DoD's $447M Raytheon Contract for Navigation Systems: A 12-Year Firm Fixed Price Award
Contract Overview
Contract Amount: $446,887,772 ($446.9M)
Contractor: Raytheon Company
Awarding Agency: Department of Defense
Start Date: 2004-06-22
End Date: 2016-03-03
Contract Duration: 4,272 days
Daily Burn Rate: $104.6K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: FIRM FIXED PRICE
Sector: Defense
Place of Performance
Location: KEYPORT, KITSAP County, WASHINGTON, 98345
Plain-Language Summary
Department of Defense obligated $446.9 million to RAYTHEON COMPANY for work described as: Key points: 1. Significant long-term award to Raytheon Company for critical navigation systems. 2. The contract spans over a decade, indicating a sustained need for these instruments. 3. Firm Fixed Price (FFP) contract type suggests price certainty but may limit flexibility. 4. The absence of competition raises questions about potential overpayment and market alternatives.
Value Assessment
Rating: questionable
The contract's value of $446,887,772 over 12 years is substantial. Without competitive benchmarks or detailed cost breakdowns, assessing its value for money is difficult. The firm fixed price structure provides budget predictability but might not reflect the most cost-effective solution achievable through competition.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was not competed, indicating a sole-source award to Raytheon Company. This lack of competition limits price discovery and may result in higher costs for taxpayers compared to a scenario with multiple bidders vying for the contract.
Taxpayer Impact: The absence of competition for a contract of this magnitude raises concerns about taxpayer value. Without competitive pressure, the government may have paid a premium for these navigation systems.
Public Impact
Ensures continued availability of essential navigation systems for naval operations. Long contract duration may impact the adoption of newer, potentially more advanced technologies. Potential for higher costs due to lack of competitive bidding affects overall defense budget efficiency.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Lack of competition
- Long contract duration
- Potential for cost overruns due to sole-source award
Positive Signals
- Ensures supply of critical navigation systems
- Firm Fixed Price provides cost certainty
Sector Analysis
This contract falls within the 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' sector. Spending in this area is crucial for defense capabilities, but competitive procurement is key to ensuring efficient use of taxpayer funds.
Small Business Impact
The data indicates this was a large contract awarded directly to Raytheon Company and does not mention any subcontracting to small businesses. Further investigation would be needed to determine if small businesses had opportunities to participate in this procurement.
Oversight & Accountability
The long duration and sole-source nature of this contract warrant scrutiny. Oversight should focus on whether the pricing remained fair and reasonable throughout the contract's life and if opportunities for competition were missed.
Related Government Programs
- Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing
- Department of Defense Contracting
- Department of the Navy Programs
Risk Flags
- Sole-source award lacks competition
- Long contract duration increases obsolescence risk
- Potential for inflated costs due to lack of bidding
- Limited transparency on pricing justification
Tags
search-detection-navigation-guidance-aer, department-of-defense, wa, definitive-contract, 100m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $446.9 million to RAYTHEON COMPANY. See the official description on USAspending.
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 $446.9 million.
What is the period of performance?
Start: 2004-06-22. End: 2016-03-03.
Was the sole-source justification for this contract robust, and were there any attempts to introduce competition during its 12-year lifespan?
The provided data states the contract was 'NOT COMPETED,' implying a sole-source justification was made at the outset. Without further documentation, it's impossible to confirm the robustness of this justification or if any efforts were made to introduce competition later. Such long-term sole-source awards often raise concerns about market research and potential missed opportunities for better pricing.
How does the per-unit cost of these navigation systems compare to similar systems procured competitively by other agencies or allies?
A direct comparison of per-unit costs is not possible with the given data. Benchmarking would require access to detailed pricing information for this specific contract and comparable systems procured competitively. The lack of competition for this $447 million award makes it difficult to assess if taxpayers received fair market value.
What was the technological obsolescence risk associated with a 12-year contract for navigation systems, and how was it managed?
A 12-year contract duration for technology-intensive systems like navigation instruments carries a significant risk of obsolescence. Without specific contract clauses addressing technology refresh or upgrade paths, the government might have been locked into using outdated systems. The firm fixed price nature could disincentivize the contractor from proactively offering newer technologies.
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: WEAPONS
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: 1847 W MAIN RD, PORTSMOUTH, RI, 02871
Business Categories: Category Business, Not Designated a Small Business
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: NO
Timeline
Start Date: 2004-06-22
Current End Date: 2016-03-03
Potential End Date: 2016-03-03 00:00:00
Last Modified: 2016-04-21
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