Raytheon Company awarded $113.7M for Taiwan delivery orders, impacting navigation and guidance systems

Contract Overview

Contract Amount: $113,731,790 ($113.7M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2025-03-10

End Date: 2029-10-31

Contract Duration: 1,696 days

Daily Burn Rate: $67.1K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: TAIWAN DELIVERY ORDER

Place of Performance

Location: ANDOVER, ESSEX County, MASSACHUSETTS, 01810

State: Massachusetts Government Spending

Plain-Language Summary

Department of Defense obligated $113.7 million to RAYTHEON COMPANY for work described as: TAIWAN DELIVERY ORDER Key points: 1. Contract awarded to a single, established provider suggests potential for streamlined delivery but limits competitive pricing. 2. The firm fixed-price structure shifts cost risk to the contractor, potentially incentivizing efficiency. 3. Long performance period (over 5 years) requires careful monitoring for scope creep and sustained value. 4. Focus on navigation and guidance systems indicates critical support for defense or operational readiness. 5. The contract's value, while substantial, needs to be benchmarked against similar system procurements for a full value assessment. 6. Absence of small business set-asides means direct impact on this segment is unlikely, but subcontracting opportunities may exist.

Value Assessment

Rating: fair

The contract value of $113.7 million over approximately five years represents a significant investment. Without specific details on the deliverables or comparable contracts for similar systems in Taiwan, a precise value-for-money assessment is challenging. However, the firm fixed-price nature is a positive indicator for cost control, assuming the scope is well-defined. Benchmarking against historical spending for similar navigation and guidance systems by the Defense Logistics Agency or other military branches would provide a clearer picture of whether this price is competitive.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded as a sole-source delivery order, meaning it was not competed among multiple vendors. This approach is often used when a specific contractor possesses unique capabilities, existing infrastructure, or when urgency dictates a rapid procurement. While it ensures access to specialized technology or services, it bypasses the potential for price reductions and innovation that can arise from a competitive bidding process.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as the government does not benefit from competitive pressures that typically drive down prices.

Public Impact

The primary beneficiaries are likely military or governmental entities operating in or supporting Taiwan, requiring advanced navigation and guidance systems. Services delivered include the provision and potential maintenance of critical search, detection, navigation, guidance, and related instrument systems. The geographic impact is focused on Taiwan, suggesting a role in regional security or operational support. Workforce implications may involve specialized technical roles for system installation, maintenance, and support, potentially within Raytheon's existing structure or through subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potential taxpayer savings.
Long contract duration increases risk of cost overruns if not managed tightly.
Lack of transparency in the sole-source justification requires scrutiny.
Potential for vendor lock-in due to specialized nature of systems.

Positive Signals

Firm fixed-price contract shifts cost risk to the contractor.
Award to an established contractor like Raytheon suggests reliability and expertise.
Delivery order structure implies integration with existing supply chains or platforms.
Focus on critical navigation systems supports essential operational capabilities.

Sector Analysis

The contract falls within the 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' sector (NAICS 334511). This industry is characterized by high technological sophistication and significant government procurement, particularly for defense applications. The market is often dominated by a few large, specialized contractors. Raytheon Company is a major player in this space, known for its advanced defense electronics. Comparable spending benchmarks would involve analyzing other large-scale procurements of similar navigation and guidance systems for military applications, both domestically and internationally.

Small Business Impact

This contract does not appear to include a small business set-aside. As a sole-source award to a large prime contractor, the direct impact on small businesses is minimal unless Raytheon Company engages them as subcontractors. The extent of subcontracting opportunities for small businesses will depend on Raytheon's procurement strategy and the specific components or services required for these delivery orders.

Oversight & Accountability

Oversight for this contract will primarily fall under the Defense Logistics Agency (DLA) and potentially the Department of Defense's Inspector General. As a sole-source award, the justification and terms will be subject to review. Transparency is enhanced through contract databases, but detailed performance metrics and financial oversight are internal DLA/DoD processes. Accountability rests on Raytheon's adherence to the firm fixed-price terms and delivery schedules.

Related Government Programs

Defense Logistics Agency Procurement
Navigation and Guidance Systems
Taiwan Defense Support
Raytheon Company Contracts
Firm Fixed Price Contracts
Sole Source Procurements

Risk Flags

Sole-source award requires justification.
Long contract duration increases performance risk.
Potential for price inflation due to lack of competition.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $113.7 million to RAYTHEON COMPANY. TAIWAN DELIVERY ORDER

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 $113.7 million.

What is the period of performance?

Start: 2025-03-10. End: 2029-10-31.

What is the specific nature of the 'TAIWAN DELIVERY ORDER' and the systems being procured?

The data indicates a delivery order valued at $113,731,790 awarded to Raytheon Company, with a performance period extending from March 10, 2025, to October 31, 2029. The North American Industry Classification System (NAICS) code 334511 points to 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing.' This suggests the contract involves the supply of sophisticated electronic systems critical for navigation, positioning, and potentially target acquisition or situational awareness. The 'TAIWAN DELIVERY ORDER' designation implies these systems are intended for use by or in support of Taiwan, likely within a defense or security context. Specific details regarding the exact systems (e.g., radar components, GPS modules, flight control instruments) are not provided in the summary data but would be crucial for a comprehensive understanding of the contract's scope and impact.

How does the $113.7 million value compare to similar procurements for navigation and guidance systems?

Benchmarking the $113.7 million value requires comparing it against similar procurements within the defense sector, specifically for navigation and guidance systems. Large-scale contracts for such systems can range widely depending on the technology's sophistication, quantity, and intended application. For instance, contracts for advanced radar systems or integrated avionics suites for fighter jets can easily exceed hundreds of millions of dollars. Conversely, procurements for specific components or upgrades might fall in the tens of millions. Given Raytheon's role as a major defense contractor and the long performance period (nearly five years), $113.7 million appears to be a substantial, but not necessarily outlier, figure for a significant system delivery. A precise comparison would necessitate access to databases of comparable contracts awarded by the Department of Defense or allied nations for similar equipment over the same timeframe.

What are the primary risks associated with a sole-source, firm-fixed-price contract of this magnitude?

A sole-source, firm-fixed-price contract of this magnitude presents several key risks. The primary risk of a sole-source award is the lack of competition, which can lead to inflated pricing and reduced incentive for the contractor to innovate or offer the best possible value. Taxpayers may end up paying more than if the contract had been competed. The firm-fixed-price (FFP) structure shifts cost overrun risk to the contractor, which is generally positive for the government. However, if the initial price was set too high due to the lack of competition, the government still overpays. Another risk is potential vendor lock-in; if the systems are highly specialized, transitioning to another provider later could be difficult and costly. Furthermore, the long performance period increases the risk of scope creep or unforeseen technical challenges that could strain the contractor's ability to deliver within the fixed price, potentially leading to disputes or performance issues if not managed proactively.

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

Raytheon Company, now part of RTX Corporation, has an extensive and long-standing track record as a major defense contractor for the U.S. Department of Defense and allied nations. They are a leading provider of advanced defense systems, including radar, missiles, sensors, and command and control systems. Their expertise in areas like navigation, guidance, and search/detection technology is well-established. Historically, Raytheon has secured numerous large-scale contracts for similar systems, often involving complex integration and high-technology components. While specific performance metrics for every contract are not publicly available, their continued success in winning significant government contracts suggests a generally positive track record regarding technical capability and delivery. However, like any large contractor, they may have faced scrutiny or challenges on specific programs over the years, which would typically be detailed in program reviews or Inspector General reports.

What are the potential implications for U.S. foreign policy and regional security in the Indo-Pacific?

The award of navigation and guidance systems to Taiwan carries significant implications for U.S. foreign policy and regional security. It signals continued U.S. commitment to Taiwan's defense capabilities amidst increasing geopolitical tensions in the Indo-Pacific. By providing advanced technology, the U.S. aims to bolster Taiwan's self-defense capacity, potentially deterring aggression. This aligns with U.S. strategy to maintain a free and open Indo-Pacific and support key regional partners. The specific systems procured could enhance Taiwan's ability to monitor its airspace and maritime domain, improve command and control, and potentially integrate better with U.S. and allied forces. However, such arms sales can also be viewed as escalatory by China, potentially impacting diplomatic relations and regional stability. The U.S. carefully balances providing defensive capabilities with managing escalation risks.

How does the 'MASSACHUSETTS' state code relate to this federal contract?

The 'ST': 'MA' and 'SN': 'MASSACHUSETTS' likely indicate the state where the contractor, Raytheon Company, has a significant presence, facility, or where the contract's administrative or operational activities are primarily associated. Many large defense contractors have extensive operations, research facilities, and manufacturing plants in Massachusetts, which has a strong aerospace and defense industry ecosystem. While the contract itself is a federal award managed by the Department of Defense (likely through the Defense Logistics Agency), the state code often serves as an administrative or reporting detail, potentially linking the contract to regional economic impact data or specific state-level business registrations. It does not typically dictate the geographic location of system deployment, which in this case is explicitly stated as Taiwan.

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: GUIDED MISSLES

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: $113,731,790

Exercised Options: $113,731,790

Current Obligation: $113,731,790

Subaward Activity

Number of Subawards: 12

Total Subaward Amount: $2,370,323

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