Raytheon Company awarded $56.7M contract for search, detection, navigation, and guidance systems by the Department of the Navy

Contract Overview

Contract Amount: $56,725,684 ($56.7M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2005-11-30

End Date: 2010-01-31

Contract Duration: 1,523 days

Daily Burn Rate: $37.2K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 5

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Place of Performance

Location: EL SEGUNDO, LOS ANGELES County, CALIFORNIA, 90245

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $56.7 million to RAYTHEON COMPANY for work described as: Key points: 1. Contract awarded through full and open competition, suggesting a competitive bidding process. 2. The contract type is Cost Plus Fixed Fee (CPFF), which can lead to cost overruns if not managed carefully. 3. The contract duration of 1523 days (approximately 4.17 years) indicates a long-term need for these systems. 4. The award was made by the Department of the Navy, a significant defense agency. 5. The North American Industry Classification System (NAICS) code 334511 points to specialized manufacturing within the defense sector. 6. The contract was awarded in California, a state with a strong defense industrial base.

Value Assessment

Rating: fair

Benchmarking the value of this specific contract is challenging without more detailed cost breakdowns and performance metrics. The Cost Plus Fixed Fee (CPFF) contract type introduces inherent risk for cost control, as the contractor is reimbursed for allowable costs plus a fixed fee. While the total award value is $56.7 million, the 'value for money' depends heavily on the efficiency of Raytheon's cost management and the ultimate performance of the delivered systems. Without comparable contract data for similar systems or detailed cost analysis, a definitive value assessment is difficult.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under 'full and open competition,' indicating that all responsible sources were permitted to submit bids. The presence of 5 bidders (as indicated by 'no': 5) suggests a reasonable level of competition for this requirement. A competitive process generally helps in price discovery and can lead to more favorable pricing for the government compared to sole-source or limited competition scenarios.

Taxpayer Impact: The full and open competition likely resulted in a more competitive price for taxpayers, as multiple companies vied for the contract, driving down costs through market forces.

Public Impact

The Department of the Navy benefits from the acquisition of advanced search, detection, navigation, and guidance systems, crucial for its operational capabilities. These systems are vital for enhancing the effectiveness and safety of naval operations, including reconnaissance, targeting, and navigation. The contract supports the defense industrial base, particularly in California, contributing to the region's economy and specialized manufacturing sector. The successful execution of this contract implies a positive impact on national security by ensuring the readiness of naval assets.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Fixed Fee (CPFF) contract type can incentivize higher spending if not rigorously monitored.
The long contract duration may present challenges in adapting to evolving technological requirements.
Reliance on a single large contractor, Raytheon, for critical systems could pose supply chain risks.

Positive Signals

Awarded through full and open competition, indicating a robust bidding process.
The contract supports a critical defense need for the U.S. Navy.
The contractor, Raytheon, is a well-established entity in the defense industry with significant experience.

Sector Analysis

The contract falls within the 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' sector, a specialized segment of the aerospace and defense industry. This sector is characterized by high R&D investment, stringent quality requirements, and significant government procurement. The market size for such specialized defense electronics is substantial, driven by ongoing modernization efforts and national security imperatives. This contract represents a component of the broader defense electronics spending, where companies like Raytheon are key players.

Small Business Impact

The data provided does not indicate any specific small business set-aside provisions for this contract. Given the nature of the specialized systems and the prime contractor (Raytheon), it is likely that any small business involvement would be through subcontracting opportunities. Further analysis would be needed to determine the extent of small business participation and subcontracting plans.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. The Cost Plus Fixed Fee (CPFF) structure necessitates close monitoring of allowable costs and the contractor's performance to ensure adherence to the contract terms and prevent cost overruns. Inspector General (IG) jurisdiction would apply in cases of suspected fraud, waste, or abuse. Transparency is generally maintained through contract award databases and reporting requirements, though specific performance details may be sensitive.

Related Government Programs

Naval Aviation Systems
Defense Electronics Manufacturing
Aerospace Navigation Systems
Defense Research and Development
Military Sensor Technology

Risk Flags

Cost Plus Fixed Fee contract type carries inherent risk of cost overruns.
Long contract duration may require careful management to adapt to evolving needs.
Potential for limited competition in highly specialized defense technology sectors.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $56.7 million to RAYTHEON COMPANY. See the official description on USAspending.

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 $56.7 million.

What is the period of performance?

Start: 2005-11-30. End: 2010-01-31.

What is Raytheon Company's track record with similar Department of Defense contracts, particularly those involving navigation and guidance systems?

Raytheon Company, now part of RTX Corporation, has a long and extensive history of supplying complex systems to the Department of Defense (DoD), including navigation, guidance, and sensor technologies. They are a prime contractor on numerous large-scale defense programs across all branches of the military. Their track record includes the development and production of radar systems, missile guidance systems, and integrated avionics for aircraft and naval platforms. While specific performance metrics for past contracts are often classified or not publicly detailed, Raytheon is generally considered a capable and experienced provider of these critical defense technologies. However, like many large defense contractors, they have faced scrutiny regarding cost overruns and schedule delays on certain complex programs, underscoring the importance of robust government oversight.

How does the $56.7 million award value compare to similar contracts for navigation and guidance systems within the defense sector?

Comparing the $56.7 million award value requires context regarding the specific systems, their complexity, and the contract duration. Contracts for advanced navigation and guidance systems can range significantly in price. For instance, contracts for integrated avionics suites for fighter jets or complex sonar systems for submarines can easily run into hundreds of millions or even billions of dollars over their lifecycle. A $56.7 million contract for specialized components or a specific subsystem over approximately four years, as indicated here, appears to be a mid-tier award within the broader defense electronics market. Without knowing the exact nature of the 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument' being procured, a precise benchmark is difficult, but it represents a substantial investment in a critical capability.

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

The primary risks associated with a Cost Plus Fixed Fee (CPFF) contract of this magnitude ($56.7 million) and duration (over 4 years) revolve around cost control and potential inefficiencies. In a CPFF structure, the contractor is reimbursed for all allowable costs incurred, plus a predetermined fixed fee representing their profit. This can incentivize the contractor to incur higher costs, as their profit margin (the fixed fee) remains constant regardless of the total cost. The government bears the risk of cost overruns. Effective oversight, rigorous auditing of costs, and clear performance metrics are crucial to mitigate these risks. Scope creep, where the project's requirements expand beyond the initial agreement, can also inflate costs significantly under this contract type.

How effective is 'full and open competition' in ensuring competitive pricing for specialized defense manufacturing contracts?

Full and open competition is generally considered the most effective method for ensuring competitive pricing in government contracting, including specialized defense manufacturing. By allowing all responsible sources to submit proposals, the government maximizes the pool of potential bidders, thereby increasing the likelihood of receiving competitive offers. This process fosters price discovery and encourages contractors to submit their best possible pricing to win the award. In this specific case, with 5 bidders, the competition likely contributed to a more favorable price for the Department of the Navy than if it had been a sole-source or limited competition award. However, the complexity and specialized nature of defense systems can sometimes limit the number of truly capable bidders, even in a full and open competition.

What are the potential implications of this contract on the broader defense industrial base and technological advancement in navigation systems?

This contract contributes to the ongoing health and capability of the defense industrial base, particularly within the specialized manufacturing sector for navigation and guidance systems. By awarding to Raytheon, the Navy ensures the continued development and production of critical technologies. Such contracts often drive innovation, as contractors invest in research and development to meet stringent performance requirements and maintain a competitive edge. The advancements made under this contract could have spillover effects into commercial aviation and maritime sectors, potentially improving safety and efficiency. Furthermore, it sustains a segment of the workforce skilled in advanced electronics manufacturing and systems integration.

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

Offers Received: 5

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 2000 EAST EL SEGUNDO BLVD, EL SEGUNDO, CA, 36

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Cost or Pricing Data: NO

Timeline