DoD awards Raytheon $171M for navigation systems, with no competition and a firm fixed price contract

Contract Overview

Contract Amount: $171,163,890 ($171.2M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2025-09-26

End Date: 2030-05-31

Contract Duration: 1,708 days

Daily Burn Rate: $100.2K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: UCA

Place of Performance

Location: ANDOVER, ESSEX County, MASSACHUSETTS, 01810

State: Massachusetts Government Spending

Plain-Language Summary

Department of Defense obligated $171.2 million to RAYTHEON COMPANY for work described as: UCA Key points: 1. Contract awarded on a firm fixed price basis, which shifts risk to the government. 2. The contract was not competed, raising questions about potential price overruns and value for money. 3. A long performance period of over 5 years suggests a need for sustained support. 4. The contractor, Raytheon Company, is a major defense contractor with significant experience. 5. The North American Industry Classification System (NAICS) code 334511 indicates a focus on manufacturing complex navigation systems. 6. The contract is a delivery order under an existing contract, suggesting a pre-established relationship. 7. The contract is not set aside for small businesses, indicating a focus on large prime contractors.

Value Assessment

Rating: questionable

The firm fixed price contract type, while common, can lead to higher initial costs as the contractor prices in potential risks. Without a competitive bidding process, it is difficult to benchmark the pricing against market rates or other potential suppliers. The lack of competition means taxpayers may not be receiving the best possible value for these navigation systems. Further analysis would require access to historical pricing data for similar systems and Raytheon's cost structure.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded using a sole-source justification, meaning it was not competed. This typically occurs when only one responsible source can provide the required supplies or services. The lack of competition limits the government's ability to leverage market forces to drive down prices and ensure the most innovative solutions are considered. It also raises concerns about whether the government is obtaining fair and reasonable pricing.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive pressure. Without multiple bids, there is less incentive for the contractor to offer the lowest possible price.

Public Impact

The Department of Defense benefits from the acquisition of essential navigation systems for its operations. Military personnel will utilize these systems, contributing to mission effectiveness and safety. The contract supports the manufacturing sector, specifically in the area of advanced electronics and defense systems. The geographic impact is primarily within Massachusetts, where Raytheon Company is located, potentially supporting local jobs and the regional economy.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to higher costs for taxpayers.
Firm fixed price contract shifts risk to the government, potentially increasing overall expenditure if costs escalate.
Long contract duration could lock the government into a specific technology or vendor, limiting future flexibility.
Sole-source award raises concerns about the thoroughness of market research and potential for better alternatives.
Absence of small business participation may limit opportunities for smaller innovative firms in this supply chain.

Positive Signals

Award to a major defense contractor like Raytheon suggests a high likelihood of technical capability and product reliability.
Firm fixed price contract provides cost certainty for the government, assuming the contractor manages their own risks effectively.
The contract is a delivery order under an existing contract, implying a streamlined process and potentially pre-negotiated terms.
The specified NAICS code indicates a focus on a critical defense capability (navigation systems).

Sector Analysis

The defense electronics manufacturing sector is characterized by high research and development costs, complex supply chains, and significant government procurement. Companies like Raytheon are key players, often holding sole-source or limited-competition contracts for specialized systems. Spending in this area is driven by national security requirements and technological advancements in areas such as radar, guidance, and navigation. Benchmarking requires comparing this contract to similar procurements of navigation systems by the DoD or other defense agencies, considering factors like system complexity and quantity.

Small Business Impact

This contract does not appear to have a small business set-aside. The award to Raytheon Company, a large prime contractor, suggests that small businesses are unlikely to be direct recipients of this prime contract. However, Raytheon may engage small businesses as subcontractors, though this is not explicitly detailed in the provided data. The absence of a set-aside means opportunities for direct prime contracting with small businesses were not pursued for this specific procurement.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and program management offices. The Defense Contract Management Agency (DCMA) would likely be involved in monitoring performance and compliance. Given the firm fixed price nature, oversight would focus on delivery schedules, quality control, and adherence to contract terms. Transparency is limited by the sole-source nature, but contract awards are generally reported in federal procurement databases.

Related Government Programs

DoD Navigation Systems Procurement
Defense Logistics Agency Contracts
Raytheon Company Contracts
NAICS 334511 Manufacturing
Sole-Source Defense Contracts

Risk Flags

Sole-source award
Firm fixed price contract
Lack of competition
Potential for higher costs
Long contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $171.2 million to RAYTHEON COMPANY. UCA

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 $171.2 million.

What is the period of performance?

Start: 2025-09-26. End: 2030-05-31.

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

Raytheon Company has a long and extensive history of contracting with the Department of Defense, including numerous awards for various defense systems, many of which incorporate navigation, guidance, and control technologies. Their portfolio includes advanced radar, missile systems, and electronic warfare capabilities, all of which rely on sophisticated navigation components. While specific data on past performance for identical navigation systems is not provided here, Raytheon's status as a major defense prime contractor indicates a substantial track record. Historical contract data from sources like the Federal Procurement Data System (FPDS) would reveal the volume and types of navigation-related contracts awarded to Raytheon, their performance ratings, and any significant issues encountered. This context is crucial for assessing the reliability of their past performance in delivering complex systems under demanding conditions.

How does the $171 million contract value compare to similar navigation system procurements?

Directly comparing the $171 million contract value to similar procurements is challenging without more specific details about the exact nature of the navigation systems, their capabilities, and the quantities involved. However, given that this is a sole-source award to a major defense contractor like Raytheon, the value is substantial and indicative of complex, high-technology systems. For context, other large sole-source or limited-competition awards for advanced avionics, radar, or guidance systems by the DoD can range from tens of millions to hundreds of millions of dollars. The firm fixed price nature suggests the government has accepted a specific price for a defined scope. To provide a robust benchmark, one would need to identify comparable contracts for similar system types (e.g., airborne navigation suites, shipboard systems) awarded competitively or through other sole-source actions, analyze their unit costs, and consider the duration and scope of work.

What are the primary risks associated with a sole-source, firm-fixed-price contract for navigation systems?

The primary risks associated with this sole-source, firm-fixed-price contract are twofold. Firstly, the sole-source nature means the government did not benefit from competitive bidding, which historically drives down prices and encourages innovation. This absence of competition increases the risk that the government may be paying a non-competitive price, potentially exceeding fair market value. Secondly, a firm-fixed-price (FFP) contract shifts most of the cost-overrun risk to the contractor. While this provides cost certainty for the government, it can incentivize the contractor to cut corners on quality or performance if not adequately monitored, or to build significant contingency into their price, making it appear higher than a cost-reimbursable contract might initially. For complex systems like navigation, ensuring the contractor maintains quality and delivers the specified performance under an FFP can be a significant oversight challenge.

What is the expected program effectiveness given the contract details?

The expected program effectiveness hinges on Raytheon's ability to deliver reliable and high-performing navigation systems as specified. The contract's firm-fixed-price structure aims to ensure cost predictability for the government, which contributes to effective budget management. The long performance period (ending May 2030) suggests a sustained need for these systems, implying they are critical to ongoing military operations. However, the sole-source award introduces a risk factor; without competition, there's less assurance that the chosen system represents the most advanced or cost-effective solution available in the market. Program effectiveness will ultimately depend on rigorous government oversight of performance, quality assurance, and adherence to delivery schedules, ensuring the systems meet the demanding operational requirements of the Department of Defense.

How does this contract fit into the broader historical spending patterns for defense navigation systems?

This $171 million contract for navigation systems fits within the broader historical spending patterns of the Department of Defense, which consistently allocates significant funds towards advanced avionics, guidance, and navigation technologies. The defense sector relies heavily on precise navigation for aircraft, vessels, and ground systems, making this a recurring and essential procurement category. Historically, such procurements have often involved major defense contractors like Raytheon, and frequently utilize sole-source or limited-competition strategies due to the specialized nature of the technology and the need for interoperability with existing platforms. While specific annual spending figures fluctuate based on modernization cycles and geopolitical needs, the consistent demand for sophisticated navigation capabilities ensures that contracts of this magnitude are a regular feature of the DoD's budget.

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: MEDICAL/DENTAL/VETERINARY EQPT/SUPP

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: $171,163,890

Exercised Options: $171,163,890

Current Obligation: $171,163,890

Subaward Activity

Number of Subawards: 19

Total Subaward Amount: $39,051,993

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