Raytheon Company awarded $33.8M for IMPLC Production Lots 10-12, a sole-source defense contract

Contract Overview

Contract Amount: $33,814,789 ($33.8M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2012-10-03

End Date: 2016-09-30

Contract Duration: 1,458 days

Daily Burn Rate: $23.2K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: IMPLC PRODUCTION LOTS 10 - 12(USN).

Place of Performance

Location: GOLETA, SANTA BARBARA County, CALIFORNIA, 93117

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $33.8 million to RAYTHEON COMPANY for work described as: IMPLC PRODUCTION LOTS 10 - 12(USN). Key points: 1. Contract awarded to a single vendor, raising questions about price competitiveness. 2. Long-term contract duration suggests a need for sustained production capabilities. 3. Firm Fixed Price contract type shifts cost risk to the contractor. 4. The contract falls under the Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing sector. 5. Awarded by the Department of Defense, indicating a focus on national security needs. 6. No small business set-aside was utilized for this procurement.

Value Assessment

Rating: fair

The contract value of $33.8 million for IMPLC Production Lots 10-12 appears to be within a reasonable range for specialized defense systems, however, without competitive bidding, it is difficult to definitively benchmark its value for money. The firm fixed price structure is generally favorable for the government in managing cost certainty. Further analysis would require comparison to similar sole-source procurements for comparable systems or components to assess if the pricing reflects market rates or potential premiums due to lack of competition.

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 among multiple vendors. This approach is typically used when only one responsible source can provide the required goods or services, or in cases of urgent need. The lack of competition means that price discovery through market forces was not leveraged, potentially leading to higher costs than if multiple bids had been solicited. The government likely relied on negotiation and cost analysis to determine a fair price.

Taxpayer Impact: Taxpayers may not have received the best possible price due to the absence of a competitive bidding process. This can result in a higher overall expenditure for the defense systems procured under this contract.

Public Impact

The Department of Defense is the primary beneficiary, receiving critical components for its operations. The contract supports the production of Search, Detection, Navigation, Guidance, Aeronautical, and Nautical systems. The geographic impact is primarily within California, where the contractor is located. This contract likely sustains jobs within Raytheon Company's manufacturing facilities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially increasing costs for taxpayers.
Lack of transparency in the sole-source justification process could obscure potential alternatives.
Long contract duration may not adapt well to rapidly evolving technological needs.
Dependence on a single supplier could create supply chain vulnerabilities.
Limited visibility into the contractor's cost structure due to sole-source nature.

Positive Signals

Firm Fixed Price contract provides cost certainty for the government.
Award to an established contractor like Raytheon suggests a degree of reliability.
Contract supports critical defense systems, aligning with national security objectives.
Specific production lots indicate a structured and planned procurement approach.

Sector Analysis

This contract falls within the 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' sector, a critical component of the defense industrial base. This industry is characterized by high technological sophistication, significant R&D investment, and often long product development cycles. Spending in this sector is heavily influenced by government defense budgets and strategic priorities. Comparable spending benchmarks are difficult to establish precisely due to the specialized nature of the systems, but overall defense electronics and systems manufacturing represents a multi-billion dollar market annually.

Small Business Impact

This contract was not set aside for small businesses, nor does it appear to have specific subcontracting requirements for small businesses mentioned in the provided data. The award to a large prime contractor like Raytheon Company suggests that the primary focus was on the prime contractor's capabilities. This means that opportunities for small businesses to directly participate in this specific contract are likely limited, though they may be involved further down the supply chain if Raytheon utilizes them for components or services.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and program management structures, potentially involving the Defense Contract Management Agency (DCMA) for contract administration. Transparency is limited due to the sole-source nature of the award. Accountability measures would be embedded in the contract terms, including performance standards and delivery schedules. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Defense Procurement
Navigation Systems
Radar and Sonar Systems
Aeronautical Equipment Manufacturing
Nautical Equipment Manufacturing
Sole-Source Contracts

Risk Flags

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

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $33.8 million to RAYTHEON COMPANY. IMPLC PRODUCTION LOTS 10 - 12(USN).

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 $33.8 million.

What is the period of performance?

Start: 2012-10-03. End: 2016-09-30.

What is the historical spending trend for IMPLC Production Lots by the Department of Defense?

The provided data indicates a single award for IMPLC Production Lots 10-12 valued at $33.8 million. To understand historical spending trends, one would need to examine previous contract awards for IMPLC Production Lots (e.g., Lots 1-9) and potentially future lots. Analyzing the value, duration, and contractor for these prior awards would reveal patterns in procurement volume, cost escalation or de-escalation over time, and any shifts in sourcing strategies. Without access to a broader contract history database, it's impossible to establish a trend from this single data point. However, the existence of multiple lots suggests a program with ongoing production needs.

How does the awarded price compare to industry benchmarks for similar navigation and guidance systems?

Benchmarking this $33.8 million contract for IMPLC Production Lots 10-12 against industry standards for similar navigation and guidance systems is challenging without more specific technical details of the 'IMPLC' system and access to proprietary industry pricing data. Given that this was a sole-source award to Raytheon Company, direct price comparisons are difficult as competitive market forces were not applied. To perform a robust benchmark, one would need to identify comparable systems from other manufacturers, analyze their contract values (if publicly available), and consider differences in features, performance, and scale. Government cost and price analysis reports, if accessible, would offer internal benchmarks but are typically not public.

What are the specific risks associated with a sole-source contract for critical defense components?

Sole-source contracts for critical defense components carry several inherent risks. Primarily, the lack of competition can lead to inflated prices, as the government does not benefit from the cost-saving pressures of a bidding process. This can result in reduced value for taxpayer money. Secondly, there's a risk of vendor lock-in, where the government becomes overly dependent on a single supplier, potentially limiting future flexibility and innovation. This dependence can also create supply chain vulnerabilities; if the sole source experiences production issues, the government's operational readiness could be compromised. Furthermore, without competitive pressure, the incentive for the contractor to innovate or improve efficiency might be diminished. Finally, the justification for a sole-source award must be rigorously scrutinized to ensure it is truly warranted and not a result of poor planning or market manipulation.

What is Raytheon Company's track record with similar sole-source defense contracts?

Raytheon Company, now part of RTX, has a long and extensive history of securing defense contracts, many of which have been sole-source or competitively awarded. As a major defense contractor, they frequently produce highly specialized and technologically advanced systems where they may be the only or primary qualified source. Analyzing their broader contract portfolio would reveal numerous instances of sole-source awards across various defense platforms, including radar, missile systems, and command and control systems. While specific details on the 'IMPLC' system's sole-source history require deeper database access, Raytheon's general track record indicates significant experience in navigating sole-source procurement processes and delivering complex defense technologies, often under firm-fixed-price agreements.

What are the potential performance implications of this contract's duration (1458 days)?

A contract duration of 1458 days (approximately 4 years) for IMPLC Production Lots 10-12 suggests a need for sustained, long-term production of these specific components or systems. From a performance perspective, this extended period allows for production ramp-up, stabilization, and consistent delivery, which can be crucial for complex defense equipment. It provides the contractor, Raytheon Company, with a predictable demand forecast, enabling better resource planning and potentially economies of scale. For the government, it ensures a steady supply chain for critical items over a significant period, reducing the need for frequent re-procurement actions. However, such a long duration also carries risks, including potential technological obsolescence if the underlying systems evolve rapidly, and the possibility of performance degradation if oversight is not consistently maintained throughout the contract term.

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

Address: 6380 HOLLISTER AVE, GOLETA, CA, 93117

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: $33,814,789

Exercised Options: $33,814,789

Current Obligation: $33,814,789

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline