Raytheon Company awarded $58.4M for Tube-Launched Optically-Tracked Wireless-Guided Improved Target Acquisition System logistics support

Contract Overview

Contract Amount: $58,366,057 ($58.4M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2022-09-01

End Date: 2027-01-28

Contract Duration: 1,610 days

Daily Burn Rate: $36.3K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: CONTRACT IS FOR THE PROCUREMENT OF CONTRACTOR LOGISTICS SUPPORT FOR THE TUBE-LAUNCHED OPTICALLY-TRACKED WIRELESS-GUIDED IMPROVED TARGET ACQUISITION SYSTEM.

Place of Performance

Location: MCKINNEY, COLLIN County, TEXAS, 75071

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $58.4 million to RAYTHEON COMPANY for work described as: CONTRACT IS FOR THE PROCUREMENT OF CONTRACTOR LOGISTICS SUPPORT FOR THE TUBE-LAUNCHED OPTICALLY-TRACKED WIRELESS-GUIDED IMPROVED TARGET ACQUISITION SYSTEM. Key points: 1. Contract awarded as a sole-source procurement, raising questions about potential price overruns and limited market engagement. 2. The firm-fixed-price structure aims to control costs, but the lack of competition may hinder optimal value realization. 3. Logistics support for a specialized targeting system suggests a critical role in defense operations. 4. The contract duration of over four years indicates a long-term need for these services. 5. Performance will be closely monitored given the sensitive nature of military equipment. 6. The contract falls under Engineering Services, a broad category that requires careful scrutiny of specific deliverables.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging due to its sole-source nature and specialized equipment. Without competitive bids, it's difficult to ascertain if the $58.4 million represents a fair market price. The firm-fixed-price contract type offers some cost control, but the absence of competition limits the government's ability to negotiate the best possible terms. Further analysis would require comparing the scope of logistics support to similar systems or previous contracts for this specific acquisition.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award. This typically occurs when only one vendor possesses the necessary expertise, technology, or security clearance to fulfill the requirement. The lack of competition means that Raytheon Company was the only entity considered for this award, which can limit price discovery and potentially lead to higher costs for the government compared to a fully competed scenario.

Taxpayer Impact: Sole-source awards mean taxpayers may not benefit from the cost savings that can arise from competitive bidding processes, potentially leading to a less efficient use of public funds.

Public Impact

The primary beneficiaries are the Department of the Army, receiving essential logistics support for a critical targeting system. Services delivered include contractor logistics support, ensuring the operational readiness and maintenance of the Tube-Launched Optically-Tracked Wireless-Guided Improved Target Acquisition System. The geographic impact is primarily within Texas, where the contractor is located, but the system's deployment could have national or international implications for military operations. Workforce implications include the employment of personnel by Raytheon Company to provide these specialized logistics services.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially impacting cost-effectiveness.
Lack of competition may reduce transparency in pricing and service delivery.
Specialized nature of the system could create vendor lock-in.
Long contract duration requires sustained oversight to ensure continued value.

Positive Signals

Firm-fixed-price contract type provides cost certainty for the government.
Logistics support ensures operational readiness of critical defense equipment.
Contract awarded to a known entity (Raytheon Company) with established capabilities.

Sector Analysis

This contract falls within the Engineering Services sector, specifically supporting defense-related technology. The market for specialized military logistics and system support is often dominated by a few large defense contractors due to the high barriers to entry, including technical expertise, security clearances, and established relationships with government agencies. Comparable spending benchmarks would likely involve other long-term sustainment contracts for complex weapon systems within the Department of Defense.

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 provided data. The sole-source nature of the award to a large prime contractor like Raytheon Company suggests that the primary focus is on specialized capabilities rather than broad-based small business participation. Further investigation into subcontracting plans would be needed to fully assess the impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Army's contracting and program management offices. Accountability measures would be defined in the contract's terms and conditions, likely including performance metrics and reporting requirements. Transparency may be limited due to the sole-source nature, but contract awards are generally reported in federal procurement databases. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected.

Related Government Programs

Defense Logistics Agency (DLA) Support Contracts
Army Weapon System Sustainment Programs
Advanced Targeting Systems Procurement
Raytheon Company Defense Contracts

Risk Flags

Sole-source award
Lack of competition
Potential for cost overruns due to limited market engagement

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $58.4 million to RAYTHEON COMPANY. CONTRACT IS FOR THE PROCUREMENT OF CONTRACTOR LOGISTICS SUPPORT FOR THE TUBE-LAUNCHED OPTICALLY-TRACKED WIRELESS-GUIDED IMPROVED TARGET ACQUISITION SYSTEM.

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 $58.4 million.

What is the period of performance?

Start: 2022-09-01. End: 2027-01-28.

What is Raytheon Company's track record with similar logistics support contracts for defense systems?

Raytheon Company, now part of RTX, has a long and extensive history of providing logistics support, sustainment, and maintenance services for a wide array of defense systems, including missile systems, aircraft components, and command and control platforms. Their track record typically involves managing complex supply chains, providing technical expertise for repairs and upgrades, and ensuring operational readiness for military equipment. While specific performance metrics for past contracts are often proprietary or not publicly detailed, their continued success in securing large-scale defense contracts suggests a generally positive performance history and established capabilities in meeting stringent military requirements. However, like any large contractor, they may have faced scrutiny or performance issues on specific programs, which would require a deeper dive into individual contract histories and performance evaluations.

How does the $58.4 million contract value compare to similar logistics support contracts for advanced targeting systems?

Directly comparing the $58.4 million value for this specific contract is challenging without more granular data on the scope of 'logistics support' and the exact system being serviced. However, contracts for the sustainment and logistics of advanced military targeting systems can range significantly, from tens of millions to hundreds of millions of dollars over their lifecycle, depending on the system's complexity, quantity, and operational tempo. Given that this is a firm-fixed-price contract for over four years, the annual value is approximately $14.6 million. This figure appears reasonable for specialized, long-term support of advanced technology, but a true benchmark would require comparing it against contracts for similar systems (e.g., other guided missile systems, advanced optics) or previous contracts for this specific system if available, and factoring in the level of service provided (e.g., depot-level maintenance, field support, spare parts management).

What are the primary risks associated with a sole-source award for this type of defense contract?

The primary risks associated with a sole-source award for this defense contract include potential cost inefficiencies, reduced innovation, and a lack of competitive pressure to maintain high service standards. Without competition, the government may pay a premium for the services, as the contractor faces less incentive to offer the most competitive pricing. There's also a risk of vendor lock-in, where the government becomes dependent on a single provider, making it difficult and costly to switch suppliers in the future. Furthermore, the absence of multiple bidders can limit the exploration of alternative solutions or technological advancements that a competitive environment might foster. Ensuring robust oversight and clear performance metrics becomes even more critical to mitigate these risks and ensure value for taxpayer money.

How effective is the firm-fixed-price contract type in managing costs for specialized logistics support?

The firm-fixed-price (FFP) contract type is generally considered effective in managing costs for specialized logistics support because it shifts the majority of the cost risk from the government to the contractor. Under an FFP agreement, the contractor is obligated to complete the work for a predetermined price, regardless of their actual costs. This incentivizes the contractor to be efficient and control their expenses. For specialized logistics, where the scope of work can be clearly defined (e.g., maintenance schedules, repair procedures, parts provisioning), FFP provides cost certainty for the government. However, if the scope is poorly defined or unforeseen technical issues arise, the contractor might face losses, potentially leading to future price increases or contract disputes. The success of FFP also relies on the government's ability to accurately define the requirements upfront.

What are the historical spending patterns for logistics support of the Tube-Launched Optically-Tracked Wireless-Guided Improved Target Acquisition System?

Historical spending data for the Tube-Launched Optically-Tracked Wireless-Guided Improved Target Acquisition System's logistics support is not directly available in the provided data snippet. This contract, awarded in September 2022 with an end date in January 2027, represents a new or ongoing expenditure. To understand historical patterns, one would need to access contract databases (like FPDS or USASpending) and search for previous contracts awarded for the sustainment, maintenance, or logistics of this specific system or its predecessors. Analyzing past awards, including their values, durations, and competition levels, would reveal trends in government spending on this capability and help contextualize the current $58.4 million award.

Industry Classification

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

Product/Service Code: TECHNICAL REPRESENTATIVE SVCS. › TECHNICAL REPRESENTATIVE SERVICES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: W31P4Q22R0004

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: $121,657,538

Exercised Options: $58,366,057

Current Obligation: $58,366,057

Actual Outlays: $3,713,848

Subaward Activity

Number of Subawards: 45

Total Subaward Amount: $14,588,825

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline