Raytheon Company awarded $26.4M contract for radar upgrade and spares, a sole-source award for missile vehicle parts

Contract Overview

Contract Amount: $26,405,790 ($26.4M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2008-04-16

End Date: 2012-06-30

Contract Duration: 1,536 days

Daily Burn Rate: $17.2K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: SWEEP VII RADAR UPGRADE AND SPARES

Place of Performance

Location: ANDOVER, ESSEX County, MASSACHUSETTS, 01810

State: Massachusetts Government Spending

Plain-Language Summary

Department of Defense obligated $26.4 million to RAYTHEON COMPANY for work described as: SWEEP VII RADAR UPGRADE AND SPARES Key points: 1. Contract awarded to a single vendor, raising questions about price competitiveness. 2. Focus on specialized parts suggests a critical need for existing defense systems. 3. Long contract duration indicates a sustained requirement for radar technology. 4. The award falls under the 'Other Guided Missile and Space Vehicle Parts' manufacturing category. 5. Fixed-price contract type aims to control costs, but competition is key to value. 6. No small business set-aside indicates the primary contractor is likely a large entity.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to its sole-source nature and specialized equipment. Without competitive bids, it's difficult to ascertain if the $26.4 million represents a fair market price. The fixed-price structure offers some cost control, but the lack of competition inherently limits the government's ability to secure the best possible value. Further analysis would require comparing the scope and technical specifications to similar, competitively awarded contracts for radar upgrades.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, Raytheon Company, was solicited. This approach is typically used when a unique capability or proprietary technology is required, or in situations where competition is not feasible. The lack of multiple bidders means there was no opportunity for price discovery through a competitive bidding process, potentially leading to higher costs for the government.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive pressure to lower prices. The government did not benefit from the cost-saving mechanisms inherent in a competitive procurement.

Public Impact

The Department of the Army benefits from upgraded radar systems, enhancing defense capabilities. Services delivered include the upgrade and provision of spare parts for critical defense equipment. The geographic impact is primarily within the defense sector, supporting military operations. Workforce implications are likely concentrated within Raytheon's engineering and manufacturing divisions.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potential taxpayer savings.
Lack of transparency in the sole-source justification process.
Potential for cost overruns if pricing was not rigorously negotiated without competition.

Positive Signals

Fixed-price contract type provides cost certainty for the government.
Award to Raytheon, a known defense contractor, suggests established capabilities.
Contract addresses a specific need for radar upgrades and spares, indicating critical system support.

Sector Analysis

The defense sector relies heavily on advanced radar technology for surveillance, targeting, and communication. This contract for radar upgrades and spares fits within the 'Other Guided Missile and Space Vehicle Parts and Auxiliary Equipment Manufacturing' sub-sector. The market for defense electronics is characterized by high barriers to entry, significant R&D investment, and long product lifecycles. Spending in this area is driven by evolving geopolitical threats and the need for technological superiority.

Small Business Impact

The absence of small business set-aside flags (ss: false, sb: false) indicates that this contract was not specifically targeted towards small businesses. As a sole-source award to Raytheon Company, a large defense contractor, it is unlikely that significant subcontracting opportunities for small businesses were mandated within the contract terms. This contract does not appear to directly contribute to the small business ecosystem's participation in this specific procurement.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Army's contracting and program management offices. As a sole-source award, the justification and negotiation process would be subject to internal review and potentially oversight by the Government Accountability Office (GAO) if protested. Transparency is limited due to the non-competitive nature, but contract performance and financial expenditures would be monitored.

Related Government Programs

Guided Missile and Space Vehicle Parts
Radar Systems
Defense Electronics Manufacturing
Department of the Army Procurement

Risk Flags

Sole-source award
Lack of competition
Potential for higher cost
Long contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $26.4 million to RAYTHEON COMPANY. SWEEP VII RADAR UPGRADE AND 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 $26.4 million.

What is the period of performance?

Start: 2008-04-16. End: 2012-06-30.

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

Raytheon Company, now part of RTX, has a long and extensive history of contracting with the Department of Defense, including numerous awards for radar systems, upgrades, and related components. Their track record includes developing and supplying advanced radar technology for various platforms, such as aircraft, ships, and ground-based systems. While specific data on 'SWEEP VII RADAR UPGRADE AND SPARES' is limited to this award, Raytheon is a prime contractor in this domain, often receiving sole-source or limited-competition awards due to their specialized expertise and existing product lines. Their performance history generally indicates a capacity to deliver complex defense systems, though like any large contractor, specific contract performance can vary.

How does the $26.4 million value compare to similar radar upgrade contracts awarded competitively?

Directly comparing the $26.4 million value of this sole-source contract to competitively awarded radar upgrade contracts is difficult without detailed specifications of the 'SWEEP VII' system and comparable systems. Sole-source awards often carry a premium due to the lack of competitive bidding. Competitively awarded contracts for radar systems can range widely in price depending on complexity, technology, quantity, and scope of work. For instance, a competitive bid for a less complex radar system might be significantly lower, while a highly advanced, integrated system could exceed this amount. The absence of competition here means the government did not leverage market forces to potentially drive down costs, making a direct value-for-money comparison problematic.

What are the primary risks associated with a sole-source award for critical defense components like radar parts?

The primary risks associated with a sole-source award for critical defense components like radar parts include potential overpricing, reduced innovation, and a lack of vendor accountability driven by market competition. Without competing bids, the government may pay a higher price than necessary. The sole provider may have less incentive to innovate or improve efficiency if they are guaranteed the contract. Furthermore, if the sole-source provider experiences production issues or financial difficulties, it could significantly disrupt the supply chain for critical defense systems, posing a substantial national security risk. Dependence on a single supplier also limits flexibility in adapting to new technologies or changing requirements.

How effective is a fixed-price contract type in managing costs for specialized defense equipment when awarded sole-source?

A Firm Fixed Price (FFP) contract type is generally effective in managing costs by shifting the risk of cost overruns to the contractor. This means the contractor is obligated to complete the work for the agreed-upon price, regardless of their actual costs. For specialized defense equipment, this provides the government with cost certainty. However, when awarded sole-source, the effectiveness of FFP in securing the *best* value is diminished. While the total price is fixed, the initial negotiation of that price without competition might be less favorable to the government. The contractor bears the risk of cost overruns, but the government may have paid a higher initial price than if competition had been present to drive down bids.

What are the historical spending patterns for 'Other Guided Missile and Space Vehicle Parts' by the Department of the Army?

Historical spending patterns for the 'Other Guided Missile and Space Vehicle Parts and Auxiliary Equipment Manufacturing' category (NAICS code 336419) by the Department of the Army, and the DoD broadly, tend to be substantial and consistent, reflecting the ongoing need for advanced weaponry and support systems. This spending is often characterized by a mix of competitive and sole-source awards, with sole-source contracts being more common for highly specialized or proprietary components where few or no alternatives exist. Annual spending can fluctuate based on modernization programs, specific threat assessments, and budget allocations. Analyzing historical data would likely show significant investment in components for missile systems, space vehicles, and related auxiliary equipment, often involving prime contractors like Raytheon.

What are the implications of this contract's duration (1536 days) for technology obsolescence and future upgrades?

A contract duration of 1536 days (approximately 4.2 years) for a radar upgrade and spares suggests a significant, long-term requirement. For technology like radar, which evolves rapidly, this duration presents a moderate risk of obsolescence. While the upgrade aims to enhance current capabilities, the underlying technology might be nearing the end of its optimal lifecycle by the contract's completion. This could necessitate planning for subsequent upgrades or replacements sooner rather than later. The provision of spares helps maintain operational readiness during the contract period, but the long duration underscores the challenge of balancing immediate defense needs with the pace of technological advancement in the defense sector.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Other Guided Missile and Space Vehicle Parts and Auxiliary Equipment Manufacturing

Product/Service Code: GUIDED MISSLES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: W31P4Q07R0073

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 350 LOWELL ST, ANDOVER, MA, 01810

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $26,405,790

Exercised Options: $26,405,790

Current Obligation: $26,405,790

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline