DoD's $14.3M Raytheon contract for AN/TPS-75 radar upgrades shows fair value despite limited competition

Contract Overview

Contract Amount: $14,298,066 ($14.3M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2009-09-28

End Date: 2014-10-28

Contract Duration: 1,856 days

Daily Burn Rate: $7.7K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: COST NO FEE

Sector: Defense

Official Description: AN/TPS-75 SOLID STATE MODULATOR (SSM) AND CONTROL PANEL (CP) UPGRADE

Place of Performance

Location: INDIANAPOLIS, MARION County, INDIANA, 46219

State: Indiana Government Spending

Plain-Language Summary

Department of Defense obligated $14.3 million to RAYTHEON COMPANY for work described as: AN/TPS-75 SOLID STATE MODULATOR (SSM) AND CONTROL PANEL (CP) UPGRADE Key points: 1. The contract's value appears reasonable when benchmarked against similar radar system upgrades. 2. Competition was limited, with only two bidders, potentially impacting price discovery. 3. The contract duration of 1856 days suggests a complex, multi-year upgrade process. 4. This contract falls within the broader context of aircraft manufacturing and defense electronics. 5. The use of a Cost No Fee (CNF) contract type warrants scrutiny for cost control. 6. The upgrade aims to enhance the operational capabilities of critical air defense radar systems.

Value Assessment

Rating: fair

The total award amount of $14.3 million for the AN/TPS-75 radar system upgrade appears to be within a reasonable range when compared to similar defense electronics modernization efforts. However, the Cost No Fee (CNF) contract type, while sometimes used for R&D or when cost certainty is low, can limit the contractor's incentive for cost efficiency. Without detailed cost breakdowns or more specific benchmarks for this particular upgrade, a definitive value-for-money assessment is challenging. The pricing structure warrants closer examination to ensure taxpayer funds are used efficiently.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, which is a positive indicator for market-based pricing. However, only two bids were received, suggesting that the market for this specialized upgrade may be limited or that other potential bidders did not find the opportunity compelling. While competition existed, the low number of bidders could have constrained the downward pressure on pricing.

Taxpayer Impact: The existence of competition, even with only two bidders, is beneficial for taxpayers as it provides a basis for negotiation and price comparison. However, a more robust competitive landscape could have potentially yielded even better pricing.

Public Impact

The primary beneficiaries are the Department of Defense and the Air Force, who will receive upgraded radar systems. The services delivered include the modernization of the AN/TPS-75 radar's Solid State Modulator and Control Panel. This upgrade is critical for maintaining the operational readiness and effectiveness of air defense capabilities. The upgrade impacts the personnel responsible for operating and maintaining these radar systems, requiring potential retraining or adaptation to new components.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The Cost No Fee (CNF) contract type may reduce contractor incentive for cost savings.
Limited competition (2 bidders) could indicate potential market concentration or barriers to entry.
The long contract duration (1856 days) increases the risk of cost overruns due to unforeseen issues.

Positive Signals

Awarded under full and open competition, allowing for a broad range of potential offerors.
The upgrade addresses critical defense infrastructure, enhancing national security capabilities.
The contractor, Raytheon Company, is a well-established defense contractor with relevant expertise.

Sector Analysis

This contract falls within the defense electronics sector, specifically focusing on radar systems. The market for specialized military radar upgrades is often characterized by a limited number of highly capable contractors due to stringent technical requirements and security clearances. Spending in this area is driven by the need to maintain technological superiority and operational readiness of military assets. Comparable spending benchmarks would typically involve other radar system modernization programs or upgrades to similar command and control systems within the defense budget.

Small Business Impact

There is no indication that this contract included small business set-asides. Given the specialized nature of the AN/TPS-75 radar system and its components, it is likely that the prime contractor, Raytheon, would perform the majority of the work. Subcontracting opportunities for small businesses may exist for specific components or services, but this contract does not appear to be structured to directly benefit the small business ecosystem through set-asides.

Oversight & Accountability

The contract was awarded by the Department of the Air Force, a component of the Department of Defense, which has established oversight mechanisms for defense contracts. The use of a Cost No Fee (CNF) contract type suggests a need for close monitoring of costs incurred by the contractor, even though the fee is not tied to performance. Inspector General jurisdiction would apply for investigations into fraud, waste, or abuse. Transparency is generally maintained through contract award databases, though detailed cost breakdowns may be proprietary.

Related Government Programs

AN/TPS-75 Radar System
Defense Radar Modernization Programs
Air Force Command and Control Systems
Solid State Modulator Technology
Aircraft Manufacturing Support

Risk Flags

Cost Control Risk (CNF Contract)
Limited Competition Impact
Long Contract Duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $14.3 million to RAYTHEON COMPANY. AN/TPS-75 SOLID STATE MODULATOR (SSM) AND CONTROL PANEL (CP) UPGRADE

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 Air Force).

What is the total obligated amount?

The obligated amount is $14.3 million.

What is the period of performance?

Start: 2009-09-28. End: 2014-10-28.

What is Raytheon Company's track record with similar radar system upgrades for the Department of Defense?

Raytheon Company has a significant track record in developing and upgrading radar systems for various military branches, including the Air Force. They are a major defense contractor known for producing a wide range of defense electronics, including air defense radars, surveillance systems, and electronic warfare equipment. Their experience with the AN/TPS-75 system specifically, or similar radar platforms, would involve a history of delivering complex technological solutions under demanding specifications. Assessing their past performance on similar contracts, including on-time delivery, adherence to budget, and technical success, is crucial for understanding their capability in executing this particular upgrade. Historical data on their performance on Cost No Fee contracts would also be relevant to gauge their efficiency in managing costs without direct profit incentive tied to cost savings.

How does the $14.3 million award compare to the cost of other AN/TPS-75 system upgrades or similar radar modernization efforts?

Benchmarking the $14.3 million award requires comparing it to the costs of previous or concurrent upgrades to the AN/TPS-75 system or comparable radar platforms. Factors influencing cost include the scope of the upgrade (e.g., specific components like the Solid State Modulator and Control Panel), the number of units being upgraded, the duration of the contract, and the prevailing economic conditions at the time of award. If previous upgrades to the AN/TPS-75 were significantly less expensive, it might suggest an increase in complexity or market prices. Conversely, if similar modernization efforts for other radar systems fall within a similar cost range, it would support the fairness of this award. Detailed analysis would involve examining contract line item numbers (CLINs) and comparing them against industry standards or historical data for similar technological advancements in defense electronics.

What are the primary risks associated with a Cost No Fee (CNF) contract for this type of upgrade?

The primary risk associated with a Cost No Fee (CNF) contract for this radar upgrade is the potential for reduced contractor incentive to control costs. In a CNF structure, the contractor is reimbursed for allowable costs but receives no fee, regardless of how efficiently those costs are managed. This can lead to less rigorous cost management compared to fixed-price contracts or cost-plus-incentive-fee contracts where cost savings directly benefit the contractor. For taxpayers, this means the government bears the full financial risk of cost overruns. Effective oversight and detailed cost tracking by the contracting agency become paramount to mitigate this risk and ensure that the final expenditure remains justified by the delivered capabilities. The government must ensure that the contractor is not incentivized to inflate costs due to the absence of a fee.

What is the expected impact of the AN/TPS-75 SSM and CP upgrade on the operational effectiveness of the Air Force's air defense capabilities?

The upgrade of the AN/TPS-75 radar's Solid State Modulator (SSM) and Control Panel (CP) is expected to significantly enhance the operational effectiveness of the Air Force's air defense capabilities. The SSM is a critical component responsible for generating the radar's power output, and transitioning to solid-state technology typically offers improved reliability, reduced maintenance, and potentially enhanced performance characteristics such as increased power output or better signal processing. The Control Panel (CP) upgrade likely involves modernizing the user interface and control systems, leading to improved operator efficiency, better situational awareness, and potentially integration with newer command and control networks. These improvements collectively contribute to a more robust, responsive, and survivable air defense system, crucial for national security.

How has spending on radar system upgrades like the AN/TPS-75 evolved within the Department of Defense over the past decade?

Spending on radar system upgrades within the Department of Defense (DoD) has generally seen a consistent, albeit fluctuating, trend over the past decade, driven by the need to modernize aging platforms and counter evolving threats. There has been a significant push towards incorporating advanced technologies such as solid-state components, phased-array antennas, and improved electronic counter-countermeasures (ECCM) capabilities across various radar systems, including those for air defense, surveillance, and targeting. While specific figures for AN/TPS-75 upgrades would be part of broader radar modernization budgets, the overall trend indicates sustained investment in maintaining and enhancing radar capabilities. Factors influencing this spending include geopolitical tensions, technological advancements, and the lifecycle of existing systems. The shift towards digital and software-defined radar architectures also influences spending patterns, prioritizing upgrades that offer greater flexibility and adaptability.

What does the limited number of bidders (two) for this contract suggest about the market for specialized radar components?

The fact that only two bidders responded to the solicitation for the AN/TPS-75 SSM and CP upgrade suggests a specialized and potentially concentrated market for such components. This could be due to several factors: high barriers to entry (e.g., significant R&D investment, proprietary technology, specialized manufacturing capabilities), stringent qualification requirements set by the government, or a limited number of companies possessing the necessary expertise and security clearances. It may also indicate that the contract's scope or terms were not attractive enough for a wider range of potential competitors. For taxpayers, a limited competitive landscape can sometimes lead to higher prices than might be achieved in a more robustly contested market, underscoring the importance of thorough negotiation and oversight by the procuring agency.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft Manufacturing

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 2

Pricing Type: COST NO FEE (S)

Evaluated Preference: NONE

Contractor Details

Address: 6125 E 21ST ST, INDIANAPOLIS, IN, 46219

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

Financial Breakdown

Contract Ceiling: $14,298,066

Exercised Options: $14,298,066

Current Obligation: $14,298,066

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: FA853008D0012

IDV Type: IDC

Timeline