Raytheon awarded $32.3M contract for Navy radios, highlighting sole-source procurement for specialized communications

Contract Overview

Contract Amount: $32,259,386 ($32.3M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2011-10-27

End Date: 2017-04-27

Contract Duration: 2,009 days

Daily Burn Rate: $16.1K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: PROCUREMENT OF JTT-SR AN/USC-62 RADIOS IN SUPPORT OF NAVY REQUIREMENTS

Place of Performance

Location: SEMINOLE, PINELLAS County, FLORIDA, 33777

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $32.3 million to RAYTHEON COMPANY for work described as: PROCUREMENT OF JTT-SR AN/USC-62 RADIOS IN SUPPORT OF NAVY REQUIREMENTS Key points: 1. Contract awarded to a single vendor, raising questions about competitive pricing. 2. Specialized radio equipment suggests a niche market with potentially limited alternatives. 3. Long contract duration (2011-2017) indicates a sustained need for the technology. 4. Firm Fixed Price contract type offers cost certainty but may limit upside for innovation. 5. Procurement supports Navy requirements, indicating a critical defense application. 6. No small business set-aside suggests the primary contractor is not a small business, and subcontracting opportunities are not guaranteed.

Value Assessment

Rating: fair

Benchmarking the value of this $32.3 million contract is challenging without direct comparisons to similar sole-source procurements for the AN/USC-62 radios. The firm fixed-price structure provides cost predictability for the Navy. However, the absence of competition means there's no market-driven validation of whether this price represents the best value achievable. Further analysis would require understanding the specific technical requirements and the availability of alternative solutions.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning the Department of the Navy did not solicit bids from multiple vendors. This approach is typically used when a specific product or service is only available from one source, or when there's a compelling justification for avoiding full and open competition, such as urgent needs or compatibility requirements. The lack of competition limits price discovery and may result in higher costs for the government compared to a competed procurement.

Taxpayer Impact: Sole-source awards mean taxpayers do not benefit from the cost savings typically achieved through competitive bidding, potentially leading to a higher overall expenditure for this equipment.

Public Impact

Naval personnel will benefit from enhanced communication capabilities through the AN/USC-62 radios. The contract delivers specialized radio equipment essential for military operations. The primary geographic impact is within Department of Defense facilities, particularly those operated by the Navy. Workforce implications are primarily within Raytheon Company, supporting the manufacturing and delivery of the radios.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated prices.
Sole-source awards can reduce government leverage in negotiations.
Dependence on a single supplier creates supply chain risks.
Limited transparency into the pricing structure due to non-competitive nature.

Positive Signals

Firm Fixed Price contract provides cost certainty.
Procurement addresses specific, likely critical, Navy communication needs.
Award to an established defense contractor like Raytheon suggests technical capability.

Sector Analysis

The market for specialized military communication equipment, such as the AN/USC-62 radios, is a niche segment within the broader wireless communications manufacturing sector. This sector is characterized by high barriers to entry due to stringent technical specifications, security requirements, and long development cycles. Spending in this area is heavily influenced by defense budgets and evolving technological demands. Comparable spending benchmarks would likely be found within other sole-source or limited-competition procurements for advanced military electronics.

Small Business Impact

This contract does not appear to have included a small business set-aside, nor is the primary awardee identified as a small business. This suggests that the primary focus was on fulfilling the specific technical requirements of the Navy, likely with a large, established defense contractor. Subcontracting opportunities for small businesses may exist but are not explicitly mandated by the contract terms, meaning their availability and extent would depend on Raytheon's procurement strategy.

Oversight & Accountability

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

Related Government Programs

Navy Radio Procurement
Defense Communications Systems
Military Electronics Manufacturing
Sole-Source Defense Contracts
Wireless Communications Equipment

Risk Flags

Sole-source award
Lack of competition
Potential for overpricing
Limited transparency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $32.3 million to RAYTHEON COMPANY. PROCUREMENT OF JTT-SR AN/USC-62 RADIOS IN SUPPORT OF NAVY REQUIREMENTS

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 $32.3 million.

What is the period of performance?

Start: 2011-10-27. End: 2017-04-27.

What is the specific technical capability of the AN/USC-62 radio and why was it procured on a sole-source basis?

The AN/USC-62 is a secure, multi-band tactical radio system designed for robust communication in challenging environments. Its sole-source procurement was likely driven by unique technical specifications, existing system integration, or a lack of viable alternative suppliers that could meet the Navy's stringent operational requirements within the required timeframe. Often, specialized military hardware is developed with proprietary technology or requires extensive compatibility with existing platforms, making competitive sourcing difficult or impossible without significant redesign or delays. This ensures the Navy receives a proven solution tailored to its specific mission needs, though it bypasses the potential cost benefits of open competition.

How does the $32.3 million contract value compare to historical spending on similar radio systems by the Navy?

Direct historical spending comparisons for the AN/USC-62 radios are difficult without access to detailed procurement databases and specific contract line item details. However, $32.3 million over a period of approximately five years (2011-2017) suggests a significant investment in specialized communication hardware. For context, major defense communication system procurements can range from tens to hundreds of millions of dollars. The value reflects the complexity, technological sophistication, and potentially the quantity of units required. Without knowing the exact number of units or specific configurations, a precise historical benchmark is elusive, but the figure indicates a substantial, albeit niche, procurement.

What are the primary risks associated with a sole-source award for critical defense equipment like these radios?

The primary risks associated with a sole-source award for critical defense equipment include potential overpricing due to the absence of competitive pressure, reduced incentive for the contractor to innovate or improve efficiency, and increased vulnerability to supply chain disruptions if the sole supplier faces issues. Taxpayers may bear a higher cost than if the contract had been competed. Furthermore, the government's negotiating leverage is diminished. While sole-source awards are sometimes necessary for unique capabilities, they require robust government oversight to mitigate these inherent risks and ensure fair pricing and timely delivery.

What is Raytheon Company's track record in supplying similar communication systems to the Department of Defense?

Raytheon Company, now part of RTX, has a long and extensive track record of supplying a wide array of sophisticated communication systems, electronics, and defense technologies to the Department of Defense and allied nations. They are a major prime contractor involved in numerous large-scale defense programs, including radar, missile systems, command and control, and various forms of electronic warfare and secure communications. Their experience with complex military specifications, integration challenges, and large-scale production makes them a frequent choice for critical defense procurements, including specialized radio systems like the AN/USC-62.

How does the firm fixed-price (FFP) contract type impact the government's financial risk and the contractor's performance incentives?

A Firm Fixed Price (FFP) contract shifts the majority of the financial risk to the contractor. The contractor is obligated to deliver the specified goods or services for a predetermined price, regardless of their actual costs. This provides the government with significant cost certainty, as the total expenditure is known upfront. For the contractor, it creates a strong incentive to manage costs efficiently and perform effectively to maximize profit. However, FFP contracts can sometimes disincentivize scope changes or extensive innovation during performance, as any deviation from the original agreement may require costly renegotiation. For specialized equipment like radios, FFP is common to lock in costs.

Industry Classification

NAICS: Manufacturing › Communications Equipment Manufacturing › Radio and Television Broadcasting and Wireless Communications Equipment Manufacturing

Product/Service Code: COMM/DETECT/COHERENT RADIATION

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0003911R0002

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 8333 BRYAN DAIRY RD, LARGO, FL, 33777

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: $32,259,386

Exercised Options: $32,259,386

Current Obligation: $32,259,386

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline