Raytheon's $59.9M NASAMS contract for air defense maintenance and sustainment awarded via sole-source procurement

Contract Overview

Contract Amount: $59,889,978 ($59.9M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2014-06-27

End Date: 2021-05-30

Contract Duration: 2,529 days

Daily Burn Rate: $23.7K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: IGF::OT::IGF NORWEGIAN ADVANCED SURFACE-TO-AIR MISSILE SYSTEMS (NASAMS) CONTRACT PROVIDES MAINTENANCE AND SUSTAINMENT OF THE NASAMS WHICH IS AN AIR DEFENSE CAPABILITY DEPLOYED IN THE HOMELAND DEFENSE AREA 1 (HLDA1) FOR ONE YEAR. THE NASAMS EFFORT INCLUDES THE MAINTENANCE AND SUSTAINMENT OF SURFACE LAUNCHERS, TRAINING, MISSION READINESS EXERCISE (MRE), FIRE DIRECTION CENTERS (FDCS), TRUCKS AND ASSOCIATED EQUIPMENT. IT ALSO INCLUDES THE PROCUREMENT OF SPARES AND REPAIR PARTS TO SUPPORT THE SUSTAINMENT EFFORT AND ENGINEERING SERVICES TO SUPPORT UPGRADES TO THE SYSTEM.

Place of Performance

Location: TEWKSBURY, MIDDLESEX County, MASSACHUSETTS, 01876

State: Massachusetts Government Spending

Plain-Language Summary

Department of Defense obligated $59.9 million to RAYTHEON COMPANY for work described as: IGF::OT::IGF NORWEGIAN ADVANCED SURFACE-TO-AIR MISSILE SYSTEMS (NASAMS) CONTRACT PROVIDES MAINTENANCE AND SUSTAINMENT OF THE NASAMS WHICH IS AN AIR DEFENSE CAPABILITY DEPLOYED IN THE HOMELAND DEFENSE AREA 1 (HLDA1) FOR ONE YEAR. THE NASAMS EFFORT INCLUDES THE MAINTENANCE AND SUS… Key points: 1. Contract focuses on critical homeland air defense capabilities, ensuring readiness of the NASAMS system. 2. Includes comprehensive sustainment, maintenance, training, and engineering services for a complex defense system. 3. Procurement of spares and repair parts is essential for operational continuity. 4. Engineering services support system upgrades, indicating a long-term investment in defense technology. 5. The sole-source award raises questions about potential cost efficiencies and market alternatives. 6. Contract duration of over 2500 days highlights a significant, long-term commitment to this system.

Value Assessment

Rating: fair

Benchmarking the value of this sole-source contract is challenging due to the lack of competitive bids. The total award amount of approximately $59.9 million over its duration suggests a substantial investment in maintaining and upgrading a critical air defense system. Without comparable contracts or market data for similar specialized defense systems, it's difficult to definitively assess if the pricing represents excellent value for money. However, the breadth of services, including maintenance, sustainment, training, and engineering, indicates a comprehensive package.

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 among multiple vendors. This approach is typically used when a specific contractor possesses unique capabilities or when there is an urgent need that cannot be met through a competitive process. The lack of competition limits the government's ability to leverage market forces to drive down prices and may result in higher costs compared to a competed contract.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive bidding, as the contractor faces less pressure to offer the most cost-effective solution.

Public Impact

The primary beneficiaries are the Department of the Army and the nation's homeland defense, ensuring protection against aerial threats. Services delivered include the maintenance and sustainment of the NASAMS air defense system, crucial for national security. The geographic impact is focused on the Homeland Defense Area 1 (HLDA1), a critical strategic location. Workforce implications include support for specialized technical roles in defense systems maintenance and engineering.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially leading to higher costs for taxpayers.
Lack of transparency in pricing due to non-competitive nature.
Long contract duration could mask inefficiencies if not closely monitored.
Reliance on a single contractor for critical air defense system sustainment poses a risk.

Positive Signals

Ensures sustainment of a critical homeland air defense capability.
Comprehensive scope covers maintenance, training, and upgrades, providing a complete solution.
Engineering services support system modernization, enhancing future defense capabilities.
Contractor (Raytheon) is a known entity in defense systems, suggesting technical expertise.

Sector Analysis

This contract falls within the Engineering Services sector, specifically supporting advanced defense systems. The market for specialized air defense systems like NASAMS is highly concentrated, often dominated by a few key defense contractors. Raytheon Company is a major player in this domain. Benchmarking spending is difficult as it relates to a specific, proprietary defense system, but overall US defense spending on air and missile defense systems is in the tens of billions annually.

Small Business Impact

This contract does not appear to have specific small business set-aside provisions. As a sole-source award to a large prime contractor, the direct impact on small businesses is likely limited unless Raytheon actively engages them as subcontractors. Further analysis would be needed to determine subcontracting opportunities and their adherence to small business utilization goals.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Army's contracting and program management offices. Transparency is limited due to the sole-source nature. Accountability measures would be defined by the contract's terms and conditions, including performance metrics and reporting requirements. The Inspector General's office for the Department of Defense would have jurisdiction for audits and investigations if any issues arise.

Related Government Programs

Air and Missile Defense Systems
Homeland Defense Programs
Advanced Surface-to-Air Missile Systems
Defense Maintenance and Sustainment Contracts

Risk Flags

Sole-source award
Lack of competitive pricing data
Potential for cost overruns in CPFF contracts
Long-term reliance on a single contractor

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $59.9 million to RAYTHEON COMPANY. IGF::OT::IGF NORWEGIAN ADVANCED SURFACE-TO-AIR MISSILE SYSTEMS (NASAMS) CONTRACT PROVIDES MAINTENANCE AND SUSTAINMENT OF THE NASAMS WHICH IS AN AIR DEFENSE CAPABILITY DEPLOYED IN THE HOMELAND DEFENSE AREA 1 (HLDA1) FOR ONE YEAR. THE NASAMS EFFORT INCLUDES THE MAINTENANCE AND SUSTAINMENT OF SURFACE LAUNCHERS, TRAINING, MISSION READINESS EXERCISE (MRE), FIRE DIRECTION CENTERS (FDCS), TRUCKS AND ASSOCIATED EQUIPMENT. IT ALSO INCLUDES THE PROCUREMENT OF SPARES AND REPAIR PARTS TO SUPPORT THE SUSTAI

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 $59.9 million.

What is the period of performance?

Start: 2014-06-27. End: 2021-05-30.

What is Raytheon's track record with NASAMS or similar air defense systems?

Raytheon Company, now part of RTX, has a long-standing history and significant expertise in developing and supporting advanced air defense systems, including the NASAMS (Norwegian Advanced Surface-to-Air Missile System). They are a primary contractor for this system, which is a joint development with Norway's Kongsberg Defence & Aerospace. Raytheon's involvement typically spans the entire lifecycle, from initial production to ongoing sustainment, upgrades, and integration with broader defense networks. Their track record with NASAMS and other missile defense programs suggests a high level of technical proficiency and program management capability, essential for maintaining the operational readiness of such critical assets.

How does the cost of this contract compare to similar air defense sustainment contracts?

Direct cost comparison is challenging due to the sole-source nature of this contract and the specialized, proprietary technology involved in the NASAMS system. Competitive contracts for similar complex defense systems often yield more transparent pricing benchmarks. However, the total value of approximately $59.9 million over its extended period suggests a significant investment. Without access to pricing details from other sole-source awards for comparable systems or data from competed contracts for less specialized defense maintenance, it's difficult to definitively state if this represents a fair market price. The government relies on internal cost analyses and negotiation in such cases.

What are the primary risks associated with this sole-source contract?

The primary risk associated with this sole-source contract is the lack of competitive pressure, which can lead to inflated costs and reduced incentive for the contractor to innovate or optimize performance. There's also a dependency risk; the government relies heavily on Raytheon for the sustainment and upgrade of a critical air defense capability. If Raytheon faces production issues, supply chain disruptions, or strategic shifts, it could directly impact national security. Furthermore, the long duration of the contract without re-competition could lead to complacency or a lack of agility in adapting to evolving threats or technological advancements.

How effective is the NASAMS system in fulfilling its air defense role?

The NASAMS system is widely regarded as a highly effective medium-range surface-to-air missile system. It is designed to counter a wide range of threats, including manned and unmanned aircraft, cruise missiles, and other precision-guided munitions. Its modular design, advanced radar, and integration capabilities allow it to be adapted to various operational environments and threat levels. Its deployment in the Homeland Defense Area 1 (HLDA1) underscores its critical role in protecting key strategic assets and population centers. The ongoing sustainment and upgrade efforts funded by this contract are intended to ensure its continued effectiveness against evolving aerial threats.

What are the historical spending patterns for NASAMS sustainment?

Historical spending data for NASAMS sustainment prior to this specific contract (which spans from 2014 to 2021) would provide context on the evolution of costs and program scope. However, this contract itself, valued at approximately $59.9 million over its duration, represents a significant and sustained investment. Analyzing annual spending within this contract's period would reveal trends in maintenance, spare parts procurement, and engineering services. Without more granular historical data, it's difficult to establish long-term spending patterns, but the scale of this award indicates a consistent and substantial commitment to the NASAMS system's operational readiness.

What are the implications of the 'Cost Plus Fixed Fee' contract type?

The 'Cost Plus Fixed Fee' (CPFF) contract type means the contractor (Raytheon) is reimbursed for all allowable costs incurred, plus a predetermined fixed fee representing profit. This structure is often used for development or specialized services where costs are difficult to estimate precisely. While it provides flexibility for the government to adapt to changing requirements, it shifts some cost risk to the government, as the contractor is guaranteed their fee regardless of cost overruns. The fixed fee incentivizes the contractor to control costs to maximize their profit margin within that fee, but the primary cost control mechanism relies on robust government oversight and negotiation.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Rockwell Collins Australia PTY Limited

Address: 50 APPLE HILL DR, TEWKSBURY, MA, 01876

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: $86,326,804

Exercised Options: $59,889,978

Current Obligation: $59,889,978

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline