Raytheon Company awarded $19.3M contract for optical sighting and ranging equipment, a sole-source procurement

Contract Overview

Contract Amount: $19,345,908 ($19.3M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2005-04-29

End Date: 2010-12-09

Contract Duration: 2,050 days

Daily Burn Rate: $9.4K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 200507!003060!2100!W31P4Q!USA AVIATION AND MISSILE COMMAND!W31P4Q05C0078 !A!N! !N! ! !20050429!20071030!060897063!060897063!001339159!N!RAYTHEON COMPANY !2000 EAST EL SEGUNDO BLVD !EL SEGUNDO !CA!90245!22412!037!06!EL SEGUNDO !LOS ANGELES !CALIFORNIA!+000015031035!N!N!000000000000!1240!OPTICAL SIGHTING AND RANGING EQUIPMENT !A2 !MISSILE AND SPACE SYSTEMS !601 !BRADLEY UPGRADE !333314!E! !3! ! ! ! ! !20200930!B! ! !A! !D!N!J!1!001!N!1A!A!Y!A! ! !N!C!N! ! ! !A!A!A!A!000!A!C!N! ! ! ! ! ! !0001! !

Place of Performance

Location: EL SEGUNDO, LOS ANGELES County, CALIFORNIA, 90245

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $19.3 million to RAYTHEON COMPANY for work described as: 200507!003060!2100!W31P4Q!USA AVIATION AND MISSILE COMMAND!W31P4Q05C0078 !A!N! !N! ! !20050429!20071030!060897063!060897063!001339159!N!RAYTHEON COMPANY !2000 EAST EL SEGUNDO BLVD !EL SEGUNDO !CA!90245!22412!037!06!EL SEGUNDO !LOS … Key points: 1. Contract awarded on a sole-source basis, raising questions about price discovery and potential for overpayment. 2. Significant duration of over 6 years suggests a long-term need for the specified equipment. 3. The contract's value of over $19 million indicates a substantial investment in defense optics. 4. Awarded to Raytheon Company, a major defense contractor with a significant presence in the sector. 5. The procurement is for optical sighting and ranging equipment, crucial for missile and space systems. 6. The contract was not competed, limiting opportunities for other vendors and potentially impacting innovation.

Value Assessment

Rating: questionable

The contract value of $19.3 million for optical sighting and ranging equipment appears substantial. Without competitive bidding, it is difficult to benchmark this price against market rates or similar contracts. The lack of competition suggests that the government may not have achieved the best possible value. Further analysis would be needed to compare the specific technical specifications and performance requirements against industry standards to assess if the price is justified.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed. This typically occurs when only one vendor can provide the required goods or services, or for reasons of national security. The lack of competition means there were no other bidders, and therefore no price negotiation based on multiple offers. This can lead to higher prices for the government.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive pressure. Without competing offers, there is less incentive for the contractor to offer the lowest possible price.

Public Impact

The U.S. Army Aviation and Missile Command is the primary beneficiary, receiving critical optical sighting and ranging equipment. The equipment is essential for the Bradley Upgrade program, enhancing the capabilities of armored vehicles. The contract supports advanced defense systems, contributing to national security. The contract likely has implications for the defense manufacturing workforce, particularly in California where Raytheon is located.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potentially leads to higher costs for taxpayers.
Long contract duration (over 6 years) increases exposure to potential cost overruns or performance issues.
Lack of competition may stifle innovation by not encouraging alternative solutions from other vendors.
Specific details on performance metrics and acceptance criteria are not readily available for independent assessment.

Positive Signals

Awarded to a well-established defense contractor (Raytheon Company) with a track record in defense systems.
The contract addresses a specific need for advanced optical equipment for a critical military upgrade (Bradley Upgrade).
The contract is for a firm fixed price, which shifts some of the cost risk to the contractor.

Sector Analysis

The contract falls within the defense sector, specifically related to missile and space systems and optical instrument manufacturing. The market for advanced optical sighting and ranging equipment is dominated by a few large defense contractors. Spending in this area is driven by modernization efforts and the need for superior targeting and surveillance capabilities in military operations. Comparable spending benchmarks would typically involve other sole-source or competitively awarded contracts for similar advanced optical systems within the Department of Defense.

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, it is unlikely to involve significant subcontracting opportunities for small businesses unless explicitly mandated. The absence of a set-aside means that small businesses were not given preferential consideration for this specific procurement, potentially limiting their direct participation in this contract's value chain.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contract management agencies, such as the Defense Contract Management Agency (DCMA). Accountability measures are inherent in the firm fixed-price structure, which places cost risk on the contractor. Transparency is limited due to the sole-source nature of the award, making public scrutiny of pricing and justification more challenging. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Bradley Fighting Vehicle Systems
Missile Systems Procurement
Advanced Optics and Targeting Systems
Department of Defense Research and Development

Risk Flags

Sole-source award
Lack of competitive bidding
Potential for overpricing
Long contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $19.3 million to RAYTHEON COMPANY. 200507!003060!2100!W31P4Q!USA AVIATION AND MISSILE COMMAND!W31P4Q05C0078 !A!N! !N! ! !20050429!20071030!060897063!060897063!001339159!N!RAYTHEON COMPANY !2000 EAST EL SEGUNDO BLVD !EL SEGUNDO !CA!90245!22412!037!06!EL SEGUNDO !LOS ANGELES !CALIFORNIA!+000015031035!N!N!000000000000!1240!OPTICAL SIGHTING AND RANGING EQUIPMENT !A2 !MISSILE AND SPACE SYSTEMS !601 !BRADLEY UPGRADE !333314!E! !3! ! ! ! ! !202

Who is the contractor on this award?

The obligated recipient is RAYTHEON COMPANY.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $19.3 million.

What is the period of performance?

Start: 2005-04-29. End: 2010-12-09.

What is the specific justification for awarding this contract on a sole-source basis?

The provided data indicates the contract was 'NOT COMPETED'. While the specific justification is not detailed in the data snippet, sole-source awards are typically justified when only one responsible source can provide the required supplies or services. This could be due to unique capabilities, proprietary technology, urgent and compelling needs where competition is not feasible, or specific national security requirements. Without further documentation from the awarding agency (Department of Defense), the precise reason for this sole-source determination remains unconfirmed, but it implies a belief that competition was either impossible or not in the government's best interest at the time of award.

How does the contract duration of over 6 years impact the overall value and risk?

A contract duration of over 6 years (from May 2005 to December 2010, totaling approximately 2050 days) for optical sighting and ranging equipment suggests a long-term requirement for these systems, likely tied to a major platform upgrade like the Bradley Upgrade. This extended period allows for phased delivery, integration, and potentially sustainment, which can be efficient for complex systems. However, it also increases the risk of cost escalation if inflation or unforeseen technical challenges arise, especially given the firm fixed-price nature. The government locks in a price for a long period, which could be advantageous if costs rise significantly, but disadvantageous if market prices fall. It also means sustained reliance on a single contractor for an extended period.

What are the potential risks associated with a sole-source award for advanced defense equipment?

The primary risk of a sole-source award for advanced defense equipment like optical sighting and ranging systems is the lack of price competition. This can lead to the government paying a higher price than if the contract had been competed, as there is no market pressure to drive down costs. Additionally, sole-source awards can reduce incentives for the contractor to innovate or improve efficiency beyond the contract's minimum requirements. There's also a risk of vendor lock-in, where the government becomes dependent on a single supplier, potentially limiting future options or flexibility. Without competitive benchmarking, assessing the true value for money becomes more challenging.

Can the value of this contract be benchmarked against similar procurements?

Benchmarking the $19.3 million value of this contract is challenging without more specific data on the exact technical specifications, quantities, and performance requirements of the optical sighting and ranging equipment. The fact that it was a sole-source award further complicates direct comparison, as competitive bids often reveal a wider range of pricing. To perform a robust benchmark, one would need to identify other contracts for similar equipment, ideally awarded competitively, and adjust for differences in technology, quantity, and contract duration. Information on the specific 'Bradley Upgrade' phase and the precise nature of the 'Optical Instrument and Lens Manufacturing' (NAICS 333314) would be crucial for finding comparable data points.

What is Raytheon Company's track record with similar defense contracts?

Raytheon Company is a major defense contractor with extensive experience in developing and producing advanced systems, including optics, sensors, and missile technologies. They have a long history of supplying the U.S. military and other government agencies. Their track record typically involves large, complex contracts, often awarded through competitive processes but also including sole-source agreements for specialized or sole-proprietor technologies. While specific performance details for every contract are not publicly available, Raytheon is generally considered a capable supplier in the defense industrial base. However, like any large contractor, they have faced scrutiny over pricing and performance on various programs throughout their history.

Industry Classification

NAICS: Manufacturing › Commercial and Service Industry Machinery Manufacturing › Optical Instrument and Lens Manufacturing

Product/Service Code: FIRE CONTROL EQPT.

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: 2000 EAST EL SEGUNDO BLVD, EL SEGUNDO, CA, 36

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Cost or Pricing Data: NO

Timeline