Raytheon Company awarded $192.6M for PATRIOT PBL Requirement, a sole-source contract for defense systems

Contract Overview

Contract Amount: $192,563,477 ($192.6M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2024-01-01

End Date: 2026-12-31

Contract Duration: 1,095 days

Daily Burn Rate: $175.9K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: PATRIOT PBL REQUIREMENT 2024-2028

Place of Performance

Location: ANDOVER, ESSEX County, MASSACHUSETTS, 01810

State: Massachusetts Government Spending

Plain-Language Summary

Department of Defense obligated $192.6 million to RAYTHEON COMPANY for work described as: PATRIOT PBL REQUIREMENT 2024-2028 Key points: 1. Contract awarded to a single vendor, raising questions about price competitiveness. 2. Long-term contract (3 years) suggests a sustained need for these defense systems. 3. Firm Fixed Price contract type offers cost certainty but limits flexibility. 4. Contract is a delivery order under an existing contract vehicle. 5. Focus on Search, Detection, Navigation, Guidance systems highlights critical defense capabilities. 6. No small business set-aside indicates potential for larger prime contractors. 7. Contract value is substantial, reflecting the importance of the PATRIOT system.

Value Assessment

Rating: fair

This contract is a sole-source award, making direct value-for-money comparisons difficult without access to Raytheon's cost data. The firm fixed-price structure provides budget predictability. However, the absence of competition inherently limits the government's ability to negotiate the best possible price. Benchmarking against similar sole-source sustainment contracts for complex defense systems would be necessary for a more definitive value assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating it was awarded directly to Raytheon Company. Sole-source awards typically occur when only one responsible source can provide the required supplies or services. This lack of competition means the government did not explore alternative vendors or pricing structures, potentially leading to higher costs than if multiple bids were solicited.

Taxpayer Impact: Taxpayers may not be receiving the most competitive pricing due to the absence of a bidding process. This can result in higher overall expenditure for the PATRIOT PBL Requirement.

Public Impact

The Department of Defense benefits from the continued sustainment and readiness of the PATRIOT missile defense system. Services delivered include sustainment and support for critical defense hardware. Geographic impact is primarily national, supporting U.S. defense readiness, with potential global implications for deployed systems. Workforce implications include continued employment for specialized technical and support staff at Raytheon and its subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potential cost savings.
Long-term nature of the contract may reduce agility in adapting to new technologies or market changes.
Reliance on a single contractor for sustainment could create vendor lock-in.

Positive Signals

Firm Fixed Price contract provides cost certainty for budgeting.
Award to Raytheon, a known incumbent, suggests continuity and expertise in supporting the PATRIOT system.
Sustainment contract ensures readiness of a critical defense asset.

Sector Analysis

The PATRIOT system is a key component of U.S. and allied air and missile defense capabilities. This contract falls within the defense electronics and systems manufacturing sector, specifically focusing on radar and missile guidance. The market for such specialized defense systems is characterized by high barriers to entry, significant R&D investment, and a limited number of qualified contractors, often leading to sole-source or limited competition awards for sustainment and upgrades.

Small Business Impact

This contract does not appear to have a small business set-aside. As a sole-source award to a large prime contractor, there is no direct subcontracting requirement for small businesses mandated by this specific award. However, Raytheon may engage small businesses as subcontractors for components or services, but this is not explicitly detailed in the provided data.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and program management offices, specifically the Defense Logistics Agency. Accountability measures are inherent in the firm fixed-price contract type, which holds the contractor responsible for delivering within the agreed price. Transparency is limited due to the sole-source nature, but contract awards are generally reported in federal procurement databases.

Related Government Programs

Missile Defense Systems
Air Defense Systems
Weapon System Sustainment
Defense Logistics Agency Contracts
Raytheon Defense Contracts

Risk Flags

Sole-source award
Lack of competition
Potential for cost overruns
Vendor lock-in risk

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $192.6 million to RAYTHEON COMPANY. PATRIOT PBL REQUIREMENT 2024-2028

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 $192.6 million.

What is the period of performance?

Start: 2024-01-01. End: 2026-12-31.

What is the historical spending trend for the PATRIOT PBL Requirement with Raytheon Company?

Detailed historical spending data for this specific PATRIOT PBL Requirement contract (334511) is not provided in the current data snippet. However, the award of $192.6 million for a 3-year period (2024-2026) suggests a significant and ongoing investment in the sustainment of the PATRIOT system. To understand historical trends, one would need to examine prior contract awards for PATRIOT sustainment, including any previous PBL (Performance-Based Logistics) contracts, and analyze the year-over-year spending, contract types, and scope of work to identify patterns in cost, duration, and contractor performance.

How does the per-unit cost of the PATRIOT PBL Requirement compare to similar defense system sustainment contracts?

A direct per-unit cost comparison for the PATRIOT PBL Requirement is not feasible with the provided data. The contract value of $192.6 million covers a broad range of sustainment activities over three years for the entire PATRIOT system, not easily broken down into discrete 'units' for benchmarking. Furthermore, the sole-source nature of this award prevents direct price comparison with competing systems. To assess value, one would need to benchmark against sustainment contracts for comparable complex air defense systems (e.g., THAAD, Aegis) from other manufacturers, considering factors like system complexity, age, and the scope of sustainment services provided. Such analysis would likely require access to proprietary cost data or specialized defense cost analysis reports.

What are the primary risks associated with this sole-source contract for the PATRIOT PBL Requirement?

The primary risk associated with this sole-source contract is the potential for inflated costs due to the lack of competitive bidding. Without competing offers, Raytheon Company may have less incentive to offer the most cost-effective solutions, potentially leading to higher prices for the government. Another risk is vendor lock-in, where the government becomes heavily reliant on a single provider for critical sustainment, making it difficult and costly to switch providers or adopt alternative technologies in the future. Additionally, performance risks exist, although mitigated by the firm fixed-price structure; any delays or quality issues could still impact readiness, and the government's leverage to enforce remedies might be constrained compared to a competed contract.

What is the expected program effectiveness or performance outcome based on this contract?

The expected program effectiveness is the continued operational readiness and sustainment of the PATRIOT missile defense system. As a Performance-Based Logistics (PBL) requirement, the contract likely aims to ensure specific performance metrics related to system availability, reliability, and maintainability are met by Raytheon. The firm fixed-price structure incentivizes Raytheon to manage costs effectively while achieving these performance targets. Successful execution of this contract should ensure that the U.S. military has a fully functional and supported air and missile defense capability, crucial for national security. The long-term nature suggests a commitment to maintaining this capability.

What is the track record of Raytheon Company in fulfilling similar defense sustainment contracts?

Raytheon Company, now part of RTX, has a long and extensive track record in fulfilling complex defense sustainment contracts, particularly for integrated systems like the PATRIOT. They are the original developer and prime contractor for the PATRIOT system, implying deep institutional knowledge and established processes for its support. Historically, Raytheon has managed numerous large-scale sustainment programs for various U.S. military platforms and international allies. While specific performance metrics for all past contracts are not publicly detailed, their continued role as a primary defense contractor suggests a generally reliable performance history, though like any large contractor, they may have faced challenges or scrutiny on specific programs over time.

Are there any alternative systems or contractors that could fulfill the PATRIOT PBL Requirement?

For the specific sustainment of the PATRIOT missile defense system, it is highly unlikely that alternative contractors could fulfill this requirement. The PATRIOT system is a proprietary, complex, integrated weapons platform developed and manufactured by Raytheon. Its sustainment necessitates specialized knowledge, proprietary technical data, unique tooling, and specific manufacturing capabilities that only the original equipment manufacturer (OEM) possesses. While other companies might offer components or related services, the comprehensive PBL requirement, which likely includes system-level maintenance, upgrades, and readiness assurance, is almost exclusively within Raytheon's domain. This is a common characteristic of sustainment for highly specialized, integrated defense systems.

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: RTX Corp

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: $192,563,477

Exercised Options: $192,563,477

Current Obligation: $192,563,477

Actual Outlays: $18,600,000

Subaward Activity

Number of Subawards: 76

Total Subaward Amount: $26,593,420

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