Raytheon Company awarded $50.8M for Taiwan Patriot Program technical assistance and consumables

Contract Overview

Contract Amount: $50,845,868 ($50.8M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2008-04-30

End Date: 2011-09-30

Contract Duration: 1,248 days

Daily Burn Rate: $40.7K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 1. SERVICES-CONTRACTOR TECHNICAL ASSISTANCE, TAIWAN PATRIOT PROGRAM. 2. CONSUMABLES FOR PROGRAM SUPPORT.

Place of Performance

Location: ANDOVER, ESSEX County, MASSACHUSETTS, 01810

State: Massachusetts Government Spending

Plain-Language Summary

Department of Defense obligated $50.8 million to RAYTHEON COMPANY for work described as: 1. SERVICES-CONTRACTOR TECHNICAL ASSISTANCE, TAIWAN PATRIOT PROGRAM. 2. CONSUMABLES FOR PROGRAM SUPPORT. Key points: 1. Contract focuses on technical assistance and consumables for the Taiwan Patriot Program. 2. Awarded to Raytheon Company, a major defense contractor. 3. Contract duration spans over 3 years. 4. Firm Fixed Price contract type indicates defined costs. 5. No small business set-aside was applied. 6. The contract is categorized under Other Guided Missile and Space Vehicle Parts and Auxiliary Equipment Manufacturing.

Value Assessment

Rating: fair

The contract value of $50.8 million for technical assistance and consumables for a major defense program appears reasonable given the scope and duration. However, without specific benchmarks for technical assistance or comparable consumable costs for the Patriot system, a precise value-for-money assessment is challenging. The firm fixed price structure provides cost certainty for the government, but the absence of competition limits the opportunity for price discovery and potential savings.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed and was awarded sole-source to Raytheon Company. This indicates that Raytheon is likely the only entity capable of providing the specialized technical assistance and specific consumables required for the Taiwan Patriot Program, possibly due to proprietary knowledge, unique manufacturing capabilities, or existing system integration. The lack of competition means the government did not benefit from a bidding process to potentially lower costs or improve terms.

Taxpayer Impact: For taxpayers, a sole-source award means there was no opportunity to leverage competitive pressures to achieve a lower price. The government relies on Raytheon's pricing to be fair and reasonable without market validation through competition.

Public Impact

The primary beneficiaries are the U.S. Department of Defense and potentially the government of Taiwan, through the continued support and operational readiness of the Patriot missile defense system. Services delivered include crucial technical assistance and the provision of necessary consumables to maintain the system's functionality. The geographic impact is primarily within the Department of Defense's operational sphere, with potential implications for U.S. foreign military sales support. Workforce implications include the employment of technical specialists and support staff by Raytheon to fulfill the contract requirements.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potential taxpayer savings.
Lack of transparency in pricing due to non-competitive nature.
Reliance on a single contractor for critical program support.

Positive Signals

Award to an established defense contractor with expertise in the Patriot system.
Firm Fixed Price contract provides cost predictability.
Contract supports a critical national defense asset.

Sector Analysis

This contract falls within the defense industrial base, specifically the segment focused on missile defense systems and associated support. The market for such specialized technical assistance and proprietary parts is highly concentrated, often dominated by the original equipment manufacturers like Raytheon. Comparable spending benchmarks are difficult to establish publicly due to the classified or sensitive nature of such programs and the limited number of players.

Small Business Impact

This contract was not set aside for small businesses, nor does it appear to involve significant subcontracting opportunities for small businesses based on the available data. The nature of specialized technical assistance and proprietary parts for advanced defense systems often requires direct engagement with the prime manufacturer, limiting the flow-down to smaller enterprises.

Oversight & Accountability

Oversight for this contract would typically be managed by the Department of the Army contracting and program management offices. Accountability measures are embedded in the contract terms, including performance standards and payment schedules. Transparency is limited due to the sole-source nature and the defense sector context, though contract awards are generally reported.

Related Government Programs

Patriot Missile System Support
Foreign Military Sales Support
Defense Technical Services
Missile Defense Agency Programs

Risk Flags

Sole-source award limits competitive pricing.
Potential for cost overruns if scope is not precisely defined.
Dependence on a single contractor for critical support.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $50.8 million to RAYTHEON COMPANY. 1. SERVICES-CONTRACTOR TECHNICAL ASSISTANCE, TAIWAN PATRIOT PROGRAM. 2. CONSUMABLES FOR PROGRAM SUPPORT.

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 $50.8 million.

What is the period of performance?

Start: 2008-04-30. End: 2011-09-30.

What is Raytheon Company's track record with the Patriot system and similar defense contracts?

Raytheon Company, now part of RTX, has a long and established history as the prime contractor for the Patriot missile defense system. They have been responsible for the system's development, production, upgrades, and sustainment for decades. Their track record includes numerous contracts with the U.S. Department of Defense and allied nations for various configurations and support elements of the Patriot system. This includes significant experience in providing technical assistance, training, spare parts, and system integration services. Their extensive involvement suggests a deep understanding of the system's complexities and operational requirements, making them a logical sole-source provider for specialized support.

How does the $50.8 million contract value compare to other technical assistance contracts for major defense systems?

Direct comparison of this $50.8 million contract value to other technical assistance contracts for major defense systems is challenging without access to proprietary contract databases and specific system complexities. However, for a multi-year support contract involving specialized technical expertise and consumables for a sophisticated platform like the Patriot missile system, this value appears within a reasonable range. Larger, more complex systems or those requiring extensive field support might command higher values, while simpler systems or shorter durations would be lower. The firm fixed price nature also implies that the scope and expected costs were well-defined at the time of award.

What are the primary risks associated with a sole-source award for critical defense program support?

The primary risks associated with a sole-source award for critical defense program support include a lack of price competition, which can lead to higher costs for the government and taxpayers. There's also a potential for reduced innovation and efficiency, as the contractor faces less pressure to improve processes or offer cost-saving alternatives. Furthermore, over-reliance on a single supplier can create vulnerabilities if that supplier experiences financial difficulties, production issues, or changes its strategic focus. Ensuring fair and reasonable pricing and robust performance monitoring becomes even more critical in sole-source situations.

How effective is the firm fixed price (FFP) contract type in managing costs for technical assistance and consumables?

The Firm Fixed Price (FFP) contract type is generally effective in managing costs for technical assistance and consumables when the scope of work and requirements are well-defined and stable. Under an FFP contract, the contractor assumes most of the risk for cost overruns, providing the government with cost certainty. This is beneficial for predictable services like routine technical support and standard consumable replenishment. However, if unforeseen technical challenges arise or the scope of assistance needs to expand significantly, an FFP contract might limit the contractor's flexibility to address these issues without formal contract modifications, potentially leading to delays or disputes.

What is the historical spending pattern for technical assistance and consumables related to the Taiwan Patriot Program?

Historical spending patterns for technical assistance and consumables specifically for the Taiwan Patriot Program are not publicly detailed in a way that allows for direct comparison to this $50.8 million award. However, the Patriot system is a long-standing defense asset, and ongoing support, including technical assistance and replenishment of parts and consumables, is a continuous requirement. Spending on such programs typically fluctuates based on system upgrades, operational tempo, and the lifecycle of components. Given the program's strategic importance, consistent and substantial investment in its sustainment, including technical support, is expected over time.

Industry Classification

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

Product/Service Code: EDUCATION AND TRAINING › EDUCATION AND TRAINING SERVICES

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: 350 LOWELL ST, ANDOVER, MA, 06

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: $50,845,868

Exercised Options: $50,845,868

Current Obligation: $50,845,868

Contract Characteristics

Cost or Pricing Data: YES

Timeline