Raytheon Company awarded $37.5M for AN/SPY-1 RADAR SSSA MOD KIT, a sole-source contract

Contract Overview

Contract Amount: $37,481,039 ($37.5M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2017-06-30

End Date: 2023-05-05

Contract Duration: 2,135 days

Daily Burn Rate: $17.6K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: AN/SPY-1 RADAR SSSA MOD KIT

Place of Performance

Location: MARLBOROUGH, MIDDLESEX County, MASSACHUSETTS, 01752

State: Massachusetts Government Spending

Plain-Language Summary

Department of Defense obligated $37.5 million to RAYTHEON COMPANY for work described as: AN/SPY-1 RADAR SSSA MOD KIT Key points: 1. Contract awarded as a sole-source action, limiting competitive price discovery. 2. The contract value of $37.5M represents a significant investment in radar system modernization. 3. Fixed-price contract type suggests cost risks are primarily borne by the contractor. 4. The duration of 2135 days indicates a long-term need for these modifications. 5. The contract falls under the 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' NAICS code. 6. The award was made by the Department of the Navy, a major defense procurement agency.

Value Assessment

Rating: questionable

Benchmarking the value for this specific AN/SPY-1 RADAR SSSA MOD KIT is challenging due to the sole-source nature of the award and limited public data on comparable modifications. The firm fixed-price structure is generally favorable for the government in managing cost overruns, but without competitive bids, it's difficult to ascertain if the pricing reflects optimal market value. Further analysis would require access to historical pricing for similar modifications or detailed cost breakdowns.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, Raytheon Company, was solicited. This approach bypasses the standard competitive bidding process, which typically involves multiple companies submitting proposals. While sole-source awards can be justified for specialized systems or urgent needs, they inherently reduce the potential for price competition and may lead to higher costs for the government.

Taxpayer Impact: Sole-source awards mean taxpayers may not benefit from the cost savings that typically arise from a competitive bidding environment, potentially leading to a less efficient use of public funds.

Public Impact

The primary beneficiaries are the U.S. Navy's fleet operations, ensuring continued readiness and effectiveness of radar systems. The services delivered involve modifications and kits for the AN/SPY-1 radar system, crucial for naval warfare. The geographic impact is primarily on naval bases and deployed vessels where these systems are installed and maintained. Workforce implications include specialized technical roles for engineers and technicians involved in the modification and integration of the radar systems.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially increasing costs for taxpayers.
Lack of transparency in the justification for sole-source procurement.
Potential for contractor lock-in due to specialized nature of the system.
Limited visibility into the specific performance metrics and success criteria for the modifications.

Positive Signals

Firm fixed-price contract type shifts cost overrun risk to the contractor.
Award to an established contractor with likely expertise in AN/SPY-1 systems.
Contract duration suggests a sustained commitment to maintaining critical defense capabilities.

Sector Analysis

The defense electronics sector, particularly radar systems, is characterized by high R&D costs, long product lifecycles, and significant government procurement. The AN/SPY-1 radar is a key component of Aegis combat systems used on many U.S. Navy vessels. Spending in this area is driven by the need for technological superiority and platform modernization. Comparable spending benchmarks would involve other major defense system upgrade contracts, often in the tens to hundreds of millions of dollars.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb: false'. There is no explicit information regarding subcontracting plans for small businesses. Without specific set-aside goals or subcontracting requirements, the direct impact on the small business ecosystem for this particular award is likely minimal, though the prime contractor may engage small businesses in their supply chain.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Navy's contracting and program management offices. Accountability measures are inherent in the firm fixed-price contract type, which obligates the contractor to deliver specified modifications within the agreed price. Transparency is limited due to the sole-source nature and the proprietary aspects of defense technology. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Aegis Combat System
Naval Radar Systems
Defense Electronics Procurement
Ship Modernization Programs

Risk Flags

Sole-source award
Lack of competitive bidding
Potential for non-competitive pricing

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $37.5 million to RAYTHEON COMPANY. AN/SPY-1 RADAR SSSA MOD KIT

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 $37.5 million.

What is the period of performance?

Start: 2017-06-30. End: 2023-05-05.

What is the historical spending trend for AN/SPY-1 RADAR SSSA MOD KITs with Raytheon Company?

Analyzing historical spending trends for this specific modification kit requires access to detailed contract databases beyond the provided data. However, the current award of approximately $37.5 million over a period of 2135 days (roughly 5.8 years) suggests a consistent, albeit potentially infrequent, need for these upgrades. Without prior contract awards for the exact 'AN/SPY-1 RADAR SSSA MOD KIT', it's difficult to establish a precise spending trajectory. Generally, major defense systems like the AN/SPY-1 undergo periodic upgrades and sustainment efforts, leading to multi-year contracts that can span several years and involve significant cumulative spending. Future spending would depend on the Navy's modernization plans, the operational lifespan of the radar systems, and the emergence of new technological requirements.

How does the pricing of this contract compare to similar radar system modification contracts awarded competitively?

Directly comparing the pricing of this sole-source contract to competitively awarded radar system modification contracts is challenging without specific benchmark data. Sole-source awards often carry a premium due to the absence of competitive pressure. If this contract were competed, it's plausible that multiple bidders would drive down the price through innovation and efficiency. To assess value, one would need to identify comparable contracts for radar system upgrades (e.g., for different radar types or platforms) that were awarded competitively, analyze their total value, scope of work, and duration, and then benchmark the per-unit cost or overall contract value against this award. The firm fixed-price nature here is a positive, but the lack of competition is a significant factor that likely impacts the final price paid by the government.

What are the key performance indicators (KPIs) or success metrics for this contract?

The provided data does not explicitly detail the Key Performance Indicators (KPIs) or success metrics for the AN/SPY-1 RADAR SSSA MOD KIT contract. Typically, for such defense modification contracts, KPIs would focus on technical performance, reliability, maintainability, and schedule adherence. This could include metrics like the Mean Time Between Failures (MTBF) for the modified system, the Mean Time To Repair (MTTR), successful integration with existing combat systems, achievement of specified operational capabilities (e.g., improved detection range, reduced false alarms), and timely delivery of modification kits and completion of installation. Adherence to the firm fixed-price terms and delivery schedules would also be critical success factors monitored by the Department of the Navy.

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

Raytheon Company (now RTX) has a long and extensive track record as a major defense contractor, including significant work with the Department of the Navy. They are a primary developer and integrator of the Aegis Combat System, which incorporates the AN/SPY-1 radar. This includes numerous contracts for the development, production, integration, and sustainment of various components and upgrades for the AN/SPY-1 radar and the broader Aegis system across different Navy platforms (e.g., destroyers and cruisers). Their established role suggests a deep understanding of the system's requirements and a history of delivering complex modifications and upgrades, although the specifics of past performance on identical 'SSSA MOD KIT' procurements would require deeper contract history analysis.

What is the potential risk associated with the sole-source nature of this award?

The primary risk associated with the sole-source nature of this award is the potential for inflated pricing due to the lack of competitive bidding. Without competing proposals, the government has less leverage to negotiate the best possible price. This can lead to a less efficient use of taxpayer funds. Additionally, sole-source awards can sometimes indicate a lack of market research or a reliance on a single supplier, which could create contractor dependency and limit future options. While justifications for sole-source procurement exist (e.g., unique capabilities, urgent needs), they require rigorous vetting to ensure they are truly in the government's best interest and that the awarded price is fair and reasonable, which is harder to ascertain without competition.

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: FIRE CONTROL EQPT.

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0002415R5152

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: RTX Corp

Address: 1001 BOSTON POST RD E, MARLBOROUGH, MA, 01752

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: $37,481,039

Exercised Options: $37,481,039

Current Obligation: $37,481,039

Subaward Activity

Number of Subawards: 481

Total Subaward Amount: $83,973,239

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: N0002417G5103

IDV Type: BOA

Timeline