Raytheon Company awarded $34.6M contract for communications equipment, raising value-for-money questions

Contract Overview

Contract Amount: $34,577,167 ($34.6M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2006-09-29

End Date: 2008-03-30

Contract Duration: 548 days

Daily Burn Rate: $63.1K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 200612!009073!2100!W15P7T!USA COMMUNICATIONS-ELECTRONICS !W15P7T06CK211 !A!N! !N! ! !20060929!20080330!963995485!001339159!001339159!N!RAYTHEON COMPANY !1010 PRODUCTION RD !FORT WAYNE !IN!46808!25000!003!18!FORT WAYNE !ALLEN !INDIANA !+000036152455!N!N!000000000000!5820!RADIO & TV COMM EQUIPMENT, EXCEPT AIRBORNE !A7 !ELECTRONICS AND COMMUNICATION EQUIP !000 !NOT DISCERNABLE !334290!E! !3! ! ! ! ! !99990909!B! ! !N!Z!D!N!J!1!001!N!2A!Z!N!Z! ! !Y!C!N! ! ! !A!A!A!A!000!A!C!N! ! ! ! ! ! !0001! !

Place of Performance

Location: FORT WAYNE, ALLEN County, INDIANA, 46808

State: Indiana Government Spending

Plain-Language Summary

Department of Defense obligated $34.6 million to RAYTHEON COMPANY for work described as: 200612!009073!2100!W15P7T!USA COMMUNICATIONS-ELECTRONICS !W15P7T06CK211 !A!N! !N! ! !20060929!20080330!963995485!001339159!001339159!N!RAYTHEON COMPANY !1010 PRODUCTION RD !FORT WAYNE !IN!46808!25000!003!18!FORT WAYNE !ALLE… Key points: 1. Contract awarded on a non-competitive basis, limiting price discovery. 2. Significant contract value for specialized communications equipment. 3. Performance period of 548 days suggests a focused, short-term need. 4. Contractor is a major defense industry player with extensive experience. 5. Geographic location of contractor in Indiana. 6. The specific equipment type is 'Radio & TV Comm Equipment, Except Airborne'.

Value Assessment

Rating: questionable

The contract value of $34.6 million for communications equipment warrants scrutiny due to the lack of competitive bidding. Without a competitive process, it is difficult to benchmark the pricing against market rates or determine if the government received the best possible value. The awarded amount is substantial, and a comparison to similar, competitively procured contracts for comparable equipment would be necessary to assess its fairness. The absence of competition inherently raises concerns about potential overpricing.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning there was no open competition. The data indicates it was not competed. This approach bypasses the standard procurement process designed to solicit bids from multiple vendors. Consequently, the government did not benefit from the potential for lower prices and innovative solutions that typically arise from a competitive environment. The lack of bidders means price discovery was not achieved through market forces.

Taxpayer Impact: Taxpayers may have paid a premium for this equipment due to the absence of competitive pressure to drive down costs. The government's ability to secure the best possible price was compromised.

Public Impact

The Department of the Army is the primary beneficiary, receiving critical communications equipment. The contract supports the operational readiness and communication capabilities of military units. The geographic impact is localized to the contractor's facility in Fort Wayne, Indiana, and potentially the end-user locations. The contract supports jobs within Raytheon Company, a major defense contractor.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition raises concerns about price fairness and potential overpayment.
Sole-source awards can limit access for smaller businesses that might offer competitive solutions.
The specific nature of the equipment might indicate a specialized need that limits the competitive pool.
Contract duration is relatively short, suggesting a specific project or upgrade rather than long-term sustainment.

Positive Signals

Awarded to a well-established defense contractor, Raytheon Company, suggesting a degree of reliability.
The contract is for essential communications equipment, supporting military operations.
The contract value, while not competitively bid, represents a significant investment in defense capabilities.

Sector Analysis

The defense sector heavily relies on advanced communication systems. This contract falls under the 'Electronics and Communication Equipment' category, specifically 'Radio & TV Comm Equipment, Except Airborne'. The market for such specialized military communications equipment is often dominated by a few large, established defense contractors like Raytheon. Spending in this area is critical for maintaining technological superiority and operational effectiveness. Comparable spending benchmarks would typically involve analyzing other sole-source or competitively awarded contracts for similar radio and communication systems within the Department of Defense.

Small Business Impact

As a sole-source award to a large prime contractor, this contract likely offers limited direct opportunities for small businesses unless Raytheon engages in subcontracting. There is no indication of a small business set-aside. The impact on the small business ecosystem is minimal in terms of direct award, but potential subcontracting opportunities could exist if Raytheon chooses to engage small businesses for specific components or services. Without a competitive solicitation, the potential for small business innovation and participation is not explored.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Army's contracting and program management offices. Accountability measures would be tied to the terms of the Firm Fixed Price contract, ensuring delivery of specified equipment. Transparency is limited due to the sole-source nature of the award. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Department of Defense Communications Equipment Procurement
Army Tactical Communications Systems
Radio and Telecommunications Equipment Manufacturing
Defense Electronics Contracts

Risk Flags

Sole-source award
Lack of competition
Potential for overpricing
Limited transparency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $34.6 million to RAYTHEON COMPANY. 200612!009073!2100!W15P7T!USA COMMUNICATIONS-ELECTRONICS !W15P7T06CK211 !A!N! !N! ! !20060929!20080330!963995485!001339159!001339159!N!RAYTHEON COMPANY !1010 PRODUCTION RD !FORT WAYNE !IN!46808!25000!003!18!FORT WAYNE !ALLEN !INDIANA !+000036152455!N!N!000000000000!5820!RADIO & TV COMM EQUIPMENT, EXCEPT AIRBORNE !A7 !ELECTRONICS AND COMMUNICATION EQUIP !000 !NOT DISCERNABLE !334290!E! !3! ! ! ! ! !999

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 Army).

What is the total obligated amount?

The obligated amount is $34.6 million.

What is the period of performance?

Start: 2006-09-29. End: 2008-03-30.

What is Raytheon Company's track record with the Department of Defense for similar communications equipment contracts?

Raytheon Company is a major defense contractor with a long history of supplying various electronic and communication systems to the Department of Defense. While this specific contract was sole-source, Raytheon has a broad portfolio of contracts for radar, sensors, communication systems, and other defense electronics. Their track record generally indicates significant experience and capability in delivering complex defense technologies. However, the specifics of their performance on past contracts, including on-time delivery, quality, and adherence to budget (especially in competitive scenarios), would require a deeper dive into contract performance databases and historical award data. Without more specific contract identifiers, a detailed performance analysis is challenging, but their status as a prime contractor suggests a substantial level of past performance.

How does the awarded price of $34.6 million compare to similar, competitively awarded contracts for radio and TV communication equipment?

Direct comparison is difficult without knowing the exact specifications of the equipment procured under this sole-source award. However, the absence of competition inherently prevents a definitive value-for-money assessment against market rates. Typically, competitively awarded contracts yield lower prices due to bidding dynamics. To benchmark this $34.6 million award, one would need to identify similar contracts for 'Radio & TV Comm Equipment, Except Airborne' awarded by the Department of the Army or other branches around the same period (2006-2008) that underwent full and open competition. Analyzing the quantity, technical specifications, and unit prices of those contracts would provide a basis for comparison. Given the sole-source nature, it is plausible that this price is higher than what might have been achieved through competition.

What are the primary risks associated with awarding a contract of this magnitude on a sole-source basis?

The primary risks associated with a sole-source award of this magnitude ($34.6 million) include: 1. **Price Inflation:** The government may pay a higher price than necessary due to the lack of competitive pressure. 2. **Limited Innovation:** Potential alternative solutions or technological advancements from other vendors are not explored. 3. **Reduced Accountability:** Without market validation, the contractor may have less incentive to optimize performance or cost-efficiency. 4. **Potential for Vendor Lock-in:** If the equipment is highly specialized, it can create dependency on a single supplier for future upgrades, maintenance, or related procurements. 5. **Erosion of Public Trust:** Sole-source awards, especially for significant amounts, can be perceived as lacking transparency and fairness, potentially undermining public confidence in the procurement process.

What is the expected program effectiveness or outcome of procuring this communications equipment?

The expected program effectiveness hinges on the specific military application of the 'Radio & TV Comm Equipment, Except Airborne'. Generally, such procurements aim to enhance or maintain the communication capabilities of military units, ensuring reliable command and control, intelligence sharing, and operational coordination. The effectiveness will be measured by the equipment's performance in its intended operational environment, its reliability, interoperability with existing systems, and its contribution to mission success. As this was a Firm Fixed Price contract, the primary outcome is the delivery of the specified equipment by the contracted date. The long-term effectiveness depends on the technology's lifecycle, maintainability, and eventual replacement or upgrade needs.

How does this contract fit into the broader historical spending patterns for communications equipment within the Department of the Army?

This $34.6 million contract represents a specific instance of spending within the Department of the Army's broader budget for communications and electronic equipment. Historically, the Army, like other military branches, invests significantly in C4ISR (Command, Control, Communications, Computers, Intelligence, Surveillance, and Reconnaissance) systems. Spending in this category fluctuates based on modernization priorities, threat assessments, and technological advancements. A $34.6 million award is substantial but likely falls within the typical range for acquiring specialized electronic systems. Analyzing historical spending data would reveal trends in procurement types (competitive vs. sole-source), technology focus areas (e.g., tactical radios, satellite communications), and major contractors. This particular contract's sole-source nature might be indicative of specific, urgent, or uniquely required capabilities that were not readily available through standard competitive means at the time.

Industry Classification

NAICS: Manufacturing › Communications Equipment Manufacturing › Other Communications Equipment Manufacturing

Product/Service Code: COMM/DETECT/COHERENT RADIATION

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 1010 PRODUCTION RD, FORT WAYNE, IN, 03

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Contract Characteristics

Cost or Pricing Data: NO

Timeline