Navy awards Raytheon $44.4M for CIWS, a sole-source contract for optical instruments

Contract Overview

Contract Amount: $44,427,029 ($44.4M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2024-09-27

End Date: 2028-10-31

Contract Duration: 1,495 days

Daily Burn Rate: $29.7K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: CIWS LONG TERM CONTRACT

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $44.4 million to RAYTHEON COMPANY for work described as: CIWS LONG TERM CONTRACT Key points: 1. Contract awarded to a single vendor suggests potential lack of competitive pricing. 2. Long-term contract duration may indicate a critical, ongoing need for the service. 3. Sole-source award raises questions about market research and alternative solutions. 4. Focus on optical instruments points to specialized technology requirements. 5. Contract value is significant, requiring careful monitoring of performance and cost. 6. Geographic location in Arizona may have implications for regional economic impact.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to its sole-source nature and specialized product. Without competitive bids, it's difficult to ascertain if the $44.4 million price represents fair market value. The firm-fixed-price structure offers some cost certainty, but the absence of competition means taxpayers may not be benefiting from the most economical pricing available. Further analysis would require understanding the specific components and market for these optical instruments.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, Raytheon Company, was solicited. This approach bypasses the standard competitive bidding process. While sole-source awards can be justified for unique capabilities or urgent needs, they limit price discovery and potentially increase costs for the government. The lack of multiple bidders means there was no direct competition to drive down prices or encourage innovation.

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

Public Impact

The U.S. Navy benefits from the continued supply of Close-In Weapon Systems (CIWS) components. Services delivered include the provision of specialized optical instruments essential for defense. The contract's impact is primarily national, supporting naval defense capabilities. Workforce implications may include specialized manufacturing and technical roles within Raytheon, potentially in Arizona.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition.
Long contract duration may obscure potential cost overruns if not closely managed.
Lack of transparency in the sole-source justification process.

Positive Signals

Firm-fixed-price contract provides cost certainty for the government.
Award to an established defense contractor like Raytheon suggests a known quantity for performance.
Contract addresses a critical defense system (CIWS).

Sector Analysis

This contract falls within the optical instrument and lens manufacturing sector, a specialized niche within the broader manufacturing industry. The defense sector heavily relies on such components for advanced weaponry and surveillance systems. The market for specialized defense optics is often characterized by high barriers to entry and a limited number of qualified suppliers, which can contribute to sole-source or limited-competition awards. Benchmarking against similar defense optics contracts would be necessary for a comprehensive value assessment.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb: false'. There is no explicit mention of subcontracting plans for small businesses. This suggests that the primary contractor, Raytheon, will likely handle the majority of the work internally or with larger partners, potentially limiting direct opportunities for small businesses within this specific contract's scope.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. As a Department of Defense contract, it is also subject to oversight by the Department of Defense Inspector General. Transparency measures would typically include contract award notifications and performance reporting requirements, though the sole-source nature might limit public visibility into the justification and negotiation process.

Related Government Programs

Naval Weapon Systems Procurement
Defense Optical Systems
Close-In Weapon Systems (CIWS) Program
Raytheon Defense Contracts

Risk Flags

Sole-source award
Lack of competition
Potential for uncompetitive pricing

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $44.4 million to RAYTHEON COMPANY. CIWS LONG TERM CONTRACT

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 $44.4 million.

What is the period of performance?

Start: 2024-09-27. End: 2028-10-31.

What is the specific nature of the optical instruments being procured for the CIWS?

The provided data does not specify the exact nature of the optical instruments. However, Close-In Weapon Systems (CIWS) are automated naval gun systems designed to defend against anti-ship missiles, aircraft, and other threats. The optical components are crucial for target acquisition, tracking, and fire control. These could include advanced sensors, targeting cameras, or related optical assemblies that are integral to the system's effectiveness. Understanding the precise technical specifications would require accessing the detailed contract statement of work.

What is Raytheon Company's track record with the CIWS program and similar optical systems?

Raytheon Company, now part of RTX Corporation, has a long-standing and significant history with the Phalanx CIWS program, which is the primary system utilizing these components. They are the original equipment manufacturer and have been responsible for the production, sustainment, and upgrades of the CIWS for decades. Their expertise in defense electronics, sensors, and integrated weapon systems is well-established. This extensive experience suggests a high level of technical capability and program familiarity, which likely contributed to their selection for this sole-source award.

How does the $44.4 million contract value compare to historical spending on CIWS optical components?

Without specific historical data on spending for CIWS optical components alone, a direct comparison is difficult. However, the $44.4 million over approximately four years (late 2024 to late 2028) represents an annual average of roughly $11.1 million. This figure should be considered in the context of the overall CIWS program's sustainment and modernization costs, which can run into hundreds of millions or billions of dollars over time. The value appears consistent with the procurement of specialized, high-technology components for a critical defense system, but a true benchmark would require detailed historical cost breakdowns for similar procurements.

What are the primary risks associated with this sole-source contract for optical instruments?

The primary risk associated with this sole-source contract is the potential for inflated pricing due to the lack of competition. Without competing bids, Raytheon may not have had the same incentive to offer the most cost-effective solution. Another risk is vendor lock-in; if these specific optical instruments are proprietary or deeply integrated, transitioning to another supplier in the future could be technically challenging and expensive. Furthermore, reliance on a single source can create supply chain vulnerabilities if Raytheon experiences production issues or disruptions.

What is the expected effectiveness or performance context for these optical instruments within the CIWS?

These optical instruments are critical for the effective operation of the Close-In Weapon System (CIWS). Their performance directly impacts the system's ability to detect, track, and engage incoming threats such as missiles and aircraft. High-resolution imaging, rapid target acquisition, and reliable tracking under adverse conditions (e.g., electronic countermeasures, weather) are essential. The effectiveness of the CIWS, and by extension these optical components, is measured by its success rate in intercepting threats, thereby protecting naval vessels. The long-term nature of this contract suggests a continued need for reliable and high-performing optical solutions.

Are there any alternative technologies or potential future replacements for these specific optical instruments?

The development of defense technology is continuous, and research into alternative or improved optical systems for target acquisition and tracking is ongoing across the defense industry. This could include advancements in sensor fusion, artificial intelligence for target recognition, or different spectral imaging technologies. However, the integration of new components into a complex, fielded system like the CIWS requires extensive testing, validation, and certification, which is a lengthy and costly process. While alternatives may exist or be in development, the current sole-source award indicates that for the immediate term and foreseeable future, Raytheon's existing optical solutions are deemed necessary and suitable by the Navy.

Industry Classification

NAICS: Manufacturing › Commercial and Service Industry Machinery Manufacturing › Optical Instrument and Lens Manufacturing

Product/Service Code: AEROSPACE CRAFT COMPONENTS AND ACCESSORIES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Rockwell Collins Australia PTY Limited

Address: 1151 E HERMANS RD, TUCSON, AZ, 85756

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: $44,427,029

Exercised Options: $44,427,029

Current Obligation: $44,427,029

Subaward Activity

Number of Subawards: 28

Total Subaward Amount: $6,111,922

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: N0038321DZM01

IDV Type: IDC

Timeline