Raytheon Company awarded $591M for NGJ-MB Production Lot 4 System Shipsets, Spares, and NRE by the Department of the Navy

Contract Overview

Contract Amount: $590,843,894 ($590.8M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2024-11-26

End Date: 2028-03-31

Contract Duration: 1,221 days

Daily Burn Rate: $483.9K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIXED PRICE INCENTIVE

Sector: Defense

Official Description: NGJ-MB PRODUCTION LOT 4 SYSTEM SHIPSETS, SPARES AND NRE

Place of Performance

Location: EL SEGUNDO, LOS ANGELES County, CALIFORNIA, 90245

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $590.8 million to RAYTHEON COMPANY for work described as: NGJ-MB PRODUCTION LOT 4 SYSTEM SHIPSETS, SPARES AND NRE Key points: 1. Contract awarded to Raytheon Company for a significant production lot of the NGJ-MB system. 2. The contract includes shipsets, spares, and non-recurring engineering, indicating a comprehensive scope. 3. This award represents a substantial investment in advanced defense technology for the Navy. 4. The fixed-price incentive contract type suggests a shared risk between the government and contractor. 5. The duration of the contract extends over several years, implying a long-term production commitment. 6. The absence of competition for this award warrants further scrutiny regarding cost-effectiveness.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging without comparable sole-source awards for similar advanced defense systems. The fixed-price incentive structure aims to control costs, but the lack of competition means there's no direct market comparison to assess if the pricing is optimal. The total value of $591 million is substantial, and without competitive pressure, it's difficult to ascertain if taxpayers are receiving the best possible value for this critical system.

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 vendors. This approach is typically used when a specific contractor possesses unique capabilities or intellectual property essential for the system. The lack of competition limits the government's ability to leverage market forces to drive down prices and ensure the most cost-effective solution.

Taxpayer Impact: The absence of competition for this significant defense contract means taxpayers may not benefit from the cost savings that typically arise from a competitive bidding process. This could result in a higher overall expenditure for the NGJ-MB system.

Public Impact

The primary beneficiaries are the U.S. Navy, which will receive advanced Next Generation Jammer (NGJ) Mid-Band systems to enhance electronic warfare capabilities. The contract will deliver critical shipsets, spare parts, and non-recurring engineering, ensuring the operational readiness and sustainment of the NGJ-MB system. The geographic impact is primarily within the United States, with potential deployment of the systems on naval platforms globally. The contract is likely to support jobs within Raytheon Company and its supply chain, particularly in areas related to advanced electronics manufacturing and engineering.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price discovery and potential cost savings for taxpayers.
Fixed-price incentive contract requires careful monitoring to ensure contractor performance aligns with cost objectives.
Long contract duration (over 3 years) increases exposure to potential cost overruns or scope creep if not managed diligently.

Positive Signals

Award to a single, established contractor (Raytheon) suggests a focus on leveraging existing expertise and technology.
The contract includes provisions for spares and NRE, indicating a commitment to full lifecycle support and system development.
The system itself (NGJ-MB) is a critical component for modern naval electronic warfare, addressing a significant capability gap.

Sector Analysis

The Next Generation Jammer (NGJ) Mid-Band system falls within the broader defense electronics and aerospace manufacturing sector. This sector is characterized by high R&D investment, long product development cycles, and significant government procurement. The NGJ-MB is a key component of the Navy's electronic warfare strategy, aimed at countering advanced threats. Comparable spending in this sector involves other large-scale defense system procurements, often involving sole-source or limited competition due to specialized technology requirements.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Given the sole-source nature and the advanced technological requirements of the NGJ-MB system, it is unlikely that significant subcontracting opportunities for small businesses will be mandated or readily available, unless Raytheon proactively includes them in its supply chain. The focus is on a prime contractor with specialized capabilities.

Oversight & Accountability

Oversight for this contract will primarily be conducted by the Department of the Navy's contracting and program management offices. Accountability measures are embedded within the fixed-price incentive contract terms, which link contractor profit to performance and cost targets. Transparency may be limited due to the sole-source nature, but contract modifications and performance reports would typically be subject to internal review and potentially Inspector General oversight if issues arise.

Related Government Programs

Next Generation Jammer (NGJ)
Electronic Warfare Systems
Naval Aviation Procurement
Defense Production Contracts
Raytheon Defense Contracts

Risk Flags

Sole-source award
Lack of competition
High contract value

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $590.8 million to RAYTHEON COMPANY. NGJ-MB PRODUCTION LOT 4 SYSTEM SHIPSETS, SPARES AND NRE

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 $590.8 million.

What is the period of performance?

Start: 2024-11-26. End: 2028-03-31.

What is the historical spending trend for the NGJ-MB program prior to this award?

Prior to this 'Production Lot 4' award, the NGJ-MB program would have incurred significant spending on research, development, and potentially earlier, smaller production or testing lots. Data on specific prior awards would be needed for a precise trend analysis. However, large-scale defense programs typically see substantial R&D investment followed by phased production awards. The 'NRE' (Non-Recurring Engineering) component in this award suggests ongoing development activities, implying that previous phases focused on design, prototyping, and testing. Without access to historical contract databases for this specific program, it's difficult to quantify the exact spending trajectory, but it's reasonable to assume substantial prior investment given the system's complexity and strategic importance.

How does the per-unit cost of the NGJ-MB system compare to similar electronic warfare systems?

A direct per-unit cost comparison for the NGJ-MB system is not feasible with the provided data, especially given this is a sole-source award for a specific production lot. Per-unit costs are highly dependent on the quantity ordered, the specific configuration (shipsets, spares, NRE), and the contract type. Furthermore, electronic warfare systems are highly specialized and vary significantly in capability and complexity. To benchmark effectively, one would need to identify comparable systems (e.g., other airborne electronic warfare suites) procured under similar contract types and quantities, and then analyze their unit costs. The 'fixed-price incentive' structure suggests that the government aims to control costs, but without competitive bids, establishing a true market-based per-unit cost benchmark is challenging. The $591 million for 'Production Lot 4' likely covers a specific number of shipsets and associated spares/NRE, making a simple division by 'number of systems' potentially misleading without detailed breakdown.

What are the key performance indicators (KPIs) being tracked for this contract?

While specific KPIs are not detailed in the contract abstract, typical performance indicators for a defense production contract like this would include: 1. On-time delivery of shipsets and spares. 2. Meeting technical specifications and performance requirements for the NGJ-MB system's jamming capabilities, range, and reliability. 3. Adherence to quality control standards throughout the manufacturing process. 4. Cost control, particularly in relation to the incentive targets set within the fixed-price incentive (FPI) contract. 5. Successful completion of non-recurring engineering tasks. The Department of the Navy would establish these KPIs, and contractor performance against them would dictate incentive fee payouts and overall contract success.

What is Raytheon Company's track record with producing complex defense systems?

Raytheon Company (now part of RTX) has a long and extensive track record of producing complex defense systems for the U.S. military and international allies. They are a major defense contractor known for developing and manufacturing a wide range of products, including radar systems, missiles, command and control systems, and electronic warfare capabilities. Their experience spans decades and includes numerous large-scale, high-value programs. While specific performance details for every contract are not publicly available, Raytheon is generally considered a capable and experienced provider of advanced defense technologies. Their involvement in programs like the NGJ-MB indicates a recognized ability to handle sophisticated and critical defense manufacturing requirements.

What are the potential risks associated with a sole-source award for a critical defense system?

The primary risk associated with a sole-source award for a critical defense system like the NGJ-MB is the potential for inflated costs due to the lack of competitive pressure. Without competing bids, the government has less leverage to negotiate the lowest possible price. This can lead to taxpayers paying more than necessary. Another risk is reduced innovation, as the sole contractor may have less incentive to explore more cost-effective or technologically superior solutions if they are not contractually obligated to do so. Furthermore, sole-source contracts can sometimes lead to vendor lock-in, making it difficult and expensive to switch providers or technologies in the future. Dependence on a single supplier also introduces supply chain risks if that supplier faces production issues or financial instability.

How does the 'fixed-price incentive' contract type aim to balance cost and performance?

A Fixed-Price Incentive (FPI) contract is designed to share the risks and rewards between the government and the contractor. It establishes an initial target cost, a target profit, and a ceiling price. If the final incurred cost is below the target cost, both the government and contractor share in the savings (often based on a pre-negotiated split). Conversely, if the final cost exceeds the target cost, the contractor absorbs a larger portion of the overrun up to the ceiling price. This structure incentivizes the contractor to control costs while still meeting performance specifications. The 'incentive' aspect means the contractor's profit is directly tied to their ability to manage costs effectively and achieve the desired performance outcomes, aiming for a balance that is more cost-conscious than a simple fixed-price contract but provides more cost certainty than a cost-plus contract.

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: N0001923R0118

Offers Received: 1

Pricing Type: FIXED PRICE INCENTIVE (L)

Evaluated Preference: NONE

Contractor Details

Parent Company: Rockwell Collins Australia PTY Limited

Address: 2000 E EL SEGUNDO BLVD, EL SEGUNDO, CA, 90245

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: $590,843,894

Exercised Options: $590,843,894

Current Obligation: $590,843,894

Subaward Activity

Number of Subawards: 24

Total Subaward Amount: $41,273,055

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline