Raytheon Company awarded $27.3M for engineering services and hardware supporting radar interface units

Contract Overview

Contract Amount: $27,276,002 ($27.3M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2020-03-01

End Date: 2021-02-28

Contract Duration: 364 days

Daily Burn Rate: $74.9K/day

Competition Type: NOT COMPETED

Pricing Type: FIXED PRICE LEVEL OF EFFORT

Sector: Defense

Official Description: ENGINEERING SERVICES AND HARDWARE IN SUPPORT OF RADAR INTERFACE UNITS - A-KITS.

Place of Performance

Location: HUNTSVILLE, MADISON County, ALABAMA, 35806

State: Alabama Government Spending

Plain-Language Summary

Department of Defense obligated $27.3 million to RAYTHEON COMPANY for work described as: ENGINEERING SERVICES AND HARDWARE IN SUPPORT OF RADAR INTERFACE UNITS - A-KITS. Key points: 1. Contract awarded to a single vendor, raising questions about competitive pricing. 2. Fixed-price contract type suggests cost control, but performance is key. 3. Short contract duration of one year may limit long-term value assessment. 4. Services include computer systems design, indicating a focus on technical solutions. 5. Geographic location in Alabama may have implications for local workforce. 6. No small business set-aside, potentially limiting opportunities for smaller firms.

Value Assessment

Rating: fair

The contract value of $27.3 million for engineering services and hardware is substantial. Without comparable contract data or detailed cost breakdowns, it's difficult to definitively assess value for money. The fixed-price level of effort contract type aims to control costs, but the absence of competition makes benchmarking against market rates challenging. The provided benchmark of $74,934 per day suggests a significant daily expenditure, which warrants further scrutiny regarding the efficiency and necessity of the services rendered.

Cost Per Unit: $74,934 per day

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning there was no open competition. This approach is typically used when a specific vendor possesses unique capabilities or when circumstances prevent a competitive process. The lack of competition means that the government did not benefit from the price discovery that typically occurs in a competitive bidding environment, potentially leading to higher costs than if multiple vendors had vied for the contract.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive bidding, as the government did not leverage multiple offers to secure the best possible price.

Public Impact

The Department of Defense, specifically the Department of the Army, benefits from these engineering services and hardware. Services delivered include computer systems design, crucial for radar interface unit support. The contract has a geographic impact in Alabama, where the services are likely performed. The contract may have implications for a specialized technical workforce in the area of radar systems engineering.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potentially increases costs for taxpayers.
Lack of transparency in the justification for sole-source award.
Fixed-price level of effort can lead to cost overruns if not carefully managed.
No small business participation noted, potentially missing opportunities for economic inclusion.

Positive Signals

Award to a known entity (Raytheon Company) may indicate a reliance on established expertise.
Focus on specific hardware and engineering services suggests a critical need for the Department of the Army.
Fixed-price contract type provides some level of cost predictability.

Sector Analysis

This contract falls within the Computer Systems Design Services sector, a critical component of the broader IT and Defense industries. The market for specialized engineering services supporting defense systems like radar interface units is often dominated by a few large, established contractors due to the high technical expertise and security clearances required. Spending in this area is driven by the need for advanced technological solutions to maintain and upgrade military hardware, with contracts often being long-term and high-value.

Small Business Impact

This contract was not awarded as a small business set-aside, nor does it indicate any subcontracting requirements for small businesses. This suggests that the primary contractor, Raytheon Company, will likely perform the majority of the work. The absence of small business involvement means that opportunities for smaller, specialized firms to contribute to this defense contract are limited, potentially impacting the broader small business ecosystem within the defense supply chain.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Army's contracting and program management offices. As a sole-source award, the justification and approval process would be subject to specific federal regulations and potentially higher levels of review. Transparency regarding the specific oversight mechanisms and accountability measures is limited without further details on the contract's administration and any associated Inspector General reviews.

Related Government Programs

Defense Logistics Agency (DLA) procurement
Naval Sea Systems Command (NAVSEA) contracts
Air Force Materiel Command (AFMC) acquisitions
Army Contracting Command (ACC) awards
Department of Defense IT services procurement

Risk Flags

Sole-source award
Lack of competition
High daily rate benchmark

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $27.3 million to RAYTHEON COMPANY. ENGINEERING SERVICES AND HARDWARE IN SUPPORT OF RADAR INTERFACE UNITS - A-KITS.

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 $27.3 million.

What is the period of performance?

Start: 2020-03-01. End: 2021-02-28.

What is Raytheon Company's track record with similar sole-source contracts for radar interface units?

Raytheon Company, now part of RTX, has a long history of supporting U.S. military radar systems. Information on their specific track record with sole-source contracts for radar interface units is often found within classified or restricted government databases. However, as a major defense contractor, Raytheon frequently receives sole-source awards due to the specialized nature of its products and services, particularly for upgrades or sustainment of existing platforms where they are the original equipment manufacturer or possess unique intellectual property. Analyzing past performance on similar contracts would involve reviewing contract awards databases for prior sole-source actions, performance evaluations (e.g., CPARS), and any associated cost or schedule variance reports to gauge their reliability and efficiency in delivering complex systems under non-competitive conditions.

How does the daily cost of $74,934 compare to industry benchmarks for similar engineering services?

The daily cost of $74,934 for engineering services and hardware in support of radar interface units is a significant figure. Benchmarking this against industry standards is challenging without more specific details on the services provided (e.g., labor categories, hours, hardware components, complexity). However, for highly specialized engineering and technical support within the defense sector, daily rates for senior engineers and specialized hardware can indeed be substantial. To provide a more accurate comparison, one would need to analyze the labor mix, overhead rates, and profit margins typically seen in comparable sole-source or competitively awarded contracts for similar defense systems. Without such granular data, it's difficult to definitively state if this rate is high or low, but it warrants scrutiny given the lack of competitive pressure.

What are the primary risks associated with a sole-source award of this magnitude?

The primary risks associated with a sole-source award of $27.3 million are centered around cost and performance. Without competition, there is a reduced incentive for the contractor to offer the lowest possible price, potentially leading to overpayment by the government. Price reasonableness is harder to ascertain. Furthermore, the government has fewer options if the contractor underperforms or fails to meet delivery schedules, as there is no readily available alternative source. There's also a risk of vendor lock-in, where the government becomes overly reliant on a single provider, potentially limiting future flexibility and innovation. Effective contract management, rigorous oversight, and clear performance metrics become even more critical in mitigating these risks.

What is the expected program effectiveness given the contract's focus and duration?

The expected program effectiveness hinges on the criticality of the radar interface units to the Department of the Army's mission and the quality of Raytheon's engineering services and hardware. The contract duration of one year suggests a focus on a specific phase of support, maintenance, upgrade, or a defined project. If the services are essential for operational readiness of radar systems, then effective delivery is paramount. The effectiveness will be measured by the contractor's ability to meet the fixed-price level of effort requirements, deliver reliable hardware, and provide timely engineering support without significant delays or technical issues. Success would be indicated by improved radar system performance, reduced downtime, and successful integration of any new hardware or software.

How does this contract's spending compare to historical trends for similar radar interface unit support?

Analyzing historical spending trends for similar radar interface unit support requires access to comprehensive contract databases and specific program information. This $27.3 million contract for a one-year period represents a significant investment. To understand its place in historical trends, one would need to examine: 1) the total lifecycle cost of the radar systems being supported, 2) the frequency and value of previous contracts for similar support (whether sole-source or competed), and 3) the inflation-adjusted costs over time. If similar support previously cost less, or if this contract represents a substantial increase without a clear justification (like enhanced capabilities or inflation), it could indicate a deviation from historical spending patterns. Conversely, if it aligns with or is lower than previous expenditures for comparable services, it might be considered within historical norms.

What are the implications of the 'Computer Systems Design Services' NAICS code for this contract?

The North American Industry Classification System (NAICS) code 541512, 'Computer Systems Design Services,' indicates that the primary focus of this contract is on designing, developing, and integrating computer systems. For radar interface units, this likely involves software development, hardware integration, system architecture, and potentially cybersecurity solutions related to the command and control aspects of the radar. This classification suggests that the contract goes beyond simple hardware provision or basic maintenance, encompassing complex technical solutions. It implies that the contractor needs expertise in software engineering, systems integration, and potentially network design, all tailored to the specific requirements of military radar platforms.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Computer Systems Design and Related Services › Computer Systems Design Services

Product/Service Code: FIRE CONTROL EQPT.

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: FIXED PRICE LEVEL OF EFFORT (B)

Evaluated Preference: NONE

Contractor Details

Parent Company: RTX Corp

Address: 401 JAN DAVIS DR NW, HUNTSVILLE, AL, 35806

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: $29,698,023

Exercised Options: $29,698,023

Current Obligation: $27,276,002

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: W31P4Q20D0019

IDV Type: IDC

Timeline