Raytheon Company awarded $61.2M for FLIR PBL FIRST DELIVERY ORDER by the Department of the Navy

Contract Overview

Contract Amount: $61,234,815 ($61.2M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2022-05-10

End Date: 2022-09-30

Contract Duration: 143 days

Daily Burn Rate: $428.2K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: MTS FLIR PBL FIRST DELIVERY ORDER

Place of Performance

Location: MCKINNEY, COLLIN County, TEXAS, 75071

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $61.2 million to RAYTHEON COMPANY for work described as: MTS FLIR PBL FIRST DELIVERY ORDER Key points: 1. Value for money is difficult to assess without a competitive benchmark. 2. The contract was not competed, raising questions about price discovery. 3. Risk indicators are moderate, given the firm-fixed-price structure. 4. Performance context is limited to the delivery order period. 5. This contract falls within the Other Electronic Component Manufacturing sector.

Value Assessment

Rating: fair

The awarded amount of $61.2 million for this delivery order presents a significant investment. Without a competitive bidding process, it is challenging to benchmark the value against market rates or similar contracts. The firm-fixed-price structure offers some cost certainty, but the absence of competition means potential savings may have been forgone. Further analysis would require comparison to historical pricing for similar systems or components.

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. This approach is typically used when only one source can provide the required goods or services. The lack of competition limits the government's ability to solicit multiple bids and potentially negotiate a lower price. It suggests a specific need or a unique capability held by Raytheon Company.

Taxpayer Impact: Taxpayers may not have received the best possible price due to the absence of a competitive bidding process. This can lead to higher overall spending for the government.

Public Impact

The Department of the Navy benefits from the acquisition of FLIR PBL systems. These systems are likely crucial for defense and surveillance operations. The geographic impact is primarily within Texas, where the contractor is located. Workforce implications are tied to Raytheon Company's manufacturing and support operations.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to higher costs for taxpayers.
Sole-source awards can reduce the incentive for contractors to offer competitive pricing.
Limited transparency in the procurement process due to non-competitive nature.

Positive Signals

Firm-fixed-price contract provides cost certainty for the government.
Award to an established contractor like Raytheon Company suggests a degree of reliability.
Delivery order structure allows for phased acquisition of necessary equipment.

Sector Analysis

The contract falls under the Other Electronic Component Manufacturing sector (NAICS 334419). This sector encompasses establishments primarily engaged in manufacturing semiconductors and other electronic components. The market for defense-related electronic components is substantial, driven by ongoing modernization and operational needs of military branches. This specific award likely supports advanced sensor or imaging systems, a critical area within defense technology.

Small Business Impact

This contract was not competed and there is no indication of small business set-asides or subcontracting requirements. Therefore, the direct impact on the small business ecosystem is likely minimal for this specific award. However, Raytheon Company, as a large prime contractor, may engage small businesses in its broader supply chain, though this is not explicitly detailed in the award information.

Oversight & Accountability

The contract is a delivery order under a larger contract vehicle, which may have its own oversight mechanisms. The firm-fixed-price nature provides some cost control. Transparency is limited due to the sole-source nature of the award. Accountability would be managed through contract performance monitoring by the Department of the Navy, with potential oversight from the Government Accountability Office (GAO) if disputes arise.

Related Government Programs

Defense Procurement
Electronic Component Manufacturing
Naval Systems
FLIR Systems

Risk Flags

Sole-source award
Lack of competitive bidding
Potential for inflated pricing

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $61.2 million to RAYTHEON COMPANY. MTS FLIR PBL FIRST DELIVERY ORDER

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 $61.2 million.

What is the period of performance?

Start: 2022-05-10. End: 2022-09-30.

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

Raytheon Company, now part of RTX, has a long-standing and extensive track record with the Department of the Navy, supplying a wide array of defense systems, including sensors, electronics, and integrated platforms. They are a major defense contractor with numerous awards for complex systems. For FLIR (Forward-Looking Infrared) systems specifically, Raytheon has been a significant provider, often integrating these into larger platforms like aircraft, ships, and ground vehicles. Their history suggests a deep understanding of naval requirements and a capacity to deliver sophisticated technology. However, the specific performance metrics and value for money on past FLIR-related contracts would require a detailed review of individual contract histories and performance reports.

How does the $61.2 million award compare to other similar contracts for FLIR systems?

Benchmarking this $61.2 million delivery order against other FLIR system contracts is challenging without more specific details on the system's capabilities, quantity, and configuration. FLIR systems can range from relatively simple handheld devices to highly complex, integrated sensor suites for advanced platforms. Given the sole-source nature of this award, a direct price comparison is difficult. However, major defense contractors like Raytheon typically deliver high-end, technologically advanced systems for military applications, which often command higher price points due to R&D, integration complexity, and performance requirements. To provide a meaningful comparison, one would need to identify contracts for similar quantities and specifications, ideally awarded competitively, to establish a clearer market rate.

What are the primary risks associated with this sole-source award?

The primary risk associated with this sole-source award is the potential for suboptimal pricing. Without competition, the government may not achieve the most favorable price, as the contractor faces less pressure to reduce costs. Another risk is the potential for scope creep or cost overruns if the firm-fixed-price (FFP) contract is not meticulously managed, although FFP generally shifts cost risk to the contractor. Furthermore, reliance on a single source can create dependency and limit future flexibility if alternative solutions emerge. Ensuring robust oversight and clear performance metrics becomes crucial to mitigate these risks and ensure the government receives adequate value.

How effective are firm-fixed-price contracts in managing costs for electronic component manufacturing?

Firm-fixed-price (FFP) contracts are generally considered effective for managing costs when the scope of work is well-defined and the risks are understood. For the manufacturing of electronic components, where production processes and material costs can be relatively predictable, FFP can provide cost certainty for the buyer. It incentivizes the contractor to control costs efficiently to maximize profit. However, if unforeseen technical challenges arise or material costs fluctuate significantly, the contractor may seek adjustments, or the initial price might have been inflated to account for perceived risks. For complex or developmental items, FFP can be riskier for the contractor, potentially leading to higher initial bids.

What are the historical spending patterns for FLIR systems within the Department of the Navy?

Historical spending patterns for FLIR systems within the Department of the Navy indicate a consistent and significant investment over many years. The Navy utilizes FLIR technology across a wide range of platforms, including surface vessels, submarines, naval aircraft, and unmanned systems, for surveillance, targeting, navigation, and situational awareness. Spending fluctuates based on modernization programs, operational tempo, and specific platform upgrades. Major defense contractors like Raytheon, Lockheed Martin, and BAE Systems are key suppliers in this domain. Analyzing historical data would reveal trends in contract values, types (e.g., new systems vs. upgrades vs. sustainment), and the competitive landscape for these procurements.

What is the significance of the 'PBL' designation in 'MTS FLIR PBL FIRST DELIVERY ORDER'?

The 'PBL' in 'MTS FLIR PBL FIRST DELIVERY ORDER' likely stands for 'Performance-Based Logistics'. Performance-Based Logistics is a contracting strategy where the government pays for the performance or availability of systems and support, rather than for individual parts or services. In this context, the delivery order might be part of a larger PBL arrangement for the MTS (Multi-Spectral Targeting System) FLIR, meaning Raytheon is contracted to ensure a certain level of readiness, availability, or performance of these systems over a specified period. This shifts the focus from transactional exchanges to long-term system support and readiness, aiming for better overall value and sustainment.

Industry Classification

NAICS: Manufacturing › Semiconductor and Other Electronic Component Manufacturing › Other Electronic Component Manufacturing

Product/Service Code: FIRE CONTROL EQPT.

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0038319R3752

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: RTX Corp

Address: 2501 W UNIVERSITY DR, MCKINNEY, TX, 75071

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: $61,234,815

Exercised Options: $61,234,815

Current Obligation: $61,234,815

Subaward Activity

Number of Subawards: 18

Total Subaward Amount: $7,676,432

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: N0038322DTH01

IDV Type: IDC

Timeline