are objective and measurable. Without stringent management, CPAF contracts can sometimes lead to cost escalation if the focus shifts too heavily towards maximizing the award fee rather than efficient cost control.

What are the risks associated with a sole-source award for critical defense technology like the AN/TPY-2 radar?

Sole-source awards for critical defense technology carry several risks. Firstly, the absence of competition can lead to higher prices than might be achieved in a competitive bidding process, as the government lacks the leverage of multiple offers. Secondly, it can reduce the incentive for innovation and efficiency, as the contractor may face less pressure to outperform. Thirdly, it creates a dependency on a single supplier, which can pose supply chain risks if that supplier experiences financial difficulties, production issues, or if geopolitical factors impact their operations. Finally, it limits the government's ability to explore alternative technological solutions that might be offered by other companies.

What is the historical spending trend for the AN/TPY-2 radar system or similar radar development programs within the Missile Defense Agency?

Analyzing historical spending for the AN/TPY-2 radar system and similar programs within the Missile Defense Agency (MDA) is crucial for context. While specific figures for the AN/TPY-2 development are not detailed here, MDA's budget typically runs into billions of dollars annually, allocated across various missile defense components, including sensors like the AN/TPY-2. Past contracts for radar development and sustainment have often been substantial, reflecting the complexity and cost of such advanced systems. Trends may show increasing investment in sensor technology to counter more sophisticated threats, or shifts in funding based on program maturity and strategic priorities. A detailed review of MDA's historical contract awards database would reveal patterns in spending on radar systems.

What are the potential performance metrics or award fee criteria likely used for this contract?

For a CPAF contract like this, performance metrics and award fee criteria are typically tailored to the specific development objectives. For the AN/TPY-2 radar system development, these could include metrics related to technical performance (e.g., achieving specific detection probabilities, accuracy levels, or signal-to-noise ratios), schedule adherence (e.g., meeting key development milestones on time), cost control (e.g., managing expenditures within projected budgets), and successful integration or testing outcomes. The award fee would be determined by how well Raytheon meets or exceeds these pre-defined criteria, with higher performance potentially unlocking a larger portion of the award fee.

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: RESEARCH AND DEVELOPMENT › C – National Defense R&D Services

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: HQ014717R0012

Pricing Type: COST PLUS AWARD FEE (R)

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: $110,776,613

Exercised Options: $46,965,775

Current Obligation: $26,905,789

Subaward Activity

Number of Subawards: 3

Total Subaward Amount: $1,518,925

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HQ014718D0002

IDV Type: IDC

Timeline