Raytheon Company awarded $22.7M for navigation systems, with limited competition impacting price discovery

Contract Overview

Contract Amount: $22,719,380 ($22.7M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2023-12-19

End Date: 2026-12-21

Contract Duration: 1,098 days

Daily Burn Rate: $20.7K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: BAHRAIN TA AWARD

Place of Performance

Location: ANDOVER, ESSEX County, MASSACHUSETTS, 01810

State: Massachusetts Government Spending

Plain-Language Summary

Department of Defense obligated $22.7 million to RAYTHEON COMPANY for work described as: BAHRAIN TA AWARD Key points: 1. Contract awarded via a non-competitive process, raising questions about optimal value. 2. Pricing for navigation systems appears to be a fixed-price arrangement. 3. The contract duration of approximately three years suggests a need for ongoing support. 4. This award falls under the 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' NAICS code. 5. The Defense Logistics Agency is the awarding agency, indicating a focus on military operational needs. 6. The contract type is a delivery order under a larger contract vehicle.

Value Assessment

Rating: questionable

Without a competitive bidding process, it is difficult to benchmark the value for money. The firm fixed-price structure provides cost certainty for the government, but the absence of competition may have led to a higher price than could have been achieved through open bidding. Further analysis would require access to historical pricing for similar systems or Raytheon's internal cost data.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award. This typically occurs when only one vendor can provide the required goods or services, or for reasons of urgency or national security. The lack of competition limits the government's ability to solicit and evaluate multiple offers, potentially hindering price negotiation and innovation.

Taxpayer Impact: Sole-source awards can result in higher costs for taxpayers as there is no competitive pressure to drive down prices. This limits the government's leverage in securing the best possible deal.

Public Impact

The primary beneficiaries are likely military operations requiring advanced navigation and guidance systems. The services delivered include the provision and potential maintenance of sophisticated navigation equipment. The geographic impact is likely focused on areas where the Department of Defense operates. Workforce implications may include specialized technical roles for the manufacturing and support of these systems.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated pricing.
Potential for vendor lock-in due to specialized nature of the equipment.
Limited transparency into the justification for sole-source award.

Positive Signals

Firm fixed-price contract provides cost predictability.
Awarded by a major defense agency, suggesting critical operational relevance.
Long-term contract duration indicates sustained need and potential for stable support.

Sector Analysis

This contract falls within the aerospace and defense sector, specifically focusing on the manufacturing of navigation and guidance systems. The market for such specialized equipment is often characterized by high barriers to entry due to technological complexity and stringent quality requirements. Comparable spending benchmarks would typically be found within other defense contracts for similar avionics and sensor systems.

Small Business Impact

There is no indication that this contract includes small business set-asides. Given the specialized nature of navigation systems and the likely sole-source award to a large prime contractor like Raytheon, subcontracting opportunities for small businesses may be limited or dictated by the prime. Further investigation into Raytheon's subcontracting plan would be necessary to assess the impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and procurement regulations. Accountability measures are inherent in the firm fixed-price structure, which caps government liability. Transparency may be limited due to the sole-source nature of the award, with justifications typically residing within agency procurement files.

Related Government Programs

Defense Logistics Agency Procurement
Navigation and Guidance Systems Manufacturing
Raytheon Company Contracts
Department of Defense Avionics Spending

Risk Flags

Sole-source award
Potential for uncompetitive pricing
Lack of transparency in justification

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $22.7 million to RAYTHEON COMPANY. BAHRAIN TA AWARD

Who is the contractor on this award?

The obligated recipient is RAYTHEON COMPANY.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Logistics Agency).

What is the total obligated amount?

The obligated amount is $22.7 million.

What is the period of performance?

Start: 2023-12-19. End: 2026-12-21.

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

Raytheon Company, now part of RTX, has a long and extensive history of providing advanced defense systems, including navigation, radar, and missile technologies, to the Department of Defense and allied nations. They are a major defense contractor with numerous awards across various platforms and systems. For navigation systems specifically, their portfolio includes solutions for aircraft, ships, and ground vehicles, often integrated into larger platforms. Their track record generally indicates a capacity for complex engineering and manufacturing, but like any large contractor, they have also faced scrutiny over contract costs and performance on specific programs. Detailed analysis would require examining specific past awards for navigation systems, including their value, duration, and any reported performance issues or cost overruns.

How does the $22.7 million award compare to other federal spending on navigation systems?

The $22.7 million award to Raytheon Company for navigation systems is a significant but not exceptionally large sum within the context of overall federal defense spending. The Department of Defense alone spends billions annually on a wide array of systems, including avionics, sensors, and guidance equipment. To provide a precise comparison, one would need to analyze the specific type of navigation system being procured (e.g., inertial navigation, GPS-based, radar-based) and benchmark against similar sole-source or competed contracts for comparable systems awarded to other prime contractors or even Raytheon itself in previous years. Without this granular data, it's challenging to definitively state if this award represents high or low spending relative to the market.

What are the primary risks associated with a sole-source award for navigation systems?

The primary risks associated with a sole-source award for navigation systems include: 1. **Higher Costs:** Without competition, the government may pay a premium as there is no market pressure to drive down prices. The contractor has less incentive to offer the most competitive bid. 2. **Limited Innovation:** A sole-source award can stifle innovation by removing the incentive for multiple companies to develop and offer improved or alternative solutions. 3. **Vendor Lock-in:** If the system is highly specialized or proprietary, the government may become dependent on the sole source for future upgrades, maintenance, and spare parts, potentially at inflated prices. 4. **Reduced Transparency and Accountability:** The justification for a sole-source award can sometimes be less transparent, and oversight may be more challenging compared to a competitively bid contract where performance and pricing are rigorously evaluated against multiple offers.

What is the typical duration and value for contracts of this nature within the Defense Logistics Agency?

The Defense Logistics Agency (DLA) manages a vast portfolio of contracts supporting military logistics across all branches of the armed forces. Contracts for specialized equipment like navigation systems can vary significantly in duration and value depending on the specific system's complexity, technological lifecycle, and the anticipated operational need. A contract with a duration of approximately three years (1098 days) and a value of $22.7 million is within a common range for such procurements. However, the DLA also awards much larger, multi-year contracts for major systems and smaller, shorter-term contracts for less complex items. Benchmarking requires comparing this award to other DLA contracts within the same Product Service Code (PSC) or NAICS code, considering factors like competition level and contract type.

How does the firm fixed-price (FFP) contract type influence cost control and risk for this navigation system award?

A Firm Fixed-Price (FFP) contract type is generally favored by the government for its cost control and risk mitigation. Under an FFP agreement, the contractor agrees to a set price for the defined scope of work, regardless of the actual costs incurred. This places the primary cost risk on the contractor. For the government, this means predictable costs and protection against cost overruns, assuming the scope of work is well-defined. However, if the scope is poorly defined or changes frequently, it can lead to costly change orders or disputes. For specialized systems like navigation equipment, an FFP contract incentivizes the contractor to manage their own costs efficiently to maximize profit, but it also means the government might pay a higher initial price to account for the contractor's risk premium.

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: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT

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: 350 LOWELL ST, ANDOVER, MA, 01810

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: $22,719,380

Exercised Options: $22,719,380

Current Obligation: $22,719,380

Contract Characteristics

Consolidated Contract: Yes

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: SPRBL115D0017

IDV Type: IDC

Timeline