Raytheon Company awarded $204.8M contract for AN/SPY-6(V) radar systems, impacting foreign military sales

Contract Overview

Contract Amount: $204,773,790 ($204.8M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2025-06-01

End Date: 2026-09-11

Contract Duration: 467 days

Daily Burn Rate: $438.5K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: AN/SPY-6(V) FAMILY OF RADARS (FOR) DESIGN AGENT (DA) FOREIGN MILITARY SALES (FMS)

Place of Performance

Location: MARLBOROUGH, MIDDLESEX County, MASSACHUSETTS, 01752

State: Massachusetts Government Spending

Plain-Language Summary

Department of Defense obligated $204.8 million to RAYTHEON COMPANY for work described as: AN/SPY-6(V) FAMILY OF RADARS (FOR) DESIGN AGENT (DA) FOREIGN MILITARY SALES (FMS) Key points: 1. Contract awarded to a single, established provider suggests limited market exploration. 2. Pricing structure (Cost Plus Fixed Fee) may incentivize cost increases over efficiency. 3. Performance timeline of 467 days indicates a moderate project duration. 4. Focus on foreign military sales highlights international defense cooperation. 5. The contract's value positions it as a significant, though not massive, defense procurement. 6. Absence of small business set-aside raises questions about broader economic impact.

Value Assessment

Rating: fair

The contract value of $204.8 million for AN/SPY-6(V) radar systems is substantial. However, without specific benchmarks for this particular radar system's unit cost or comparison to similar foreign military sales of advanced radar technology, a definitive value-for-money assessment is challenging. The Cost Plus Fixed Fee (CPFF) contract type carries inherent risks of cost overruns, as the contractor is reimbursed for allowable costs plus a fixed fee, which may not fully align incentives for cost control compared to fixed-price contracts. Further analysis would require detailed cost breakdowns and comparisons to industry standards for similar complex defense systems.

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 approach is typically used when a specific contractor possesses unique capabilities, intellectual property, or is the only source capable of meeting the requirement. The lack of competition means that the Department of the Navy did not explore potential cost savings or innovative solutions that might have emerged from a competitive bidding process. This can limit price discovery and potentially lead to higher costs for the government.

Taxpayer Impact: Sole-source awards mean taxpayers may not benefit from the competitive pricing that typically drives down costs in government procurement. The absence of competition limits the government's leverage to negotiate the best possible price.

Public Impact

Foreign military allies will benefit from advanced radar technology, enhancing their defense capabilities. The contract delivers critical components for the AN/SPY-6(V) radar system, essential for naval defense. Geographic impact is primarily international, supporting U.S. foreign policy and defense partnerships. Workforce implications are likely concentrated within Raytheon Company's engineering and manufacturing divisions.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure on pricing.
Cost Plus Fixed Fee contract type can lead to cost overruns.
Lack of small business participation may limit broader economic benefits.

Positive Signals

Award to Raytheon Company, a known defense contractor, suggests a degree of reliability.
Focus on advanced radar technology supports critical national security and allied defense needs.
Contract duration provides a clear, defined period for delivery and performance.

Sector Analysis

The AN/SPY-6(V) radar system falls within the broader defense electronics and aerospace manufacturing sector. This sector is characterized by high R&D investment, long product development cycles, and significant government procurement. The market for advanced radar systems is highly specialized, with a limited number of prime contractors capable of developing and producing such sophisticated technology. Comparable spending benchmarks would involve other major defense radar system procurements, which often run into hundreds of millions or billions of dollars.

Small Business Impact

This contract does not appear to include a small business set-aside, nor is there information indicating subcontracting opportunities for small businesses. The award to a large prime contractor like Raytheon Company suggests that the primary focus is on specialized capabilities rather than broad-based small business engagement. This could limit the direct economic impact on the small business ecosystem within the defense industrial base for this specific procurement.

Oversight & Accountability

Oversight for this contract will likely be managed by the Department of the Navy's contracting and program management offices. Accountability measures are typically embedded within the contract terms, including performance metrics, delivery schedules, and financial reporting requirements. Transparency may be limited due to the sole-source nature and the classification of certain defense technologies. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

AN/SPY-6 Radar Program
Foreign Military Sales (FMS) Program
Naval Combat Systems Procurement
Defense Radar Technology Development

Risk Flags

Sole-source award
Cost-plus contract type
Foreign Military Sales (FMS) implications

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $204.8 million to RAYTHEON COMPANY. AN/SPY-6(V) FAMILY OF RADARS (FOR) DESIGN AGENT (DA) FOREIGN MILITARY SALES (FMS)

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 $204.8 million.

What is the period of performance?

Start: 2025-06-01. End: 2026-09-11.

What is Raytheon Company's track record with similar radar system contracts for the Department of Defense or foreign military sales?

Raytheon Company has a long and extensive history of developing and supplying advanced radar systems to the U.S. Department of Defense and numerous international partners through Foreign Military Sales (FMS). They are a primary contractor for various radar platforms, including those used in naval, air, and missile defense applications. Their experience spans decades, encompassing research, development, production, and sustainment of complex systems. Specific to the AN/SPY-6 family, Raytheon has been a key player in its development and integration. While specific contract values and performance metrics for past, similar FMS radar contracts are often sensitive or classified, Raytheon's consistent role in major defense programs indicates a strong, albeit expensive, capability in this niche.

How does the Cost Plus Fixed Fee (CPFF) pricing structure compare to other contract types for advanced radar systems in terms of value for money?

The Cost Plus Fixed Fee (CPFF) contract type is often used for research and development or complex systems where the scope of work or final costs are difficult to estimate precisely upfront. In this structure, the contractor is reimbursed for all allowable costs plus a predetermined fixed fee, representing profit. While it allows for flexibility and can facilitate innovation in uncertain environments, it generally offers less value for money to the buyer compared to fixed-price contracts. This is because the government bears the risk of cost overruns, and the contractor has less incentive to control costs once the contract is awarded, as their fee is fixed regardless of the final cost. For advanced radar systems, where R&D is significant, CPFF might be justifiable, but it necessitates robust government oversight to manage costs effectively.

What are the primary risks associated with a sole-source award for advanced defense systems like the AN/SPY-6(V) radar?

The primary risks associated with a sole-source award for advanced defense systems like the AN/SPY-6(V) radar include a lack of competitive pricing, which can lead to higher costs for the government and taxpayers. Without competition, there is reduced incentive for the sole-source provider to innovate or improve efficiency to gain a market advantage. Furthermore, it can create vendor lock-in, making it difficult and expensive to switch providers or integrate alternative solutions in the future. There's also a potential risk of complacency from the contractor, assuming continued awards without the pressure to constantly demonstrate superior value or performance. This can also limit opportunities for smaller, innovative companies to enter the market.

What is the expected program effectiveness or performance context for the AN/SPY-6(V) radar system based on its intended use?

The AN/SPY-6(V) family of radars is designed to be a highly capable, next-generation, multi-mission radar system intended for use on U.S. Navy ships. Its primary function is to provide advanced air and missile defense capabilities, including the detection, tracking, and engagement of a wide range of threats, from low-flying aircraft to ballistic missiles. The system is expected to offer significantly improved performance over legacy radar systems in terms of sensitivity, resolution, and processing power. Its effectiveness is crucial for maintaining naval superiority and protecting naval assets and personnel in complex threat environments. The 'Design Agent' role suggests this contract is for the foundational design and potentially initial production phases, critical for ensuring the system's overall performance and integration.

How does this contract's value compare to historical spending on similar radar systems or defense procurements by the Department of the Navy?

The $204.8 million contract value for the AN/SPY-6(V) radar systems is a significant sum, but within the context of major defense procurements, it represents a mid-tier investment. The Department of the Navy procures a wide array of complex systems, including ships, aircraft, and advanced electronics, with individual program costs often reaching billions of dollars over their lifecycle. For instance, the development and procurement of entire naval combat systems or new classes of ships can dwarf this figure. However, for a specific component system like an advanced radar, $204.8 million is substantial and reflects the high cost of cutting-edge defense technology. Historical spending on comparable advanced radar systems, especially those involving new designs or significant upgrades, would likely fall within a similar range or higher, depending on the system's complexity and quantity.

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: N0002424R5501

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

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: $2,835,607,394

Exercised Options: $536,750,202

Current Obligation: $204,773,790

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline