Raytheon Company awarded $33M contract for search and navigation systems, highlighting strong defense sector performance

Contract Overview

Contract Amount: $32,977,260 ($33.0M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2019-06-13

End Date: 2021-12-31

Contract Duration: 932 days

Daily Burn Rate: $35.4K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: DEMONSTRATION OF EXISTING TECHNOLOGIES

Place of Performance

Location: GOLETA, SANTA BARBARA County, CALIFORNIA, 93117

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $33.0 million to RAYTHEON COMPANY for work described as: DEMONSTRATION OF EXISTING TECHNOLOGIES Key points: 1. Contract value of $33.0M for search, detection, navigation, guidance, and related systems. 2. Awarded under a firm-fixed-price definitive contract, indicating predictable costs for the government. 3. Competition was full and open, suggesting a robust bidding process. 4. Contract duration of 932 days points to a significant, long-term need. 5. The contract falls under the 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' industry. 6. Awarded by the Department of the Navy, indicating a focus on naval defense capabilities.

Value Assessment

Rating: good

The contract value of $33.0M appears reasonable for specialized defense systems manufacturing. Benchmarking against similar contracts for navigation and guidance systems would provide a more precise value-for-money assessment. The firm-fixed-price structure helps control costs, but detailed cost breakdowns are not available to fully assess pricing efficiency. The duration suggests a substantial requirement, and the value aligns with the complexity of such technological systems.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded through full and open competition, indicating that multiple bidders were likely invited to submit proposals. The presence of 3 bids suggests a healthy level of interest and competition for this requirement. This competitive environment is generally favorable for price discovery and ensuring the government receives competitive pricing.

Taxpayer Impact: Full and open competition typically leads to better pricing for taxpayers by fostering a competitive environment among potential contractors.

Public Impact

The Department of the Navy is the primary beneficiary, receiving advanced search and navigation systems. This contract supports the development and manufacturing of critical defense technology. The geographic impact is primarily in California, where the contractor is located. Workforce implications include employment for engineers, technicians, and manufacturing personnel within the defense industry.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if the firm-fixed-price contract does not adequately account for all development and manufacturing complexities.
Dependence on a single contractor for critical defense systems could pose supply chain risks.
The specific performance metrics and quality assurance measures are not detailed, raising potential concerns about delivered system effectiveness.

Positive Signals

Firm-fixed-price contract structure provides cost certainty for the government.
Full and open competition suggests a competitive bidding process, likely leading to favorable pricing.
The contract is awarded to Raytheon Company, a well-established defense contractor with a track record in complex systems.
The duration of the contract indicates a sustained need and commitment from the Navy.

Sector Analysis

This contract operates within the defense electronics and systems manufacturing sector, a significant segment of the broader aerospace and defense industry. This sector is characterized by high technological sophistication, long development cycles, and substantial government investment. Comparable spending benchmarks would involve analyzing other contracts for similar navigation, guidance, and search systems awarded by various military branches, which often run into tens or hundreds of millions of dollars depending on scale and complexity.

Small Business Impact

There is no indication that this contract included small business set-asides. Given the nature of advanced defense systems manufacturing, it is likely that the prime contractor, Raytheon Company, will manage the subcontracting process. The extent to which small businesses will be involved as subcontractors is not specified, but large defense contracts often include provisions for small business participation.

Oversight & Accountability

Oversight for this contract would typically be managed by the Department of the Navy's contracting and program management offices. Accountability measures are embedded within the contract terms, including performance requirements and payment schedules tied to deliverables. Transparency is facilitated through contract award databases, though detailed performance data may be restricted. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Naval Combat Systems
Defense Electronics Manufacturing
Aerospace and Defense Systems
Navigation and Guidance Systems
Military Search and Detection Equipment

Risk Flags

Potential for schedule delays
Risk of technological obsolescence
Cybersecurity vulnerabilities
Performance specification adherence

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $33.0 million to RAYTHEON COMPANY. DEMONSTRATION OF EXISTING TECHNOLOGIES

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 $33.0 million.

What is the period of performance?

Start: 2019-06-13. End: 2021-12-31.

What is Raytheon Company's track record with the Department of the Navy for similar systems?

Raytheon Company, now part of RTX, has a long and extensive history of providing advanced defense systems, including radar, sensors, and navigation equipment, to the Department of the Navy. They are a prime contractor on numerous programs across various naval platforms, from surface ships to submarines and aircraft. Their track record typically involves delivering complex technological solutions under stringent performance requirements. While specific details of past performance on identical systems are proprietary, their overall engagement with the Navy suggests a capacity to meet demanding specifications. Historical data from contract databases often shows Raytheon as a consistent recipient of significant Navy contracts in areas related to command, control, communications, computers, and intelligence (C4I), as well as sensing and navigation technologies.

How does the $33.0M contract value compare to similar navigation and guidance system contracts?

The $33.0M contract value for search, detection, navigation, guidance, and related systems appears to be within a moderate range for specialized defense components or subsystems. Contracts for full-scale integrated systems or major platform upgrades can easily reach hundreds of millions or even billions of dollars. However, for specific instrument manufacturing or the development/production of a defined set of components, $33.0M is a substantial but not extraordinary figure. Benchmarking requires comparing it to contracts with similar scope, technological complexity, and duration. For instance, contracts for advanced radar components or specialized flight control systems might fall within a similar financial bracket, while simpler off-the-shelf navigation aids would be significantly less expensive.

What are the primary risks associated with this type of defense technology contract?

Primary risks for this type of defense technology contract include technological obsolescence, where the developed systems may become outdated before or shortly after deployment due to rapid advancements in adversary capabilities or commercial technology. Schedule delays are also a significant risk, common in complex R&D and manufacturing projects, which can increase costs and impact operational readiness. Performance risks involve the possibility that the systems may not meet the stringent operational requirements or reliability standards demanded by the Navy in challenging environments. Furthermore, cybersecurity risks are paramount, as these systems could be targets for espionage or disruption. Finally, cost overruns, even in fixed-price contracts, can occur if unforeseen technical challenges arise or if the initial cost estimates were inaccurate.

How effective are firm-fixed-price contracts in managing costs for advanced systems?

Firm-fixed-price (FFP) contracts are designed to provide cost certainty for the government by shifting the majority of the cost risk to the contractor. In theory, this incentivizes the contractor to manage costs efficiently to maximize profit. For advanced systems where the scope of work and technical requirements are well-defined, FFP can be highly effective. However, for contracts involving significant research and development or novel technologies, where uncertainties are high, FFP can lead to contractors either bidding very high to cover potential risks or encountering change orders and claims if unforeseen issues arise, potentially negating the cost-saving benefits. In this case, the $33.0M contract suggests a defined scope, making FFP a potentially effective tool for cost management, provided the initial technical baseline is robust.

What is the typical spending pattern for navigation and guidance systems within the Department of the Navy?

Spending patterns for navigation and guidance systems within the Department of the Navy are generally characterized by consistent, significant investment driven by the need for advanced situational awareness, precision targeting, and operational effectiveness across its diverse fleet. This spending encompasses a wide range, from upgrades to existing platforms to the integration of new technologies in new builds. Key areas include inertial navigation systems (INS), GPS-based systems, radar-based navigation, sonar for underwater navigation, and advanced sensor fusion technologies. Annual spending can fluctuate based on major modernization programs, fleet readiness initiatives, and the introduction of new weapon systems or platforms. The overall trend reflects a continuous effort to maintain a technological edge in contested maritime environments, often involving multi-year procurement contracts for major systems.

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 › OTHER RESEARCH/DEVELOPMENT

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: N0001918R0086

Offers Received: 3

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, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $32,977,260

Exercised Options: $32,977,260

Current Obligation: $32,977,260

Actual Outlays: $5,599,036

Subaward Activity

Number of Subawards: 23

Total Subaward Amount: $9,029,935

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline