Raytheon Company awarded $105.7M for Search, Detection, Navigation, Guidance Systems by the Department of Defense

Contract Overview

Contract Amount: $105,680,224 ($105.7M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2011-06-28

End Date: 2020-06-30

Contract Duration: 3,290 days

Daily Burn Rate: $32.1K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 4

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Defense

Official Description: GPNTS

Place of Performance

Location: SAN DIEGO, SAN DIEGO County, CALIFORNIA, 92123

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $105.7 million to RAYTHEON COMPANY for work described as: GPNTS Key points: 1. Contract value of over $105 million indicates a significant investment in advanced defense systems. 2. The use of a Cost Plus Incentive Fee (CPIF) contract suggests a need for flexibility in managing evolving project requirements and costs. 3. The duration of the contract (3290 days) points to a long-term strategic need for these systems. 4. The award to a single, large contractor, Raytheon Company, highlights the concentration of specialized defense manufacturing capabilities. 5. The absence of small business set-asides suggests the scope or nature of the work may not have been suitable for smaller enterprises. 6. The contract's focus on navigation and guidance systems is critical for modern military operations and technological advancement.

Value Assessment

Rating: good

The contract value of $105.7 million for search, detection, and navigation systems appears substantial, reflecting the complexity and strategic importance of the technology. Benchmarking against similar contracts for advanced defense electronics is challenging without more specific technical details. However, the CPIF contract type implies that cost controls and performance incentives were built into the agreement, aiming for value by aligning contractor and government interests. The long duration suggests a sustained need, potentially indicating that the pricing reflects long-term sustainment or development rather than a one-time purchase.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple bidders were likely solicited. The presence of four bidders (no=4) suggests a reasonably competitive environment for this specialized defense technology. While the specific details of the competition are not provided, a multi-bidder scenario generally allows for price discovery and encourages contractors to offer competitive terms. The government's ability to select from multiple proposals implies a degree of market responsiveness.

Taxpayer Impact: Full and open competition is generally favorable for taxpayers as it promotes a more competitive bidding process, potentially leading to lower prices and better value for the government's investment.

Public Impact

The Department of Defense is the primary beneficiary, receiving advanced systems crucial for national security and military operations. The contract supports the development, manufacturing, and potentially sustainment of search, detection, navigation, and guidance systems. The geographic impact is primarily within the United States, likely involving Raytheon's facilities in California (sn=CALIFORNIA) and potentially other sites. The contract supports a highly skilled workforce in the aerospace and defense manufacturing sector, particularly in specialized engineering and production roles.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The Cost Plus Incentive Fee (CPIF) structure, while incentivizing, can lead to cost overruns if not closely monitored, especially given the contract's long duration.
The long contract duration of 3290 days (over 9 years) presents a risk of technological obsolescence or changing mission requirements that may not be fully captured by the initial contract terms.
Reliance on a single large contractor for such critical systems could pose a long-term risk if the contractor faces financial instability or strategic shifts.
The lack of specific performance metrics or outcome data makes it difficult to fully assess the effectiveness and efficiency of the spending.
The absence of small business participation may limit opportunities for innovation and competition from smaller, agile firms in the defense supply chain.

Positive Signals

Awarded under full and open competition, suggesting a robust selection process and potential for competitive pricing.
The CPIF contract type includes incentives, aiming to reward efficient performance and cost control, which can benefit the government.
The long contract duration indicates a sustained commitment to a critical capability, suggesting strategic planning by the DoD.
The contract is with a well-established defense contractor (Raytheon Company), implying a track record of delivering complex systems.
The focus on advanced navigation and guidance systems aligns with modernization efforts in defense technology.

Sector Analysis

The contract falls within the 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' sector (NA=334511). This industry is characterized by high R&D investment, stringent quality requirements, and significant government procurement. The market is dominated by large, established defense contractors due to the complexity and scale of production. Comparable spending benchmarks are difficult without specific system details, but this award represents a significant investment in a technologically advanced niche within the broader aerospace and defense industry.

Small Business Impact

This contract did not involve small business set-asides (sb=false). The nature of advanced defense systems manufacturing often requires specialized facilities, extensive R&D capabilities, and large-scale production capacity typically found in larger corporations. While there are no direct set-asides, large prime contractors like Raytheon often engage small businesses as subcontractors, contributing to the broader small business ecosystem. However, the absence of direct set-asides means fewer opportunities for small businesses to compete as prime contractors on this specific award.

Oversight & Accountability

Oversight for this contract would primarily be managed by the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor performance, compliance, and quality assurance. The CPIF contract type necessitates close monitoring of costs and performance against established targets and incentives. Transparency is facilitated through contract awards databases, but detailed operational oversight information is typically considered sensitive. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Defense Advanced Research Projects Agency (DARPA) programs
Naval Air Systems Command (NAVAIR) contracts
Air Force Life Cycle Management Center (AFLCMC) procurements
Missile Defense Agency (MDA) initiatives
Tactical Systems Development

Risk Flags

Long contract duration may lead to technological obsolescence.
Cost Plus Incentive Fee (CPIF) requires diligent oversight to manage costs.
Concentration of work with a single large contractor.
Lack of specific performance metrics in public data.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $105.7 million to RAYTHEON COMPANY. GPNTS

Who is the contractor on this award?

The obligated recipient is RAYTHEON COMPANY.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $105.7 million.

What is the period of performance?

Start: 2011-06-28. End: 2020-06-30.

What is Raytheon Company's track record with the Department of Defense for similar navigation and guidance systems?

Raytheon Company, now part of RTX Corporation, has a long and extensive history of providing advanced defense systems, including navigation, guidance, and sensor technologies, to the Department of Defense. They are a prime contractor on numerous programs across all military branches. Their portfolio includes systems for aircraft, missiles, and naval platforms. While specific performance data for this particular contract isn't publicly detailed, Raytheon's consistent role as a major defense supplier suggests a substantial track record. However, like any large contractor, they have faced scrutiny on specific programs regarding cost, schedule, and performance, necessitating robust government oversight.

How does the $105.7 million contract value compare to other similar defense system procurements?

The $105.7 million contract value is significant but falls within a common range for major defense system development and production contracts. Procurements for advanced avionics, radar systems, or missile guidance components can range from tens of millions to billions of dollars. This specific award for 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' suggests a substantial, multi-year effort. To provide a precise comparison, one would need to identify contracts with identical or highly similar Product Service Codes (PSCs) and technical specifications. However, in the context of specialized defense electronics, this value indicates a mid-to-large scale procurement.

What are the primary risks associated with a Cost Plus Incentive Fee (CPIF) contract of this magnitude and duration?

The primary risks with a CPIF contract of this scale and duration ($105.7M over 3290 days) revolve around cost control and scope creep. While CPIF incentivizes cost savings, the 'cost-plus' nature means the government ultimately bears the costs incurred by the contractor, plus a fee. If the target costs are set too high or the incentives are not sufficiently motivating, costs can escalate. For long-duration contracts, there's also the risk of evolving technological requirements or unforeseen challenges that could necessitate contract modifications, potentially increasing costs and complexity. Effective government oversight is crucial to manage these risks by closely monitoring expenditures, performance, and adherence to the incentive structure.

How effective is 'full and open competition' in ensuring value for money in specialized defense manufacturing?

Full and open competition is generally considered the most effective method for ensuring value for money in defense manufacturing, as it maximizes the pool of potential bidders and fosters price competition. When multiple qualified companies vie for a contract, they are incentivized to offer their best technical solutions at the most competitive prices. This process allows the government to select the offer that provides the best overall value, considering both technical merit and cost. However, the effectiveness can be influenced by factors such as the complexity of the technology, the number of capable suppliers, and the clarity of the government's requirements. In highly specialized fields, the number of truly capable bidders might be limited, potentially reducing the competitive pressure.

What are the implications of awarding this contract to a single, large entity like Raytheon Company?

Awarding a significant contract like this to a single, large entity like Raytheon Company has several implications. Positively, it leverages the contractor's established infrastructure, expertise, and proven ability to manage complex, large-scale projects. This can lead to more streamlined execution and potentially faster delivery of critical capabilities. However, it also concentrates risk with one supplier, potentially reducing market resilience if that supplier faces issues. Furthermore, it may limit opportunities for smaller, innovative firms to participate directly as prime contractors, although they might be engaged as subcontractors. The government must ensure robust oversight to mitigate risks associated with sole-source reliance, even if the initial award was competitive.

How does the NAICS code 334511 (Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing) reflect the nature of this spending?

The NAICS code 334511 precisely categorizes this contract's focus on the manufacturing of sophisticated systems used for locating, tracking, and directing aircraft, vessels, and other assets. This includes components like radar, sonar, GPS receivers, inertial navigation units, flight control computers, and related instruments. Spending under this code typically involves high levels of engineering, precision manufacturing, and integration of complex electronic and mechanical systems. It signifies investment in technologies critical for military operations, aviation safety, and maritime surveillance, often requiring significant research and development and adherence to stringent military specifications.

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: RESEARCH AND DEVELOPMENT › C – National Defense R&D Services

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: N0003910R0032

Offers Received: 4

Pricing Type: COST PLUS INCENTIVE FEE (V)

Evaluated Preference: NONE

Contractor Details

Parent Company: RTX Corp

Address: 8680 BALBOA AVE, SAN DIEGO, CA, 92123

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: $108,144,964

Exercised Options: $108,144,964

Current Obligation: $105,680,224

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline