Raytheon Company awarded $44.8M for Commander's Viewer Unit production, a sole-source definitive contract

Contract Overview

Contract Amount: $44,767,217 ($44.8M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2019-09-26

End Date: 2021-10-29

Contract Duration: 764 days

Daily Burn Rate: $58.6K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: COMMANDER'S VIEWER UNIT (CVU) PRODUCTION.

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $44.8 million to RAYTHEON COMPANY for work described as: COMMANDER'S VIEWER UNIT (CVU) PRODUCTION. Key points: 1. Contract awarded at a firm fixed price, indicating clear cost expectations. 2. Sole-source award suggests limited market competition for this specific requirement. 3. Contract duration of 764 days provides a substantial period for production and delivery. 4. The award falls under Guided Missile and Space Vehicle Manufacturing, a specialized defense sector. 5. Performance is located in Arizona, potentially impacting local workforce and economy. 6. No small business set-aside was utilized for this procurement.

Value Assessment

Rating: fair

The contract value of $44.8 million for the Commander's Viewer Unit (CVU) production is difficult to benchmark without comparable sole-source awards or detailed cost breakdowns. As a sole-source procurement, the absence of competitive bidding limits the ability to assess if the pricing represents optimal value for money. Further analysis would require understanding the unique technical specifications and the contractor's cost structure. Without competitive data, assessing the fairness of the price is challenging.

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 typically occurs when a unique capability or proprietary technology is required, or when only one source is capable of meeting the government's needs. The lack of competition means the government did not benefit from price discovery through a bidding process, potentially leading to higher costs than if multiple vendors had competed.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive pressure. Without competing bids, there is less assurance that the price reflects the lowest possible cost for the required goods.

Public Impact

The Department of the Army is the primary beneficiary, receiving the Commander's Viewer Units. These units are critical components for military operations, likely enhancing situational awareness and command capabilities. The production is geographically concentrated in Arizona, supporting local manufacturing and employment within the state. The contract supports specialized roles within the defense manufacturing workforce.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially increasing costs for taxpayers.
Lack of transparency in sole-source justifications can obscure the necessity of this approach.
Dependence on a single contractor for critical components can pose supply chain risks.
Limited visibility into cost build-up without competitive proposals.

Positive Signals

Firm fixed price contract provides cost certainty for the government.
Long contract duration allows for sustained production and delivery.
Award to an established defense contractor like Raytheon suggests a degree of confidence in their production capabilities.

Sector Analysis

The contract falls within the Guided Missile and Space Vehicle Manufacturing sector, a highly specialized segment of the defense industrial base. This sector is characterized by high barriers to entry due to complex technology, stringent quality requirements, and significant R&D investment. Spending in this area is driven by national security needs and technological advancements. Comparable spending benchmarks are difficult to establish due to the niche nature of the products and the prevalence of sole-source or limited competition procurements.

Small Business Impact

This contract was not set aside for small businesses, nor does it appear to have specific subcontracting requirements for small businesses mentioned in the provided data. The award to a large prime contractor like Raytheon suggests that any small business involvement would likely be through the prime's own supply chain, rather than direct government solicitation. This limits direct opportunities for small businesses to participate in this specific contract.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Army's contracting and program management offices. The Inspector General for the Department of Defense may also conduct audits or investigations into contract performance and pricing, particularly given the sole-source nature. Transparency is limited by the lack of competitive bidding, but contract modifications and performance reports would be subject to internal government review.

Related Government Programs

Guided Missile Manufacturing
Space Vehicle Manufacturing
Defense Production Act Investments
Army Aviation and Missile Command Procurements
Tactical Systems Production

Risk Flags

Sole-source award
Lack of competition
Potential for higher cost
Supply chain dependency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $44.8 million to RAYTHEON COMPANY. COMMANDER'S VIEWER UNIT (CVU) PRODUCTION.

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 $44.8 million.

What is the period of performance?

Start: 2019-09-26. End: 2021-10-29.

What is the historical spending trend for Commander's Viewer Unit (CVU) production by the Department of the Army?

Historical spending data for the Commander's Viewer Unit (CVU) production by the Department of the Army is not readily available in the provided snippet. This specific contract, valued at $44.8 million, represents a significant investment. To understand historical trends, one would need to access broader contract databases and search for previous awards related to CVUs or similar command and control hardware. Analyzing past awards, including their values, durations, and competition levels, would reveal whether this is a recurring procurement, an increase or decrease in spending, and if previous awards were also sole-source. Without this historical context, it's difficult to assess if the current award is an anomaly or part of a consistent spending pattern for this capability.

How does the firm fixed price (FFP) structure of this contract compare to other sole-source defense procurements?

A Firm Fixed Price (FFP) contract, like the one awarded to Raytheon for $44.8 million, is a common contract type in defense procurement, even for sole-source awards. FFP contracts place the risk of cost overruns on the contractor, providing the government with budget certainty. In sole-source situations, FFP is often used to establish a clear ceiling price. However, without competitive bids, the 'firmness' of the price is based on the government's negotiation and cost analysis rather than market forces. Compared to other sole-source procurements, FFP is generally preferred by the government for its predictability. Other sole-source contracts might utilize cost-plus structures if significant R&D or undefined scope is involved, but FFP is typically seen as a more cost-conscious approach when feasible, aiming to achieve value despite the lack of competition.

What are the specific risks associated with a sole-source award for critical defense components like the CVU?

Sole-source awards for critical defense components like the Commander's Viewer Unit (CVU) present several risks. Firstly, the primary risk is reduced price competition, which can lead to the government paying a premium compared to a competitively bid scenario. This lack of competition can also stifle innovation, as the sole contractor may have less incentive to improve efficiency or develop cost-saving measures. Secondly, there's an increased dependency on a single supplier, creating potential supply chain vulnerabilities. If the sole contractor experiences production issues, financial instability, or decides to discontinue the product line, the government could face significant disruptions in acquiring essential equipment. Lastly, sole-source awards can sometimes lack transparency regarding the justification for their necessity and the fairness of the negotiated price, potentially leading to perceptions of inefficiency or favoritism.

What is Raytheon Company's track record with the Department of the Army for similar defense manufacturing contracts?

Raytheon Company, now part of RTX, has an extensive and long-standing track record of contracting with the Department of the Army, particularly in areas related to missile systems, defense electronics, and advanced manufacturing. They are a major defense contractor involved in numerous large-scale programs. For guided missile and space vehicle manufacturing, Raytheon is a key player, consistently awarded significant contracts for various platforms and components. Their history with the Army includes delivering complex systems under various contract types, often involving firm-fixed-price agreements for production runs. While specific details of past CVU-related contracts are not provided here, Raytheon's overall performance history with the Army in producing sophisticated defense hardware suggests a capability to meet production demands, though the specifics of cost-effectiveness and competition on individual sole-source awards would require deeper investigation.

Can the government benchmark the value of this $44.8M contract against other similar procurements or market rates?

Benchmarking the value of this $44.8 million sole-source contract is challenging due to the inherent limitations of non-competitive awards. The government typically relies on competitive bidding to establish market rates and ensure value for money. In a sole-source situation, the primary benchmarking tool becomes the contractor's proposal, supported by cost and technical analyses conducted by the government. The Department of Defense may have internal databases of historical pricing for similar components or systems, but direct comparisons are difficult if the CVU has unique specifications or if comparable systems are also sole-sourced. Without open market competition, establishing an independent market rate is problematic. The government's negotiation team would have used available data, including previous contract history (if any) and should-cost analyses, to assess the reasonableness of Raytheon's proposed price.

Industry Classification

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

Product/Service Code: GUIDED MISSLES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: W31P4Q17R0029

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Rockwell Collins Australia PTY Limited

Address: 2501 W UNIVERSITY DR, MCKINNEY, TX, 75071

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: $44,767,217

Exercised Options: $44,767,217

Current Obligation: $44,767,217

Subaward Activity

Number of Subawards: 48

Total Subaward Amount: $18,140,376

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline