Raytheon Company awarded $12.5M for AN/ALR-67(V)3 engineering support, a sole-source contract

Contract Overview

Contract Amount: $12,542,696 ($12.5M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2009-02-27

End Date: 2012-02-27

Contract Duration: 1,095 days

Daily Burn Rate: $11.5K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: AN/ALR-67(V)3 ENGINEERING SUPPORT

Place of Performance

Location: GOLETA, SANTA BARBARA County, CALIFORNIA, 93117

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $12.5 million to RAYTHEON COMPANY for work described as: AN/ALR-67(V)3 ENGINEERING SUPPORT Key points: 1. Contract awarded on a sole-source basis, limiting price competition. 2. Engineering services for a specific defense system suggest specialized contractor knowledge. 3. Contract duration of 3 years indicates a medium-term support requirement. 4. The contract type (Cost Plus Fixed Fee) can lead to cost overruns if not managed carefully. 5. The awardee, Raytheon Company, is a major defense contractor with extensive experience. 6. The contract value is moderate for specialized engineering support within the defense sector.

Value Assessment

Rating: fair

Benchmarking the value of this specific engineering support contract is challenging without detailed scope of work and performance metrics. However, the Cost Plus Fixed Fee (CPFF) contract type, while common for complex R&D or engineering services, carries inherent risks of cost escalation. The fixed fee component provides some incentive for the contractor to control costs, but the primary cost driver is the cost reimbursement. Without competitive bidding, it's difficult to ascertain if the pricing reflects optimal value for money compared to potential market alternatives. The $12.5 million award over three years averages to approximately $4.17 million annually, which appears within a reasonable range for specialized defense engineering services, but a definitive assessment requires more granular cost data and comparison to similar sole-source procurements.

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 among multiple vendors. This typically occurs when only one vendor possesses the necessary technical expertise, intellectual property, or is the sole provider of a critical component or service. The lack of competition means that taxpayers did not benefit from the price discovery mechanisms inherent in a competitive bidding process, potentially leading to higher costs than if multiple firms had vied for the contract. The justification for sole-source awards is usually documented by the agency, often citing reasons like urgency, unique capabilities, or lack of alternatives.

Taxpayer Impact: Sole-source awards limit the government's ability to negotiate the best possible price, as there is no competitive pressure on the contractor. This can result in taxpayers paying a premium for goods or services that might be available at a lower cost through open competition.

Public Impact

The primary beneficiaries are the U.S. Department of Defense, ensuring continued engineering support for the AN/ALR-67(V)3 system. This contract supports the operational readiness and sustainment of critical electronic warfare capabilities. The services delivered include engineering expertise, technical support, and potentially system upgrades or maintenance. The geographic impact is primarily within California, where the contract is managed, but the system's deployment is global. The contract supports specialized engineering roles, likely benefiting highly skilled technical professionals within Raytheon Company.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potential cost savings for taxpayers.
Cost Plus Fixed Fee contract type carries a risk of cost overruns if not closely monitored.
Lack of transparency in the sole-source justification process can obscure the true necessity of this approach.
Dependence on a single contractor for critical engineering support can create long-term vendor lock-in.

Positive Signals

Award to a major defense contractor (Raytheon) suggests access to significant technical expertise and resources.
The AN/ALR-67(V)3 system is a critical component of electronic warfare, indicating a necessary and important procurement.
The contract duration suggests a stable, ongoing need for support, allowing for consistent system sustainment.

Sector Analysis

The defense engineering services sector is characterized by high barriers to entry, specialized technical requirements, and significant government investment. Contracts often involve complex systems requiring deep domain knowledge and proprietary technology. Major defense contractors like Raytheon dominate this space, leveraging decades of experience and established relationships with government agencies. Spending in this sector is driven by national security priorities, technological advancements, and the need to maintain and upgrade existing defense platforms. Comparable spending benchmarks are difficult to establish precisely due to the unique nature of specific defense systems, but annual budgets for defense engineering and sustainment run into billions of dollars.

Small Business Impact

This contract was not set aside for small businesses, nor does it appear to have specific subcontracting requirements for small businesses indicated in the provided data. As a sole-source award to a large prime contractor, the direct impact on the small business ecosystem is likely minimal unless Raytheon Company voluntarily includes small businesses in its subcontracting chain. The absence of set-asides suggests that the specific engineering services required were deemed beyond the scope or capability of small businesses, or that the sole-source justification overrode any small business considerations. Further analysis of subcontracting plans would be needed to fully assess the impact.

Oversight & Accountability

Oversight for this contract would typically fall under the purview of the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor performance and compliance. The specific terms of the Cost Plus Fixed Fee contract would dictate detailed financial reporting and auditing requirements. Transparency regarding the sole-source justification and the contractor's cost proposals is often limited due to national security or proprietary concerns. Inspector General (IG) jurisdiction would apply if any allegations of fraud, waste, or abuse arise during the contract's lifecycle.

Related Government Programs

AN/ALR-67(V)3 Radar Warning Receiver System
Defense Electronic Warfare Systems
Aerospace Engineering Services
Cost Plus Fixed Fee Contracts
Sole-Source Defense Procurements

Risk Flags

Sole-source award
Cost Plus Fixed Fee contract type
Potential for cost overruns
Lack of competitive pricing

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $12.5 million to RAYTHEON COMPANY. AN/ALR-67(V)3 ENGINEERING SUPPORT

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 $12.5 million.

What is the period of performance?

Start: 2009-02-27. End: 2012-02-27.

What is the specific technical scope of 'AN/ALR-67(V)3 ENGINEERING SUPPORT' and why was it deemed sole-source?

The AN/ALR-67(V)3 is a digital radar warning receiver (RWR) system used by various U.S. Navy and Air Force aircraft to detect and identify radar threats. Engineering support likely encompasses a range of activities such as system diagnostics, troubleshooting, software updates, hardware maintenance, performance analysis, and potentially modifications or upgrades to enhance its capabilities or adapt it to new platforms. The sole-source justification, often documented in a Justification and Approval (J&A) document, would typically cite reasons such as the contractor (Raytheon) being the original equipment manufacturer, possessing unique technical data, proprietary knowledge, or specialized facilities essential for supporting this specific, complex defense system. Without access to the official J&A, the precise rationale remains speculative, but it invariably points to a lack of viable alternatives in the market for this specialized support.

How does the Cost Plus Fixed Fee (CPFF) contract type compare to other contract types for similar engineering services in terms of cost efficiency?

Cost Plus Fixed Fee (CPFF) contracts are often used for research and development or complex engineering services where the scope of work is not precisely defined at the outset, or where innovation is a key objective. The government reimburses the contractor for allowable costs incurred, plus a predetermined fixed fee representing profit. While this structure allows flexibility and encourages the contractor to undertake challenging tasks, it carries a higher risk of cost overruns compared to fixed-price contracts, as the government bears the brunt of cost uncertainties. In contrast, Firm-Fixed-Price (FFP) contracts offer greater cost certainty for the government but require a well-defined scope and can disincentivize innovation or scope adjustments. For specialized engineering services like those for the AN/ALR-67(V)3, CPFF might be deemed necessary if the exact technical challenges and solutions are unknown. However, from a cost efficiency standpoint for the taxpayer, FFP contracts, when feasible, are generally preferred due to their inherent price predictability and risk transfer to the contractor.

What is Raytheon Company's track record with supporting the AN/ALR-67(V)3 system or similar defense electronics?

Raytheon Company, now part of RTX Corporation, has a long and extensive history as a prime contractor for numerous defense systems, including electronic warfare and radar technologies. They were the original developer and manufacturer of the AN/ALR-67(V)3 RWR system. Consequently, their track record in supporting this specific system is likely robust, encompassing initial development, production, and sustainment activities over many years. Their broader experience includes providing engineering, logistics, and upgrade services for a wide array of complex military platforms and avionics. Given their position as a major defense industrial base participant, Raytheon typically demonstrates significant technical capability and program management experience, although like any large contractor, specific contract performance can vary. Past performance reviews and contract award histories would provide more granular detail on their success rates and any challenges encountered.

What are the potential risks associated with a sole-source award for critical defense system support?

Sole-source awards for critical defense system support present several potential risks. Firstly, the lack of competition can lead to inflated prices, as the contractor faces no market pressure to offer the most cost-effective solution. Secondly, it can foster vendor lock-in, making it difficult and expensive to switch providers or introduce new technologies in the future. Thirdly, without competitive benchmarking, it can be challenging for the government to accurately assess whether the awarded price represents fair and reasonable value. Fourthly, sole-source arrangements can sometimes reduce the incentive for the incumbent contractor to innovate or improve efficiency, as their position is secured. Finally, the justification process for sole-source awards, while necessary in some cases, can be opaque, raising concerns about whether competition was truly impossible or simply not pursued diligently.

How does this contract's value compare to other engineering support contracts within the Department of Defense for similar systems?

Comparing the $12.5 million value of this contract for AN/ALR-67(V)3 engineering support over three years (averaging ~$4.17M/year) to other DoD engineering support contracts requires careful consideration of system complexity, scope of work, and contract type. The AN/ALR-67(V)3 is a sophisticated electronic warfare component. Engineering support for such systems often involves highly specialized skills and proprietary knowledge, justifying significant investment. While $4.17M annually might seem substantial, it could be considered reasonable or even low for sole-source sustainment of critical, complex avionics, especially when compared to larger platform-level sustainment contracts. However, without detailed scope comparisons and knowledge of the specific tasks performed (e.g., basic maintenance vs. major upgrades), a precise benchmark is difficult. Sole-source awards, by their nature, often appear higher than competitively bid contracts for similar services due to the absence of price pressure.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services

Product/Service Code: MODIFICATION OF EQUIPMENT › MODIFICATION OF EQUIPMENT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N6893608R0071

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 6380 HOLLISTER AVE, GOLETA, CA, 93117

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $14,653,498

Exercised Options: $14,653,498

Current Obligation: $12,542,696

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline