DoD Awards Raytheon $296M for EASR EMD, Facing Potential Cost Overruns
Contract Overview
Contract Amount: $295,932,230 ($295.9M)
Contractor: Raytheon Company
Awarding Agency: Department of Defense
Start Date: 2016-08-19
End Date: 2025-09-30
Contract Duration: 3,329 days
Daily Burn Rate: $88.9K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 1
Pricing Type: COST PLUS INCENTIVE FEE
Sector: Defense
Official Description: EASR EMD (BASE)
Place of Performance
Location: MARLBOROUGH, MIDDLESEX County, MASSACHUSETTS, 01752
Plain-Language Summary
Department of Defense obligated $295.9 million to RAYTHEON COMPANY for work described as: EASR EMD (BASE) Key points: 1. Significant contract value of $296M for a critical defense system. 2. Raytheon Company is the sole awardee, raising questions about competition. 3. Potential for cost overruns due to Cost Plus Incentive Fee (CPIF) structure. 4. The contract falls under the Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing sector.
Value Assessment
Rating: questionable
The contract's Cost Plus Incentive Fee (CPIF) structure, while incentivizing performance, carries inherent risk for cost overruns. Benchmarking against similar complex defense system development contracts is difficult without more granular cost data.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, suggesting a competitive bidding process. However, the definitive contract award to a single entity, Raytheon Company, warrants further examination of the price discovery achieved.
Taxpayer Impact: The significant contract value means taxpayer funds are being utilized for advanced defense technology development, with the ultimate value dependent on cost control and system effectiveness.
Public Impact
Enhances naval capabilities with advanced search and navigation systems. Supports national security through technological advancement in defense. Potential for job creation within the defense manufacturing sector. Impact on future defense procurement strategies and technology integration.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- CPIF contract type increases cost overrun risk.
- Sole awardee to Raytheon Company may limit competitive pricing.
- Long contract duration (2016-2025) increases exposure to market changes.
Positive Signals
- Awarded under full and open competition.
- Addresses critical defense system needs.
- Potential for technological innovation.
Sector Analysis
This contract is within the aerospace and defense sector, specifically focusing on advanced electronic systems for naval applications. Spending in this area is driven by national security priorities and technological competition.
Small Business Impact
The data does not indicate any specific subcontracting goals or participation by small businesses in this contract. Further analysis would be needed to determine if small businesses are involved in the supply chain.
Oversight & Accountability
The contract's long duration and CPIF structure necessitate robust oversight from the Department of the Navy to ensure cost efficiency and adherence to performance objectives. Regular reviews of progress and spending are crucial.
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
- Cost overrun risk due to CPIF.
- Limited visibility into competitive price discovery.
- Long contract duration.
- Potential for scope creep.
- Dependence on a single contractor.
Tags
search-detection-navigation-guidance-aer, department-of-defense, ma, definitive-contract, 100m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $295.9 million to RAYTHEON COMPANY. EASR EMD (BASE)
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 $295.9 million.
What is the period of performance?
Start: 2016-08-19. End: 2025-09-30.
What specific performance metrics are tied to the incentive fee structure, and how are they measured to ensure fair pricing?
The incentive fee structure is designed to reward Raytheon for achieving specific performance targets related to the EASR EMD system's capabilities and delivery schedule. These metrics are typically defined in the contract's Statement of Work and are monitored through regular technical reviews and testing phases. The effectiveness of the incentive fee in controlling costs and driving performance depends on the clarity and measurability of these targets.
Given the sole award to Raytheon, what measures were in place during the full and open competition to ensure the government received the best possible price?
During a full and open competition, the government typically solicits proposals from multiple sources and evaluates them based on technical merit, past performance, and price. For this contract, the government likely established detailed technical requirements and evaluation criteria. The final price is determined through negotiation, aiming to achieve a fair and reasonable cost based on the proposals received and market research.
How does the $296M award compare to the estimated cost of similar advanced radar system development contracts, and what factors contribute to any variance?
Benchmarking this $296M award against similar contracts is challenging without access to detailed cost breakdowns and specific system functionalities. Factors influencing variance include the complexity of the EASR system, the technological maturity required, the specific performance parameters, and the overall economic conditions at the time of contract award and negotiation.
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: FULL AND OPEN COMPETITION
Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE
Solicitation ID: N0002415R5370
Offers Received: 1
Pricing Type: COST PLUS INCENTIVE FEE (V)
Evaluated Preference: NONE
Contractor Details
Parent Company: RTX Corp
Address: 528 BOSTON POST RD, SUDBURY, MA, 01776
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: $381,935,090
Exercised Options: $322,024,217
Current Obligation: $295,932,230
Actual Outlays: $9,250,299
Subaward Activity
Number of Subawards: 854
Total Subaward Amount: $979,956,098
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: NO
Timeline
Start Date: 2016-08-19
Current End Date: 2025-09-30
Potential End Date: 2025-09-30 00:00:00
Last Modified: 2025-10-30
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