DoD Awards Raytheon $120.7M for Saudi IT Systems, Lacking Competition

Contract Overview

Contract Amount: $120,683,768 ($120.7M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2010-12-27

End Date: 2021-09-21

Contract Duration: 3,921 days

Daily Burn Rate: $30.8K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: CONTRACT IS FOR THE FMS PROCURMENT OF 274 ITSS SYSTEMS FOR THE SAUDI ARABIAN NATIONAL GUARD AND 26 ITSS SYSTEMS FOR THE SAUDI ARABIAN MINESTRY OF DEFENSE AND AVIATION. IT INCLUDES OPTION QUANTITIES OF 16 AND 23 RESPECTIVELY.

Place of Performance

Location: MCKINNEY, COLLIN County, TEXAS, 75071

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $120.7 million to RAYTHEON COMPANY for work described as: CONTRACT IS FOR THE FMS PROCURMENT OF 274 ITSS SYSTEMS FOR THE SAUDI ARABIAN NATIONAL GUARD AND 26 ITSS SYSTEMS FOR THE SAUDI ARABIAN MINESTRY OF DEFENSE AND AVIATION. IT INCLUDES OPTION QUANTITIES OF 16 AND 23 RESPECTIVELY. Key points: 1. Significant award to Raytheon for IT systems destined for Saudi Arabian entities. 2. The contract value is substantial at over $120 million. 3. Lack of competition raises questions about price discovery and value. 4. The sector is IT systems within defense procurement.

Value Assessment

Rating: questionable

The contract value of $120.7 million for 300 ITSS systems (plus options) suggests a per-unit cost of approximately $402,279. Without competitive bids, it's difficult to assess if this represents fair market value compared to similar domestic or international procurements.

Cost Per Unit: $402,279

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source or limited competition procurement. This significantly limits price discovery and may lead to higher costs for the government or, in this case, the foreign military sales recipient.

Taxpayer Impact: While this is a Foreign Military Sale, the lack of competition means taxpayer funds potentially allocated for support or oversight may not be optimized, and the recipient nation may be overpaying.

Public Impact

Foreign Military Sale (FMS) of advanced IT systems to key allies. Supports U.S. defense industry and technological export capabilities. Potential for follow-on support and sustainment contracts. Highlights the complexities of international defense procurement and sales.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of Competition
High Per-Unit Cost
Sole-Source Award

Positive Signals

Supports Key Ally
Long-Term Contract Duration

Sector Analysis

This contract falls within the defense sector, specifically IT systems for military applications. Spending benchmarks for such specialized systems can vary widely, but the lack of competition makes direct comparison difficult.

Small Business Impact

The data indicates the prime contractor is Raytheon Company, a large business. There is no information provided regarding subcontracting opportunities for small businesses on this specific award.

Oversight & Accountability

As a Foreign Military Sale, oversight involves both the Department of Defense and the recipient nation. The lack of competition suggests potential gaps in ensuring the best possible value was achieved.

Related Government Programs

Military Armored Vehicle, Tank, and Tank Component Manufacturing
Department of Defense Contracting
Department of the Army Programs

Risk Flags

Lack of competitive bidding
Potentially inflated per-unit cost
Limited transparency in pricing
Sole-source award raises value concerns

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $120.7 million to RAYTHEON COMPANY. CONTRACT IS FOR THE FMS PROCURMENT OF 274 ITSS SYSTEMS FOR THE SAUDI ARABIAN NATIONAL GUARD AND 26 ITSS SYSTEMS FOR THE SAUDI ARABIAN MINESTRY OF DEFENSE AND AVIATION. IT INCLUDES OPTION QUANTITIES OF 16 AND 23 RESPECTIVELY.

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 $120.7 million.

What is the period of performance?

Start: 2010-12-27. End: 2021-09-21.

What is the justification for awarding this contract on a sole-source basis, and what steps were taken to ensure fair pricing?

The justification for a sole-source award typically involves unique capabilities, urgent needs, or lack of viable alternatives. Without specific documentation, it's presumed the Department of Defense or the Saudi Arabian National Guard identified Raytheon as the sole capable provider. However, the absence of competition makes verifying fair pricing challenging, often relying on historical data or cost analysis rather than market-based negotiation.

How does the per-unit cost of these ITSS systems compare to similar systems procured competitively by the U.S. military?

The calculated per-unit cost of approximately $402,279 is high. Without knowing the exact specifications and capabilities of these ITSS systems, a direct comparison is difficult. However, competitive procurements for complex IT systems within the U.S. military often yield lower per-unit costs due to market forces driving efficiency and price reduction.

What is the long-term strategic value of providing these IT systems to the Saudi Arabian National Guard and Ministry of Defense?

Providing these IT systems enhances the operational capabilities and interoperability of key regional security partners, aligning with U.S. foreign policy and security interests. It strengthens alliances, potentially improves regional stability, and fosters closer military-to-military relationships, which can have significant long-term geopolitical and economic benefits.

Industry Classification

NAICS: Manufacturing › Other Transportation Equipment Manufacturing › Military Armored Vehicle, Tank, and Tank Component Manufacturing

Product/Service Code: VEHICULAR EQUIPMENT COMPONENTS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: W56HZV10R0254

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: RTX Corp

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

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $132,589,687

Exercised Options: $120,683,768

Current Obligation: $120,683,768

Actual Outlays: $184,972

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline