DoD Awards Raytheon $3.26 Billion for AN/SPY-6(V) Radar Hardware Production

Contract Overview

Contract Amount: $3,266,151,877 ($3.3B)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2022-03-31

End Date: 2030-01-30

Contract Duration: 2,862 days

Daily Burn Rate: $1.1M/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: FIXED PRICE INCENTIVE

Sector: Defense

Official Description: AN/SPY-6(V) HARDWARE PRODUCTION

Place of Performance

Location: ANDOVER, ESSEX County, MASSACHUSETTS, 01810

State: Massachusetts Government Spending

Plain-Language Summary

Department of Defense obligated $3.27 billion to RAYTHEON COMPANY for work described as: AN/SPY-6(V) HARDWARE PRODUCTION Key points: 1. Significant investment in advanced naval radar technology. 2. Raytheon Company is the sole awardee, raising questions about competition. 3. Long-term contract (2030) with fixed-price incentive terms presents potential cost risks. 4. Spending falls within the broader 'Search, Detection, Navigation' manufacturing sector.

Value Assessment

Rating: fair

The contract value of $3.26 billion over several years suggests a substantial investment. Without comparable contract data for similar advanced radar systems, a precise pricing assessment is difficult. However, the fixed-price incentive structure implies that costs could escalate if performance targets are not met efficiently.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

Despite the 'FULL AND OPEN COMPETITION' designation, Raytheon is the sole awardee. This suggests that either only Raytheon could meet the stringent technical requirements, or the competition process may not have fully explored alternative solutions. The price discovery mechanism relies heavily on the incentive structure within the fixed-price contract.

Taxpayer Impact: Taxpayer funds are allocated for critical defense capabilities. The effectiveness of the competition and the incentive structure will determine the ultimate value for money.

Public Impact

Enhances U.S. Navy's air and missile defense capabilities. Supports advanced warfighting readiness and technological superiority. Potential for job creation within Raytheon and its supply chain. Long-term commitment to a specific radar technology.

Waste & Efficiency Indicators

Waste Risk Score: 75 / 10

Warning Flags

Sole awardee despite full and open competition.
Long contract duration with potential for cost overruns.
Lack of small business participation noted.

Positive Signals

Acquisition of critical defense technology.
Clear performance incentives in contract.
Established contractor with proven capabilities.

Sector Analysis

This contract falls under the 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' sector. Spending in this area is crucial for maintaining technological advantage in defense systems. Benchmarks are difficult without specific radar system comparisons, but the scale indicates a major program.

Small Business Impact

The data indicates no specific small business participation in this contract (sb: false). This suggests that the prime contractor, Raytheon, is likely handling the majority of the work, potentially through its own facilities or larger subcontractors, rather than actively engaging small businesses for this specific award.

Oversight & Accountability

The Department of the Navy is the contracting agency, responsible for oversight. The fixed-price incentive contract structure includes performance metrics that should be monitored to ensure cost control and timely delivery. The long duration necessitates sustained oversight to manage risks and ensure accountability.

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 awardee despite full and open competition.
Long contract duration (8+ years) increases risk of cost escalation.
Fixed-price incentive contract requires careful monitoring of performance and costs.
No indication of small business participation.
Potential for technological obsolescence over the contract life.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $3.27 billion to RAYTHEON COMPANY. AN/SPY-6(V) HARDWARE PRODUCTION

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 $3.27 billion.

What is the period of performance?

Start: 2022-03-31. End: 2030-01-30.

What specific technical capabilities does the AN/SPY-6(V) radar system offer that justified a sole awardee under full and open competition?

The AN/SPY-6(V) is a highly advanced, next-generation radar system designed for comprehensive air and missile defense. Its capabilities include superior detection range, discrimination of targets, and resistance to electronic countermeasures compared to legacy systems. These advanced features likely represent a significant technological leap, potentially limiting the number of contractors capable of meeting the stringent performance specifications and thus leading to a sole awardee.

How does the fixed-price incentive (FPI) structure mitigate cost risks for taxpayers given the long contract duration and sole awardee status?

The FPI structure aims to balance cost control with performance incentives. While the government sets a target cost and price, the contractor shares in any savings below the target or absorbs a portion of any cost overruns up to a ceiling. For taxpayers, this means the contractor has an incentive to manage costs efficiently to maximize their profit. However, the long duration and sole awardee status still require vigilant oversight to prevent cost creep and ensure the negotiated price remains fair.

What is the expected impact of this AN/SPY-6(V) hardware production contract on the U.S. Navy's overall combat effectiveness and technological readiness?

This contract is expected to significantly enhance the U.S. Navy's combat effectiveness by equipping vessels with state-of-the-art air and missile defense capabilities. The AN/SPY-6(V) system is crucial for countering advanced threats, improving situational awareness, and enabling integrated air defense across naval fleets. Its deployment will bolster technological readiness, ensuring the Navy maintains a critical advantage in complex operational environments and deterrence missions.

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: N0002420R5500

Offers Received: 1

Pricing Type: FIXED PRICE INCENTIVE (L)

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: $3,266,151,877

Exercised Options: $3,266,151,877

Current Obligation: $3,266,151,877

Subaward Activity

Number of Subawards: 854

Total Subaward Amount: $1,415,213,646

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline