Raytheon Company awarded $219M for USN IMPLC-6 Upgrades, a sole-source definitive contract

Contract Overview

Contract Amount: $21,914,795 ($21.9M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2009-09-22

End Date: 2020-11-05

Contract Duration: 4,062 days

Daily Burn Rate: $5.4K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: USN IMPLC-6 UPGRADES

Place of Performance

Location: GOLETA, SANTA BARBARA County, CALIFORNIA, 93117

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $21.9 million to RAYTHEON COMPANY for work described as: USN IMPLC-6 UPGRADES Key points: 1. Contract awarded on a sole-source basis, limiting price competition. 2. Long contract duration of over 11 years suggests potential for cost overruns. 3. Firm Fixed Price contract type offers some cost certainty. 4. The contract falls under the Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing NAICS code. 5. Awarded by the Defense Contract Management Agency, indicating a focus on defense procurement. 6. The contractor, Raytheon Company, is a major defense contractor with extensive experience.

Value Assessment

Rating: questionable

Benchmarking the value for this specific contract is challenging due to its sole-source nature and long duration. Without competitive bids, it's difficult to ascertain if the $219 million represents a fair market price. The firm fixed price structure provides some cost control, but the extended period of performance could still lead to cost increases if not managed diligently. Further analysis would require comparing the scope and deliverables to similar, competitively awarded contracts, which may not be readily available.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed. This typically occurs when only one responsible source can provide the required goods or services. The lack of competition means that taxpayers did not benefit from the price discovery mechanisms inherent in a competitive bidding process, potentially leading to a higher price than if multiple vendors had vied for the contract.

Taxpayer Impact: Sole-source awards limit opportunities for other businesses and can result in higher costs for the government due to the absence of competitive pressure.

Public Impact

The U.S. Navy benefits from the upgrades to its IMPLC-6 systems, enhancing operational capabilities. Services delivered include the manufacturing and integration of systems for naval platforms. The contract's geographic impact is primarily tied to the contractor's facilities and Navy installations where the systems are deployed. Workforce implications include employment opportunities at Raytheon Company and its subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competition and potentially increases costs.
Long contract duration (over 11 years) raises concerns about cost control and potential for scope creep.
Lack of transparency in the justification for sole-source award.
Potential for contractor lock-in due to specialized nature of the systems.

Positive Signals

Firm Fixed Price contract type provides some cost certainty.
Award to a major defense contractor with a proven track record.
Contract supports critical U.S. Navy operational capabilities.

Sector Analysis

This contract falls within the defense sector, specifically related to the manufacturing of search, detection, navigation, guidance, and related systems. The market for such specialized defense electronics is dominated by a few large, established contractors like Raytheon. Spending in this area is driven by national security requirements and technological advancements in military hardware. Comparable spending benchmarks would likely involve other large-scale defense system development and procurement contracts.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. There is no explicit information regarding subcontracting plans for small businesses. The sole-source nature of the award further reduces the likelihood of significant subcontracting opportunities for small businesses unless they are direct suppliers to Raytheon for this specific contract.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor performance and compliance. Accountability measures are inherent in the contract terms, particularly the firm fixed price structure. Transparency regarding the sole-source justification and performance metrics would be crucial for assessing accountability. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Naval Systems Modernization Programs
Defense Electronics Procurement
Advanced Sensor Systems Development
Military Navigation and Guidance Systems

Risk Flags

Sole-source award
Long contract duration
Lack of competitive bidding

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $21.9 million to RAYTHEON COMPANY. USN IMPLC-6 UPGRADES

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 $21.9 million.

What is the period of performance?

Start: 2009-09-22. End: 2020-11-05.

What specific upgrades are included in the USN IMPLC-6 program, and how do they enhance naval capabilities?

The provided data does not detail the specific upgrades encompassed by the 'USN IMPLC-6 Upgrades' contract. However, based on the NAICS code (334511 - Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing), these upgrades likely pertain to enhancing the performance, reliability, or functionality of existing naval systems related to these areas. This could include improvements to radar systems, sonar, navigation equipment, or guidance systems for weaponry. Such enhancements are critical for maintaining the U.S. Navy's technological edge, improving situational awareness, enabling more precise targeting, and ensuring the effective operation of naval platforms in complex operational environments. The long duration of the contract suggests a phased implementation of these upgrades across various naval assets.

What is the justification for awarding this contract on a sole-source basis to Raytheon Company?

The data indicates the contract was awarded as 'NOT COMPETED' and is 'sole-source.' While the specific justification is not provided, common reasons for sole-source awards in defense procurement include unique capabilities, proprietary technology, urgent need where only one source can meet the requirement, or if the follow-on to a previously competed system where only the original manufacturer can provide compatible upgrades. Given Raytheon's position as a major defense contractor specializing in systems related to search, detection, and navigation, it's plausible that they possess the proprietary technology, specialized knowledge, or existing infrastructure necessary for these specific IMPLC-6 upgrades, making them the only viable source. A formal justification document would typically be required by federal acquisition regulations.

How does the firm fixed price (FFP) contract type mitigate risks for the government on this long-term contract?

The Firm Fixed Price (FFP) contract type is generally favorable to the government as it shifts the risk of cost overruns to the contractor. Under an FFP agreement, the contractor is obligated to complete the work for a predetermined price, regardless of their actual costs. This provides a high degree of cost certainty for the government. For this long-term contract (over 11 years), the FFP structure aims to prevent unexpected cost escalations due to inflation, material price changes, or labor cost increases. However, the effectiveness of FFP on such extended contracts can be influenced by contract clauses related to economic price adjustments or changes in scope, which could still impact the final cost.

What is the historical spending pattern for similar USN IMPLC-6 upgrades or related systems procured by the Department of Defense?

The provided data focuses on a single contract award and does not offer historical spending patterns for USN IMPLC-6 upgrades or directly comparable systems. To analyze historical spending, one would need to access broader federal procurement databases (like USASpending.gov or FPDS) and search for contracts awarded to Raytheon Company or other prime contractors for similar defense systems (e.g., radar, navigation, guidance systems) over several fiscal years. This analysis would reveal trends in contract values, competition levels, and the prevalence of sole-source versus competed awards within this specific defense sub-sector. Without such data, it's impossible to establish a baseline for comparison.

What are the potential implications of a sole-source award of this magnitude on market competition within the defense electronics sector?

A sole-source award of $219 million can have several implications for market competition. Firstly, it means that other capable companies in the defense electronics sector were excluded from bidding, potentially hindering their business development and revenue growth opportunities. Secondly, it reinforces the incumbent contractor's (Raytheon) market position and potentially creates barriers to entry for competitors seeking to develop similar capabilities. While sole-source awards are sometimes necessary due to unique requirements, a pattern of such awards can lead to reduced innovation and less competitive pricing over time. It also signals to the market that opportunities in this specific niche may be limited to established players.

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

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: RTX Corp (UEI: 001344142)

Address: 6380 HOLLISTER AVE, GOLETA, CA, 93117

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $21,969,795

Exercised Options: $21,969,795

Current Obligation: $21,914,795

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline