Raytheon Company awarded $34.1M for fire control equipment, a sole-source procurement with a long performance period

Contract Overview

Contract Amount: $34,127,090 ($34.1M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2006-06-23

End Date: 2018-12-31

Contract Duration: 4,574 days

Daily Burn Rate: $7.5K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: NEW PROCUREMENT FIRE CONTROL TRANSMITTING & RECEIVING EQUIPMENT

Place of Performance

Location: SUDBURY, MIDDLESEX County, MASSACHUSETTS, 01776

State: Massachusetts Government Spending

Plain-Language Summary

Department of Defense obligated $34.1 million to RAYTHEON COMPANY for work described as: NEW PROCUREMENT FIRE CONTROL TRANSMITTING & RECEIVING EQUIPMENT Key points: 1. The contract's value of $34.1 million over its duration suggests a significant investment in specialized defense technology. 2. As a sole-source award, the absence of competitive bidding raises questions about potential price efficiencies and market responsiveness. 3. The extended performance period (2006-2018) indicates a long-term need for this specific fire control equipment. 4. The firm-fixed-price contract type shifts cost risk to the contractor, which can be beneficial for budget predictability. 5. The procurement falls under the 'Other Communication and Energy Wire Manufacturing' Product Service Code, suggesting a focus on integrated systems. 6. The contract's sole-source nature warrants scrutiny regarding the justification for not pursuing a competitive process.

Value Assessment

Rating: questionable

Benchmarking the value of this $34.1 million contract is challenging without comparable sole-source procurements for similar fire control transmitting and receiving equipment. The firm-fixed-price structure is generally favorable for cost control, but the lack of competition means there's no direct market comparison to assess if the pricing is optimal. The extended duration of the contract (over 12 years) could imply either a stable, long-term requirement or a potential for cost creep if not managed diligently. Without more data on the specific capabilities and market alternatives, a definitive value-for-money assessment is difficult.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning the Department of the Navy did not conduct a competitive bidding process. The justification for this approach is not detailed in the provided data. Sole-source awards can be necessary for highly specialized or proprietary systems where only one vendor can meet the requirement. However, they typically result in less price discovery and potentially higher costs compared to fully competed contracts.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competition, as there was no opportunity for multiple vendors to bid and drive down prices. This also limits transparency in the pricing structure.

Public Impact

The primary beneficiaries are likely the Department of Defense, specifically the Navy, which receives critical fire control equipment. The services delivered involve the provision of transmitting and receiving equipment essential for military operations and command and control systems. The geographic impact is primarily within defense installations and operational theaters where the Navy deploys its assets. Workforce implications could include specialized manufacturing and technical support roles within Raytheon Company and its supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to higher costs for taxpayers.
Sole-source awards require strong justification to ensure necessity and prevent potential abuse.
Long contract duration could mask inefficiencies if not actively managed.
Limited transparency in pricing due to non-competitive nature.

Positive Signals

Firm-fixed-price contract type provides budget certainty.
Award to a known defense contractor like Raytheon suggests a reliance on established capabilities.
Specialized equipment likely supports critical national security functions.

Sector Analysis

This contract falls within the broader defense electronics sector, specifically focusing on communication and fire control systems. The market for such specialized equipment is often dominated by a few large defense contractors due to high research and development costs, stringent security requirements, and long product lifecycles. Comparable spending benchmarks would typically involve other large-scale defense procurements for integrated electronic warfare, radar, or communication systems, often running into tens or hundreds of millions of dollars.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). As a sole-source award to a large prime contractor, Raytheon Company, there are likely limited direct subcontracting opportunities for small businesses unless specifically mandated or pursued by the prime. The absence of a small business set-aside suggests that the primary focus was on acquiring specialized capabilities rather than promoting small business participation.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Navy's contracting and program management offices. Given the long duration and significant value, regular performance reviews, audits, and potentially Inspector General investigations could be part of the oversight framework. Transparency is limited by the sole-source nature, but contract modifications, delivery schedules, and payment milestones would likely be tracked. Accountability rests with the contracting officer and program managers to ensure the contractor meets the terms and conditions of the firm-fixed-price agreement.

Related Government Programs

Naval Fire Control Systems
Defense Communication Equipment
Military Electronics Procurement
Raytheon Defense Contracts
Sole-Source Defense Awards

Risk Flags

Sole-source award lacks competitive pricing.
Long contract duration may obscure cost efficiencies.
Limited public data on specific technical capabilities.
Potential for cost overruns without robust oversight.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $34.1 million to RAYTHEON COMPANY. NEW PROCUREMENT FIRE CONTROL TRANSMITTING & RECEIVING EQUIPMENT

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 $34.1 million.

What is the period of performance?

Start: 2006-06-23. End: 2018-12-31.

What specific fire control capabilities does this transmitting and receiving equipment provide, and how critical are they to current naval operations?

The provided data does not specify the exact fire control capabilities. However, transmitting and receiving equipment in this context typically refers to components of integrated combat systems responsible for target acquisition, tracking, weapon assignment, and engagement. These systems are critical for naval platforms, enabling them to defend against threats and conduct offensive operations. The long duration of the contract (2006-2018) suggests these capabilities were considered essential and enduring for the Navy's operational readiness during that period. Without access to the contract's SOW (Statement of Work) or technical specifications, a precise definition of 'criticality' remains elusive, but its procurement by the Department of the Navy implies a significant role in mission accomplishment.

What was the justification for awarding this contract on a sole-source basis instead of through full and open competition?

The provided data indicates the contract was 'NOT COMPETED' and is 'SOLE SOURCE'. Typically, sole-source justifications are required when only one responsible source is available or capable of meeting the agency's needs. This could be due to unique technical requirements, proprietary technology, essential integration with existing systems, or a lack of adequate competition in the market for the specific item. For a defense procurement like fire control equipment, it's plausible that Raytheon possessed unique intellectual property, specialized manufacturing capabilities, or existing system integration expertise that made them the only viable option. A formal Justification for Other Than Full and Open Competition (JOFOC) would have been required and should be on file with the Department of the Navy, detailing the specific reasons.

How does the $34.1 million contract value compare to other similar fire control system procurements by the Department of the Navy during the contract period?

Comparing this $34.1 million contract value requires access to historical procurement data for similar fire control transmitting and receiving equipment. However, given the extended performance period (2006-2018), the total value spread over more than a decade suggests an average annual expenditure of roughly $2.5 to $3 million. This figure might be considered moderate to significant depending on the complexity and quantity of the equipment. Large-scale naval combat system procurements can easily reach hundreds of millions or even billions of dollars. This specific contract appears to be for a component or a specific subsystem rather than an entire combat system, making direct comparison difficult without more granular data on comparable procurements.

What are the potential risks associated with a sole-source contract of this magnitude and duration, particularly concerning cost control and contractor performance?

The primary risk with a sole-source contract of this magnitude ($34.1M) and duration (over 12 years) is the potential for inflated costs due to the lack of competitive pressure. Without competing bids, the contractor may have less incentive to minimize expenses or offer the most cost-effective solution. Contractor performance risks include potential complacency, schedule delays, or quality issues, as the government has fewer alternatives if problems arise. However, the firm-fixed-price (FFP) contract type mitigates some cost risk by shifting it to the contractor. Effective government oversight, including rigorous performance monitoring, milestone tracking, and potentially audits, is crucial to manage these risks and ensure the contractor delivers the required equipment satisfactorily and within the agreed-upon price.

What is Raytheon Company's track record with the Department of the Navy for similar defense electronics or fire control systems?

Raytheon Company (now RTX) has a long and extensive history of providing defense electronics, including radar, missile systems, command and control, and fire control systems, to the Department of the Navy and other military branches. They are a major defense contractor known for developing and manufacturing sophisticated military hardware. While this specific contract data doesn't detail Raytheon's overall performance history with the Navy, their continued awards in complex defense areas suggest a generally positive track record and established relationship. Specific performance metrics for this contract would require deeper analysis of contract performance reports (e.g., CPARS) if available.

Industry Classification

NAICS: Manufacturing › Other Electrical Equipment and Component Manufacturing › Other Communication and Energy Wire Manufacturing

Product/Service Code: FIRE CONTROL EQPT.

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

Parent Company: RTX Corp

Address: 528 BOSTON POST RD, SUDBURY, MA, 01776

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $231,012,554

Exercised Options: $187,046,087

Current Obligation: $34,127,090

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline