DoD awards $225M for air defense radars to Raytheon, impacting European deterrence and Army formations

Contract Overview

Contract Amount: $225,397,657 ($225.4M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2018-12-28

End Date: 2025-12-31

Contract Duration: 2,560 days

Daily Burn Rate: $88.0K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: PROCUREMENT OF 50 ADDITIONAL AIR DEFENSE RADARS AND ASSOCIATED SPARES IN SUPPORT OF THE EUROPEAN DETERRENCE INITIATIVE AND FUTURE INITIAL MANEUVER-SHORT RANGE AIR DEFENSE BATTALIONS INCLUDING AIR AND MISSILE DEFENSE PROTECTION TO THE MANEUVERING FORMATIONS, TO COUNTER A WIDE RANGE OF THREATS: UNMANNED AERIAL SYSTEMS, ROTARY WING AIRCRAFT AND FIXED WING AIRCRAFT. THIS PROCUREMENT WILL MAINTAIN A COMMON CONFIGURATION ACROSS THE ARMY DEFENSE SENSOR PORTFOLIO WHILE MAXIMIZING WAR FIGHTER CAPABILITY.

Place of Performance

Location: FULLERTON, ORANGE County, CALIFORNIA, 92834

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $225.4 million to RAYTHEON COMPANY for work described as: PROCUREMENT OF 50 ADDITIONAL AIR DEFENSE RADARS AND ASSOCIATED SPARES IN SUPPORT OF THE EUROPEAN DETERRENCE INITIATIVE AND FUTURE INITIAL MANEUVER-SHORT RANGE AIR DEFENSE BATTALIONS INCLUDING AIR AND MISSILE DEFENSE PROTECTION TO THE MANEUVERING FORMATIONS, TO COUNTER A WIDE RANG… Key points: 1. This contract focuses on enhancing air and missile defense capabilities against a range of aerial threats. 2. The procurement aims to standardize the Army's defense sensor portfolio for improved warfighter effectiveness. 3. A single award to Raytheon Company suggests a lack of broader market competition for this specific system. 4. The contract duration extends over several years, indicating a long-term need for these defense assets. 5. The firm-fixed-price nature of the contract shifts cost risk to the contractor. 6. This acquisition directly supports European deterrence efforts and maneuver-short-range air defense battalions.

Value Assessment

Rating: good

The total contract value of approximately $225 million for 50 air defense radars and spares appears reasonable given the advanced technology and strategic importance. Benchmarking against similar advanced radar systems is challenging due to the specialized nature of this procurement. However, the firm-fixed-price contract structure generally indicates a commitment to a set price, which can be advantageous for the government if costs are managed effectively by the contractor. The value aligns with the stated goal of enhancing critical defense capabilities.

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, proprietary technology, or when there is an urgent need that precludes a full and open competition. The lack of competition means the government did not benefit from potential price reductions or innovative solutions that might arise from a competitive bidding process. This raises questions about whether the best possible value was secured.

Taxpayer Impact: A sole-source award limits opportunities for taxpayers to benefit from competitive pricing. Without multiple bids, there is less pressure on the contractor to offer the lowest possible price, potentially leading to higher overall expenditure for the government.

Public Impact

Enhances air defense capabilities for U.S. Army maneuver formations, directly improving soldier protection. Supports European deterrence initiatives by providing advanced missile defense systems to allies and U.S. forces. Addresses threats from unmanned aerial systems (UAS), rotary-wing, and fixed-wing aircraft. Maintains a common configuration across the Army's defense sensor portfolio, improving interoperability and readiness. The procurement is managed by the Department of the Army, indicating a focus on ground force modernization.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potential for cost savings.
Long contract duration (2018-2025) requires ongoing monitoring of performance and costs.
Reliance on a single contractor for critical defense systems could pose supply chain risks.

Positive Signals

Firm-fixed-price contract shifts cost risk to the contractor.
Focus on standardization improves interoperability and reduces training/maintenance complexity.
Directly addresses critical threats to U.S. and allied forces in Europe.

Sector Analysis

This contract falls within the Defense sector, specifically focusing on advanced radar and air defense systems manufacturing. The North American Industry Classification System (NAICS) code 334511, 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing,' covers companies involved in producing such sophisticated equipment. The market for advanced defense electronics is characterized by high barriers to entry, significant R&D investment, and long product development cycles. Spending in this area is often driven by geopolitical factors and the need to maintain technological superiority.

Small Business Impact

This contract was not set aside for small businesses, and there is no indication of subcontracting requirements for small businesses in the provided data. The award to a large prime contractor like Raytheon Company suggests that the primary focus is on specialized, high-value defense systems where large companies typically have the established expertise and infrastructure. This procurement is unlikely to have a direct positive impact on the small business ecosystem unless Raytheon actively engages them for specific components or services not detailed here.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Army's contracting and program management offices. The firm-fixed-price contract type provides some cost control, but performance monitoring is crucial. Transparency is generally maintained through contract awards databases, but detailed operational performance data is often classified. Inspector General (IG) jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

European Deterrence Initiative
Army Air and Missile Defense Systems
Ground Vehicle Radar Systems
Air Traffic Control and Navigation Equipment Manufacturing
Defense Electronics Manufacturing

Risk Flags

Sole-source award
Lack of public cost-per-unit data
Potential for limited competition impact on price

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $225.4 million to RAYTHEON COMPANY. PROCUREMENT OF 50 ADDITIONAL AIR DEFENSE RADARS AND ASSOCIATED SPARES IN SUPPORT OF THE EUROPEAN DETERRENCE INITIATIVE AND FUTURE INITIAL MANEUVER-SHORT RANGE AIR DEFENSE BATTALIONS INCLUDING AIR AND MISSILE DEFENSE PROTECTION TO THE MANEUVERING FORMATIONS, TO COUNTER A WIDE RANGE OF THREATS: UNMANNED AERIAL SYSTEMS, ROTARY WING AIRCRAFT AND FIXED WING AIRCRAFT. THIS PROCUREMENT WILL MAINTAIN A COMMON CONFIGURATION ACROSS THE ARMY DEFENSE SENSOR PORTFOLIO WHILE MAXIMIZING WAR FIGHTER CAPABILITY.

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 $225.4 million.

What is the period of performance?

Start: 2018-12-28. End: 2025-12-31.

What is Raytheon Company's track record with similar air defense radar systems for the U.S. Army?

Raytheon Company has a long and established history of developing and supplying advanced radar and air defense systems to the U.S. military, including the Army. They are a major defense contractor known for producing systems like the Patriot missile defense system, which includes sophisticated radar components. Their experience spans decades, encompassing research, development, manufacturing, and sustainment of complex electronic warfare and sensor systems. This extensive background suggests a strong capability to deliver the specified air defense radars, though specific performance metrics for this particular contract would require deeper analysis of program execution data.

How does the per-unit cost of these radars compare to similar systems procured by the DoD or allied nations?

Determining a precise per-unit cost is difficult without knowing the exact configuration and capabilities of each radar system and the total number of units procured. The total contract value of $225,397,657.37 for 50 radars and associated spares averages to approximately $4.5 million per radar, including spares. However, this is an average and does not represent the unit cost of the radar itself. Benchmarking is further complicated by the sole-source nature of this award, which limits direct price comparisons. Advanced, integrated air defense radar systems can range significantly in price, from a few million to tens of millions of dollars, depending on their sophistication, range, mobility, and integration with other defense platforms. Without access to competitive bidding data or detailed specifications, a definitive value-for-money assessment against market rates is challenging.

What are the primary risks associated with this sole-source procurement of air defense radars?

The primary risk associated with this sole-source procurement is the potential for inflated pricing due to the lack of competitive pressure. Without multiple bidders vying for the contract, Raytheon may not have been incentivized to offer the lowest possible price. Another risk is the potential for reduced innovation, as a competitive environment often spurs contractors to propose more advanced or cost-effective solutions. Furthermore, reliance on a single supplier for critical defense equipment can create vulnerabilities in the supply chain and limit the government's options if performance issues arise or if the contractor faces financial difficulties. Ensuring robust oversight and performance management becomes paramount in sole-source situations.

How effective are these air defense radars expected to be against current and emerging threats like UAS?

The contract explicitly states the radars are intended to counter a 'wide range of threats: unmanned aerial systems, rotary wing aircraft and fixed wing aircraft.' This indicates a design requirement for multi-domain threat detection and tracking, including low-slow-small (LSS) targets like many UAS. Modern air defense radars are increasingly incorporating advanced signal processing and multi-function capabilities to address these evolving threats. The effectiveness will depend on the specific radar technology employed, its integration with the broader air defense network (e.g., command and control systems, effectors), and the sophistication of the adversary's countermeasures. The Army's goal to 'maximize warfighter capability' suggests an expectation of high effectiveness against these threats.

What is the historical spending trend for similar air defense radar procurements by the Department of the Army?

Historical spending on air defense radar systems by the Department of the Army has been substantial and cyclical, often driven by perceived threats and modernization requirements. Major programs like the Integrated Air and Missile Defense (IAMD) Battle Command System (IBCS), which integrates various sensors including radars, have seen significant investment over the past decade. Procurements of specific radar platforms, such as Sentinel (AN/MPQ-64) or upgrades to existing systems, also represent considerable outlays. While specific figures for 'additional air defense radars' are not readily available without deeper database queries, the Army consistently allocates billions of dollars annually towards air and missile defense capabilities, reflecting the ongoing strategic importance of this domain.

Industry Classification

NAICS: Manufacturing › Navigational, Measuring, Electromedical, and Control Instruments Manufacturing › Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing

Product/Service Code: ELECTRICAL/ELECTRONIC EQPT COMPNTS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: W31P4Q18R0076

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Rockwell Collins Australia PTY Limited

Address: 1801 HUGHES DR, FULLERTON, CA, 92834

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: $431,714,012

Exercised Options: $225,398,657

Current Obligation: $225,397,657

Actual Outlays: $2,044,489

Subaward Activity

Number of Subawards: 896

Total Subaward Amount: $316,985,652

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline