Raytheon Company awarded $140M for Search, Detection, Navigation Systems, with 2598 days duration

Contract Overview

Contract Amount: $139,887,836 ($139.9M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2022-09-21

End Date: 2029-11-01

Contract Duration: 2,598 days

Daily Burn Rate: $53.8K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: FY22 DBR DA/TE

Place of Performance

Location: TEWKSBURY, MIDDLESEX County, MASSACHUSETTS, 01876

State: Massachusetts Government Spending

Plain-Language Summary

Department of Defense obligated $139.9 million to RAYTHEON COMPANY for work described as: FY22 DBR DA/TE Key points: 1. Contract awarded to a single, large defense contractor, indicating potential for limited competition. 2. Long contract duration of over 7 years suggests a need for sustained support or development. 3. Cost-plus-fixed-fee contract type may incentivize cost overruns if not closely monitored. 4. The specific North American Industry Classification System (NAICS) code 334511 points to a specialized manufacturing sector. 5. Awarded by the Department of the Navy, highlighting a focus on maritime defense capabilities. 6. The contract's value, while substantial, needs to be benchmarked against similar procurements for true value assessment.

Value Assessment

Rating: fair

Benchmarking the value of this $140M contract is challenging without specific details on the deliverables. Cost-plus-fixed-fee contracts can sometimes lead to higher costs than fixed-price agreements if not managed stringently. Comparing this to other Raytheon contracts for similar systems would provide better insight into pricing fairness. The long duration might also indicate a higher overall value than a shorter-term contract for comparable services.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. This typically occurs when a specific contractor possesses unique capabilities, proprietary technology, or is the only source capable of meeting the requirement. The lack of competition means there was no opportunity for price discovery through a bidding process, potentially leading to a higher price for the government.

Taxpayer Impact: Sole-source awards limit taxpayer value by removing the downward price pressure that competition provides. The government may pay a premium when a contract is not openly competed.

Public Impact

The Department of the Navy benefits from advanced search, detection, and navigation systems crucial for operational readiness. This contract supports the development and sustainment of critical defense technologies. The geographic impact is primarily within the United States, with potential for deployment globally. Workforce implications include specialized engineering, manufacturing, and technical support roles within Raytheon and its supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potential for cost savings.
Cost-plus-fixed-fee structure requires robust oversight to prevent cost escalation.
Long contract duration increases exposure to potential scope creep or evolving technological needs.
Lack of transparency in sole-source justification could mask inefficiencies.
Potential for contractor lock-in due to specialized nature of the systems.

Positive Signals

Award to a major defense contractor suggests access to advanced, proven technologies.
Long duration indicates a commitment to sustained capability development and support.
Focus on critical defense systems like search and navigation is vital for national security.
Definitive contract award provides a framework for ongoing work and potential future modifications.

Sector Analysis

The contract falls within the 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' sector, a highly specialized area within the broader defense industrial base. This sector is characterized by high R&D investment, complex manufacturing processes, and significant barriers to entry. Spending in this area is driven by national security requirements and technological advancements in sensing and guidance systems. Comparable spending benchmarks would involve analyzing other large, sole-source awards for similar complex defense systems.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. The award to Raytheon Company, a large prime contractor, suggests that small businesses are unlikely to be direct recipients of this prime contract. However, Raytheon may engage small businesses as subcontractors for specialized components or services, though the extent of this subcontracting is not detailed here. The lack of a set-aside means direct opportunities for small businesses to compete for the prime contract are absent.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. As a sole-source award, scrutiny on the justification and pricing is crucial. The cost-plus-fixed-fee structure necessitates rigorous financial oversight to ensure costs are reasonable and allocable. Transparency may be limited due to the sole-source nature, but contract modifications and performance reports should be available through federal procurement databases. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected.

Related Government Programs

Naval Combat Systems
Aerospace and Defense Manufacturing
Defense Research and Development
Navigation and Guidance Systems

Risk Flags

Sole-source award
Cost-plus-fixed-fee contract type
Long contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $139.9 million to RAYTHEON COMPANY. FY22 DBR DA/TE

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 $139.9 million.

What is the period of performance?

Start: 2022-09-21. End: 2029-11-01.

What is the specific justification for awarding this contract on a sole-source basis to Raytheon Company?

The provided data does not include the specific justification for the sole-source award. Typically, sole-source contracts are awarded when only one responsible source is available to meet the government's needs. This could be due to proprietary technology, unique capabilities, urgent requirements where competition is not feasible, or specific government property possessed by the contractor. A detailed justification document, often found in contract award justifications (CAJs) or similar procurement filings, would be required to understand the rationale. Without this, it's presumed that the Department of the Navy determined Raytheon was the only viable option for these specific search, detection, and navigation systems.

How does the Cost Plus Fixed Fee (CPFF) contract type compare to other contract types in terms of risk and potential cost savings for the government?

Cost Plus Fixed Fee (CPFF) contracts are used when the scope of work is not precisely defined, or when there is significant uncertainty in the cost of performance. The government agrees to pay the contractor's actual costs plus a fixed fee, which represents the contractor's profit. This structure shifts some cost risk to the government, as the final cost is not predetermined. Compared to fixed-price contracts, CPFF can lead to higher overall costs if not managed diligently, as there is less incentive for the contractor to control expenses beyond what is necessary to achieve the fixed fee. However, for complex R&D or system development where costs are inherently unpredictable, CPFF can facilitate innovation and ensure the government obtains the necessary capabilities, provided robust oversight is in place to scrutinize costs.

What are the potential implications of the long contract duration (2598 days) on technological relevance and contractor performance?

A contract duration of 2598 days (approximately 7 years and 1 month) presents both opportunities and risks. On the positive side, it allows for sustained development, integration, and support of complex systems, potentially leading to mature and reliable capabilities. It also provides the contractor with a stable demand, encouraging investment in specialized resources. However, a long duration also increases the risk of technological obsolescence, especially in rapidly evolving fields like navigation and detection systems. The government must ensure mechanisms are in place to adapt the contract to new technologies or requirements. Furthermore, prolonged contracts can sometimes lead to complacency or reduced urgency from the contractor if performance metrics are not consistently monitored and enforced. Regular performance reviews and potential for contract modifications are crucial.

Can we benchmark the value of this $140M contract against similar procurements for navigation and detection systems?

Benchmarking this $140M contract requires access to data on similar procurements, including the specific systems procured, their capabilities, contract types, and durations. Without such comparative data, it is difficult to definitively assess if $140M represents good value for money. Factors like the technological sophistication of the systems, the number of units procured, the level of customization, and the specific risks involved all influence pricing. Analyzing historical awards for comparable search, detection, and navigation systems from the Department of Defense or other agencies, particularly those with similar contract types and durations, would be necessary for a meaningful benchmark. The sole-source nature of this award also complicates direct price comparisons.

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

Raytheon Company is a major defense contractor with a long-standing relationship with the Department of the Navy, frequently awarded contracts for advanced systems, including those related to search, detection, and navigation. Their track record typically involves developing and producing complex electronic warfare systems, radar, sonar, and guidance technologies. While specific performance metrics for this particular contract are not yet available due to its recent award, Raytheon generally possesses significant experience and technical expertise in these domains. Past performance reviews and contract histories available through federal procurement databases would offer a more detailed insight into their reliability, quality of work, and adherence to schedules and budgets on previous, similar Navy contracts.

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: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0002422R5501

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: RTX Corp

Address: 50 APPLE HILL DR, TEWKSBURY, MA, 01876

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: $440,637,542

Exercised Options: $312,281,992

Current Obligation: $139,887,836

Actual Outlays: $33,714

Subaward Activity

Number of Subawards: 30

Total Subaward Amount: $13,558,217

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline