Raytheon Company awarded $32.1M for 78 modified target acquisition systems, with an option for 37 more

Contract Overview

Contract Amount: $32,099,452 ($32.1M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2011-06-24

End Date: 2013-05-31

Contract Duration: 707 days

Daily Burn Rate: $45.4K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: FMS CASE FOR 78 MODIFIED IMPROVED TARGET ACQUISITION SYSTEMS WITH A OPITON TO PROCURE AN ADDITIONAL 37 SYSTEMS.

Place of Performance

Location: MCKINNEY, COLLIN County, TEXAS, 75071

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $32.1 million to RAYTHEON COMPANY for work described as: FMS CASE FOR 78 MODIFIED IMPROVED TARGET ACQUISITION SYSTEMS WITH A OPITON TO PROCURE AN ADDITIONAL 37 SYSTEMS. Key points: 1. The contract value of $32.1 million for 78 systems suggests a per-unit cost of approximately $411,500. 2. This acquisition is for modified Improved Target Acquisition Systems, indicating a need for upgraded capabilities. 3. The sole-source nature of this award warrants scrutiny regarding potential cost efficiencies and market alternatives. 4. The contract duration of 707 days (approx. 23 months) provides a reasonable timeframe for delivery and integration. 5. The award was made to Raytheon Company, a major defense contractor with a significant presence in the sector. 6. The contract type is Firm Fixed Price, which shifts cost risk to the contractor. 7. The systems are intended for the Department of the Army, highlighting a specific military application.

Value Assessment

Rating: fair

The per-unit cost of approximately $411,500 for these modified target acquisition systems appears to be within a reasonable range for specialized military hardware, though direct comparisons are difficult without more specific system details. The firm fixed-price contract structure helps control costs for the government. However, the lack of competition prevents a robust benchmark against market alternatives or other potential suppliers, making a definitive value-for-money assessment challenging.

Cost Per Unit: Approximately $411,500 per unit (based on 78 systems).

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 only one vendor can provide the required goods or services, often due to proprietary technology, unique capabilities, or urgent needs. The lack of competition means the government did not benefit from a bidding process that could drive down prices or foster innovation through alternative solutions.

Taxpayer Impact: For taxpayers, a sole-source award means there is a reduced opportunity to secure the best possible price through competitive bidding, potentially leading to higher overall expenditure for these systems.

Public Impact

The primary beneficiaries are the U.S. Army personnel who will utilize these improved target acquisition systems for enhanced battlefield awareness and targeting. The services delivered include the modification and procurement of advanced military hardware essential for modern warfare. The geographic impact is primarily within military operational theaters where the Army deploys these systems. Workforce implications include potential employment opportunities at Raytheon Company and its subcontractors involved in the manufacturing and modification processes.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to higher prices than a competed contract.
Sole-source awards can limit opportunities for emerging or smaller businesses to enter the defense market.
Reliance on a single supplier could create long-term dependency and potential supply chain vulnerabilities.

Positive Signals

Firm Fixed Price contract type provides cost certainty for the government.
Award to an established contractor like Raytheon suggests a higher likelihood of successful delivery and performance.
Modification of existing systems may leverage existing infrastructure and reduce development time compared to entirely new systems.

Sector Analysis

The defense sector, specifically within military hardware manufacturing, is characterized by high technological sophistication and significant government investment. Contracts for advanced targeting systems are crucial for maintaining military superiority. The market is often dominated by a few large, established defense contractors like Raytheon. Spending benchmarks for similar specialized military equipment can vary widely based on technological complexity and quantity, but this contract falls within the typical range for such acquisitions.

Small Business Impact

This contract was not competed and there is no indication of small business set-asides or subcontracting plans. As a sole-source award to a large prime contractor, it is unlikely to directly benefit small businesses through set-aside provisions. However, Raytheon may engage small businesses as subcontractors, but this is not explicitly detailed in the award information. The absence of a competitive process limits the visibility into potential subcontracting opportunities for the broader small business ecosystem.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Army's contracting and program management offices. As a Department of Defense contract, it is also subject to oversight by the Department of Defense Inspector General. Transparency is generally maintained through contract award databases and reporting requirements, though specific details of performance and cost management are often internal to the agency and contractor.

Related Government Programs

Military Armored Vehicle, Tank, and Tank Component Manufacturing
Target Acquisition Systems
Defense Procurement
Raytheon Company Contracts

Risk Flags

Sole-source award limits price competition.
Lack of detailed modification information.
Potential for vendor lock-in.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $32.1 million to RAYTHEON COMPANY. FMS CASE FOR 78 MODIFIED IMPROVED TARGET ACQUISITION SYSTEMS WITH A OPITON TO PROCURE AN ADDITIONAL 37 SYSTEMS.

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 $32.1 million.

What is the period of performance?

Start: 2011-06-24. End: 2013-05-31.

What is the historical spending pattern for similar target acquisition systems by the Department of the Army?

Analyzing historical spending for similar target acquisition systems by the Department of the Army requires access to detailed procurement databases. However, general trends indicate consistent investment in advanced targeting capabilities to maintain battlefield superiority. Spending can fluctuate based on evolving threats, technological advancements, and budgetary allocations. Contracts for such systems often involve significant R&D and customization, leading to high per-unit costs. Without specific historical data points for comparable systems, it's challenging to provide precise figures, but the $32.1 million award for 78 units suggests a substantial, yet not unprecedented, investment in this critical technology area.

What specific modifications are included in the 'modified Improved Target Acquisition Systems'?

The provided data does not specify the exact nature of the modifications to the 'Improved Target Acquisition Systems.' Typically, modifications in defense procurement aim to enhance performance, integrate new technologies, improve reliability, reduce maintenance, or adapt systems to new operational requirements. These could range from software upgrades and sensor enhancements to physical component changes or integration with new platforms. A detailed understanding of these modifications would require reviewing the contract's statement of work or technical specifications, which are not publicly available in this summary.

What is Raytheon Company's track record with similar defense systems?

Raytheon Company, now part of RTX, has a long and extensive track record in developing and manufacturing advanced defense systems, including targeting, sensing, and command and control technologies. They are a major prime contractor for the U.S. military and allied nations, with numerous successful programs across various domains. Their experience with complex electronic warfare, radar systems, and integrated defense solutions suggests a strong capability to deliver on contracts for sophisticated equipment like target acquisition systems. Past performance on similar contracts would be a key factor in the government's decision-making, even in a sole-source scenario.

What are the potential risks associated with a sole-source award for these systems?

The primary risk of a sole-source award is the potential for inflated pricing due to the absence of competitive pressure. Without competing bids, the government may not achieve the most cost-effective outcome. Additionally, sole-source contracts can limit innovation by excluding alternative solutions or technologies that other vendors might offer. There's also a risk of vendor lock-in, where the government becomes dependent on a single supplier, potentially leading to challenges in future procurements or sustainment if the supplier's pricing or performance changes unfavorably.

How does the 'option to procure an additional 37 systems' impact the overall value and risk?

The option to procure an additional 37 systems provides the government with flexibility to scale its acquisition based on evolving needs or budget availability. If exercised, this option would increase the total contract value significantly. The terms for these additional systems, including pricing, are typically negotiated at the time of the initial award. Exercising the option can offer a degree of cost savings compared to a separate, new procurement process, but it also commits further government funds. The risk lies in potentially over-committing resources if the need for the additional systems diminishes or if better alternatives emerge later.

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: W56HZV10R0485

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 2501 W UNIVERSITY DR, MCKINNEY, TX, 03

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

Financial Breakdown

Contract Ceiling: $32,099,452

Exercised Options: $32,099,452

Current Obligation: $32,099,452

Contract Characteristics

Cost or Pricing Data: NO

Timeline