Raytheon Company awarded $59.6M contract for search and navigation systems, with limited competition

Contract Overview

Contract Amount: $59,630,496 ($59.6M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2018-07-30

End Date: 2025-11-14

Contract Duration: 2,664 days

Daily Burn Rate: $22.4K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: IMPLC - KUWAIT

Place of Performance

Location: GOLETA, SANTA BARBARA County, CALIFORNIA, 93117

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $59.6 million to RAYTHEON COMPANY for work described as: IMPLC - KUWAIT Key points: 1. Contract awarded on a sole-source basis, raising questions about price discovery and potential for overpayment. 2. Long contract duration of 2664 days suggests a need for sustained support or development. 3. Firm Fixed Price contract type aims to control costs, but sole-source nature may limit savings. 4. Contractor, Raytheon Company, is a major defense contractor with extensive experience in this sector. 5. Awarded by the Department of the Navy, indicating a focus on naval defense capabilities. 6. The contract is for systems related to search, detection, navigation, guidance, and related instruments.

Value Assessment

Rating: questionable

Benchmarking the value of this $59.6 million contract is challenging due to its sole-source nature. Without competitive bids, it's difficult to ascertain if the pricing reflects fair market value or if taxpayers are receiving optimal value for money. The firm fixed-price structure provides some cost certainty, but the lack of competition means there's less pressure on the contractor to offer the most competitive rates. Further analysis would require access to cost breakdowns and comparisons with similar sole-source awards for comparable systems.

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 potential bidders. This typically occurs when only one responsible source is available or capable of meeting the government's requirements. The lack of competition limits the government's ability to leverage market forces to drive down prices and potentially limits the range of innovative solutions considered. It also raises concerns about whether alternative, potentially more cost-effective, solutions were overlooked.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as there is no competitive pressure to ensure the lowest possible price. This contract's value could be inflated without the scrutiny of multiple bids.

Public Impact

The primary beneficiaries are the Department of the Navy, receiving critical search, detection, and navigation systems. The contract supports the development, manufacturing, or sustainment of advanced navigation and guidance instruments. The geographic impact is primarily linked to the contractor's operations in California, where the award is noted. This contract likely supports a specialized workforce within Raytheon Company, contributing to high-tech manufacturing and engineering jobs.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially leading to higher costs.
Long contract duration may indicate potential for scope creep or cost overruns if not managed tightly.
Lack of transparency in pricing due to sole-source nature makes value assessment difficult.

Positive Signals

Firm Fixed Price contract type provides cost certainty for the government.
Award to an experienced contractor like Raytheon suggests a high likelihood of successful delivery.
Contract supports critical defense capabilities for the Navy.

Sector Analysis

This contract falls within the 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' sector, a specialized area within the broader aerospace and defense industry. This sector is characterized by high R&D investment, stringent quality requirements, and significant government procurement. The market is dominated by a few large, established players like Raytheon. Comparable spending benchmarks are difficult to establish without more specific system details, but defense electronics and navigation systems represent a substantial portion of the defense budget.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Furthermore, the 'ss': false flag suggests it's not a small business prime award. This means that the primary contract value is likely going to a large defense contractor. While large prime contractors often engage small businesses as subcontractors, the direct award to Raytheon Company means opportunities for small businesses are indirect, dependent on Raytheon's subcontracting plans. The impact on the small business ecosystem is therefore indirect and contingent on the prime contractor's procurement practices.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. As a definitive contract, it is subject to standard federal procurement regulations and oversight. Transparency is limited due to the sole-source nature. Accountability measures would be embedded in the contract's performance clauses and delivery schedules. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Naval Navigation Systems
Defense Electronics Manufacturing
Aerospace and Defense Systems
Search and Detection Equipment

Risk Flags

Sole-source award
Lack of competitive bidding
Potential for inflated pricing
Limited transparency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $59.6 million to RAYTHEON COMPANY. IMPLC - KUWAIT

Who is the contractor on this award?

The obligated recipient is RAYTHEON COMPANY.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Navy).

What is the total obligated amount?

The obligated amount is $59.6 million.

What is the period of performance?

Start: 2018-07-30. End: 2025-11-14.

What is Raytheon Company's track record with similar sole-source contracts for navigation systems?

Raytheon Company, as a major defense contractor, has a long history of receiving sole-source and competitively awarded contracts for various defense systems, including navigation and guidance equipment. Analyzing their past performance on similar sole-source awards would involve reviewing contract histories for on-time delivery, adherence to budget, and quality of products. Without specific data on past sole-source navigation system contracts, a general assessment suggests that Raytheon possesses the technical expertise and manufacturing capacity. However, the specific value and efficiency of such sole-source awards are often debated, as they bypass the price discovery mechanisms inherent in competitive bidding. A deeper dive would require examining specific contract performance metrics and any associated cost variances from previous sole-source engagements.

How does the $59.6 million value compare to similar navigation system contracts awarded by the Navy?

Comparing the $59.6 million value of this contract to similar navigation system contracts is challenging without more specific details about the systems being procured and the contract duration. However, given the typical costs associated with advanced defense electronics and navigation systems, this amount appears within a plausible range for a significant procurement or sustainment effort. The sole-source nature of this award, however, makes direct value comparison difficult. Competitive awards for similar systems might yield different price points. To provide a robust comparison, one would need to identify other definitive contracts for comparable navigation, search, and detection systems awarded by the Department of the Navy or other military branches, analyze their scope, duration, and final awarded prices, and adjust for inflation and technological advancements.

What are the primary risks associated with a sole-source award of this magnitude?

The primary risks associated with a sole-source award of this magnitude ($59.6 million) include potential overpricing due to the lack of competitive pressure, limited innovation from a single provider, and a reduced incentive for the contractor to achieve maximum efficiency. There's also a risk that the government may not be aware of or have access to superior alternative technologies or solutions that might have emerged from a competitive process. Furthermore, sole-source awards can sometimes face greater public scrutiny regarding fairness and value for taxpayer money. Effective risk mitigation would involve rigorous negotiation of terms, detailed cost analysis, and strong contract oversight to ensure performance and manage scope.

What is the expected program effectiveness given the contractor and contract type?

Given that Raytheon Company is a well-established defense contractor with significant experience in aerospace and defense systems, the program is likely to be effective in terms of technical execution and delivery of the specified systems. The Firm Fixed Price (FFP) contract type also provides a degree of cost certainty, which can contribute to predictable outcomes. However, the sole-source nature of the award introduces a risk that the 'effectiveness' might be measured against a potentially inflated baseline cost, and that the government might not be achieving the best possible value or the most innovative solution available in the market. Program effectiveness will ultimately depend on the clarity of the SOW, the robustness of the government's oversight, and Raytheon's commitment to meeting performance standards.

How does this contract's spending pattern compare to historical trends for similar navigation systems?

Analyzing this contract's spending pattern against historical trends requires access to historical data for similar navigation systems procured by the Department of the Navy or other defense agencies. Without such data, it's difficult to provide a precise comparison. However, spending on advanced defense electronics, including navigation and guidance systems, has generally been substantial and consistent, driven by ongoing modernization efforts and operational requirements. The $59.6 million awarded here, spread over the contract's duration (2018-2025), represents a significant but not necessarily anomalous investment for specialized military hardware. A detailed historical analysis would involve identifying comparable systems, tracking their procurement costs over time, and assessing factors like inflation, technological evolution, and changes in defense strategy.

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: N0001918R0017

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Rockwell Collins Australia PTY Limited

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: $59,630,496

Exercised Options: $59,630,496

Current Obligation: $59,630,496

Subaward Activity

Number of Subawards: 44

Total Subaward Amount: $8,554,712

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline