Raytheon Company awarded $20.7M for GBS Receive Suites, with a per-unit cost of $101,196

Contract Overview

Contract Amount: $20,745,208 ($20.7M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2008-05-02

End Date: 2009-06-30

Contract Duration: 424 days

Daily Burn Rate: $48.9K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: CONTRACT NO. W15P7T-08-C-K406 IS FOR THE PRODUCTION AND DELIVERY OF 205 (EA) GLOBAL BROADCAST SERVICE (GBS) AN/TSR-8 RECEIVE SUITES AND ASSOCIATED SPARES.

Place of Performance

Location: RESTON, FAIRFAX County, VIRGINIA, 20190

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $20.7 million to RAYTHEON COMPANY for work described as: CONTRACT NO. W15P7T-08-C-K406 IS FOR THE PRODUCTION AND DELIVERY OF 205 (EA) GLOBAL BROADCAST SERVICE (GBS) AN/TSR-8 RECEIVE SUITES AND ASSOCIATED SPARES. Key points: 1. The contract value of $20.7 million for 205 units suggests a significant investment in communication technology. 2. The sole-source nature of this award warrants scrutiny regarding potential price inflation and lack of competitive pressure. 3. A firm-fixed-price contract type indicates that the contractor bears the risk of cost overruns, which is generally favorable for the government. 4. The contract duration of 424 days for production and delivery is a key performance metric to monitor. 5. The award to Raytheon Company, a major defense contractor, places this spending within a familiar industry landscape. 6. The absence of small business participation raises questions about broader economic impact and subcontracting opportunities.

Value Assessment

Rating: fair

The per-unit cost of $101,196 for the GBS AN/TSR-8 Receive Suites appears high when compared to typical electronic equipment procurement. Without specific details on the complexity and capabilities of these suites, a direct comparison is challenging. However, the significant dollar amount per unit suggests a specialized or advanced technology. Further benchmarking against similar advanced communication systems would be necessary to definitively assess value for money.

Cost Per Unit: $101,196 per unit

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning there was no open competition. This typically occurs when a specific contractor possesses unique capabilities or proprietary technology essential for the requirement. The lack of competition means the government did not benefit from multiple bids to drive down prices or explore alternative solutions, potentially leading to a higher cost than if it had been competed.

Taxpayer Impact: The sole-source award means taxpayers may have paid a premium, as competitive market forces were not leveraged to ensure the best possible price for these specialized receive suites.

Public Impact

The primary beneficiaries are likely military units requiring advanced global broadcast communication capabilities. The contract delivers 205 Global Broadcast Service (GBS) AN/TSR-8 Receive Suites and associated spares. The geographic impact is global, supporting deployed forces and command centers. Workforce implications include specialized manufacturing and technical support roles within Raytheon Company.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potentially increases cost to taxpayers.
High per-unit cost requires further justification and benchmarking.
Lack of small business involvement may limit broader economic benefits.

Positive Signals

Firm-fixed-price contract shifts cost overrun risk to the contractor.
Award to established defense contractor suggests potential for reliable delivery.
Procurement of specialized communication equipment supports critical military operations.

Sector Analysis

This contract falls within the Radio and Television Broadcasting and Wireless Communications Equipment Manufacturing sector. The market for such specialized defense communication systems is often dominated by a few large, established contractors due to high research and development costs and stringent security requirements. Benchmarking this spending against other similar advanced military communication procurements would provide further context on its scale and cost-effectiveness.

Small Business Impact

This contract does not appear to have a small business set-aside, nor is there an indication of significant subcontracting to small businesses. The award to a large prime contractor like Raytheon Company suggests that the primary focus was on specialized capabilities rather than fostering small business participation. This could limit opportunities for smaller firms to engage in defense contracting for this specific requirement.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Army's contracting and program management offices. As a firm-fixed-price contract, oversight would focus on ensuring delivery of the specified goods and adherence to the contract schedule. Transparency is generally maintained through contract award databases, but detailed performance metrics and cost breakdowns may not be publicly available. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Global Broadcast Service (GBS)
Military Communication Systems
Defense Electronics Procurement
Satellite Communication Equipment

Risk Flags

Sole-source award
High per-unit cost
Lack of small business participation

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $20.7 million to RAYTHEON COMPANY. CONTRACT NO. W15P7T-08-C-K406 IS FOR THE PRODUCTION AND DELIVERY OF 205 (EA) GLOBAL BROADCAST SERVICE (GBS) AN/TSR-8 RECEIVE SUITES AND ASSOCIATED SPARES.

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 $20.7 million.

What is the period of performance?

Start: 2008-05-02. End: 2009-06-30.

What is the specific technical capability of the GBS AN/TSR-8 Receive Suite, and how does it compare to commercially available alternatives?

The GBS AN/TSR-8 Receive Suite is a specialized military communication system designed to receive and process high-bandwidth data, including intelligence, surveillance, and reconnaissance (ISR) information, via satellite links. Its primary function is to provide deployed forces with near real-time access to critical information. While specific technical specifications are often classified or proprietary, its military designation suggests it incorporates features for security, ruggedization, and integration with military networks that may not be present in commercial off-the-shelf (COTS) equipment. Commercial alternatives might offer similar data rates but often lack the required security certifications, environmental hardening, or interoperability with military command and control systems, justifying the specialized nature and potentially higher cost of the AN/TSR-8.

Given the sole-source nature, what steps were taken to ensure fair and reasonable pricing for this contract?

When a sole-source procurement is necessary, the government typically employs specific strategies to ensure fair and reasonable pricing. This often involves conducting a thorough price analysis, which may include reviewing historical pricing for similar items, analyzing the contractor's cost and pricing data (if available and required), and comparing the proposed price to independent government cost estimates. For specialized systems like the GBS AN/TSR-8, the government might also engage in negotiations with the sole-source provider to achieve the best possible terms. However, the absence of competitive bids inherently limits the government's leverage in price negotiations compared to a competed procurement.

What is the track record of Raytheon Company in delivering similar complex communication systems to the Department of Defense?

Raytheon Company, now part of RTX, has a long and extensive track record of delivering complex defense systems, including advanced communication and intelligence platforms, to the Department of Defense and allied nations. They are a major prime contractor involved in numerous large-scale programs across various domains, such as radar, missiles, cybersecurity, and space systems. Their experience with satellite communications and signal processing is well-established. While specific performance on every contract varies, Raytheon's general standing as a leading defense industrial base participant suggests a capacity to handle sophisticated procurements like the GBS AN/TSR-8, though contract-specific performance data would be needed for a complete assessment.

How does the $20.7 million expenditure for 205 units align with historical spending on similar communication suites?

The $20.7 million expenditure for 205 GBS AN/TSR-8 Receive Suites, resulting in a per-unit cost of approximately $101,196, represents a significant investment. To assess alignment with historical spending, one would need to compare this to procurements of comparable advanced military satellite receive terminals or specialized communication suites. Historically, such specialized, high-technology military equipment can range from tens of thousands to hundreds of thousands of dollars per unit, depending on complexity, capabilities, and production volume. Without access to specific historical data for the GBS program or directly comparable systems, it's difficult to definitively state if this spending is high or low. However, the per-unit cost is substantial and warrants careful consideration within the broader context of defense communication budgets.

What are the potential risks associated with the 424-day contract duration for production and delivery?

A 424-day duration for the production and delivery of 205 specialized receive suites presents several potential risks. Firstly, there is the risk of schedule delays, which could stem from manufacturing challenges, supply chain disruptions, or unforeseen technical issues. Delays can impact operational readiness for the end-users. Secondly, longer production cycles can increase the risk of technology obsolescence, where the delivered equipment might be less advanced by the time it is fielded compared to rapidly evolving commercial technologies. Finally, for a firm-fixed-price contract, delays could potentially lead to increased costs for the contractor, which might indirectly affect future pricing if not managed effectively. The government's oversight will be crucial in monitoring progress and mitigating these risks.

Industry Classification

NAICS: Manufacturing › Communications Equipment Manufacturing › Radio and Television Broadcasting and Wireless 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: 1768 BUSINESS CENTER DR, RESTON, VA, 11

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Federally Funded Research and Development Corp, Not Designated a Small Business, Special Designations

Financial Breakdown

Contract Ceiling: $20,745,208

Exercised Options: $20,745,208

Current Obligation: $20,745,208

Contract Characteristics

Cost or Pricing Data: NO

Timeline