Raytheon Company awarded $35.2M for ATNAVICS/FBPAR system support, a sole-source contract

Contract Overview

Contract Amount: $35,222,330 ($35.2M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2021-08-04

End Date: 2026-03-25

Contract Duration: 1,694 days

Daily Burn Rate: $20.8K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: PROVIDE SUPPORT SERVICES TO INCLUDE REPAIR SERVICES FOR THE ATNAVICS/FBPAR LINE REPLACEABLE UNITS SYSTEM RESTORATION (RESET)/REFURBISHMENT AND DEPLOYMENT OF FIELD ENGINEERS TO PERFORM ENGINEERING SERVICES IN SUPPORT OF THE ATNAVICS AND FBPAR SYSTEMS.

Place of Performance

Location: ABERDEEN PROVING GROUND, HARFORD County, MARYLAND, 21005

State: Maryland Government Spending

Plain-Language Summary

Department of Defense obligated $35.2 million to RAYTHEON COMPANY for work described as: PROVIDE SUPPORT SERVICES TO INCLUDE REPAIR SERVICES FOR THE ATNAVICS/FBPAR LINE REPLACEABLE UNITS SYSTEM RESTORATION (RESET)/REFURBISHMENT AND DEPLOYMENT OF FIELD ENGINEERS TO PERFORM ENGINEERING SERVICES IN SUPPORT OF THE ATNAVICS AND FBPAR SYSTEMS. Key points: 1. Contract focuses on repair, refurbishment, and field engineering for critical navigation systems. 2. Sole-source award raises questions about potential price overruns and limited market engagement. 3. Long-term contract duration (over 5 years) suggests a sustained need for these specialized services. 4. Performance is tied to Department of the Army, indicating a defense-centric application. 5. The contract type (Cost Plus Fixed Fee) allows for cost reimbursement plus a fixed fee, which can incentivize cost control but also carries inherent risk. 6. No small business set-aside indicates a focus on large prime contractors for this specialized work.

Value Assessment

Rating: questionable

The contract's value of $35.2 million over approximately five years for specialized repair and field engineering services for ATNAVICS/FBPAR systems appears substantial. Without direct comparable sole-source contracts for these specific systems, it is difficult to benchmark value definitively. However, the sole-source nature of the award suggests a lack of competitive pressure, which could lead to less favorable pricing than if multiple vendors had competed. The Cost Plus Fixed Fee (CPFF) contract type, while common for complex R&D or services where costs are uncertain, can sometimes lead to higher overall costs compared to fixed-price contracts if not managed diligently.

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 specific capability is unique to a single provider, or in situations where urgency or national security dictates a specific contractor. The lack of competition means that taxpayers did not benefit from a bidding process that could have driven down prices through market forces. The government likely justified this sole-source award based on Raytheon's proprietary knowledge or existing role with the ATNAVICS/FBPAR systems.

Taxpayer Impact: The absence of competition means taxpayers may be paying a premium, as there was no opportunity for other companies to offer lower prices or more innovative solutions. This can result in less efficient use of taxpayer funds.

Public Impact

The primary beneficiaries are the Department of the Army, ensuring the operational readiness of critical ATNAVICS and FBPAR systems. Services delivered include repair, refurbishment, and deployment of field engineers for system maintenance and support. The geographic impact is likely concentrated around military installations where these systems are deployed or maintained. Workforce implications include the employment of specialized engineers and technicians by Raytheon Company.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potentially increases costs for taxpayers.
Cost Plus Fixed Fee contract type can lead to cost overruns if not closely monitored.
Long contract duration may reduce flexibility to adapt to changing technological needs or market conditions.
Lack of small business participation may limit opportunities for smaller, specialized firms in this niche.

Positive Signals

Ensures continued support for critical defense navigation systems, maintaining operational readiness.
Leverages Raytheon's specialized expertise and established role with the ATNAVICS/FBPAR systems.
Provides a stable, long-term solution for system maintenance and refurbishment needs.

Sector Analysis

This contract falls within the aerospace and defense sector, specifically focusing on navigation and guidance systems. The market for such specialized systems is often dominated by a few large, established defense contractors due to high R&D costs and stringent security requirements. Comparable spending benchmarks are difficult to establish without more specific details on the ATNAVICS/FBPAR systems, but defense spending on avionics and navigation technology is a significant portion of the overall defense budget.

Small Business Impact

This contract does not appear to have a small business set-aside, nor is there an indication of significant subcontracting opportunities for small businesses. The nature of the specialized repair and engineering services for advanced defense systems often requires large prime contractors with extensive resources and security clearances. This focus on a prime contractor like Raytheon may limit the direct participation of small businesses in this specific contract, although they may be involved further down the supply chain.

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 within the contract's terms and conditions, including performance metrics and reporting requirements. Transparency is limited due to the sole-source nature and the defense classification of the systems involved. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Defense Logistics Agency (DLA) support services
Naval Air Systems Command (NAVAIR) contracts
Air Force Materiel Command (AFMC) support
Army Aviation and Missile Command (AMCOM) services

Risk Flags

Sole-source award
Cost-plus contract type
Long contract duration
Lack of competition

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $35.2 million to RAYTHEON COMPANY. PROVIDE SUPPORT SERVICES TO INCLUDE REPAIR SERVICES FOR THE ATNAVICS/FBPAR LINE REPLACEABLE UNITS SYSTEM RESTORATION (RESET)/REFURBISHMENT AND DEPLOYMENT OF FIELD ENGINEERS TO PERFORM ENGINEERING SERVICES IN SUPPORT OF THE ATNAVICS AND FBPAR 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 $35.2 million.

What is the period of performance?

Start: 2021-08-04. End: 2026-03-25.

What is the specific technical capability or proprietary knowledge that necessitates a sole-source award to Raytheon Company for the ATNAVICS/FBPAR systems?

Sole-source awards are typically justified when a product or service is unique and only available from one responsible source. For the ATNAVICS/FBPAR systems, this likely stems from Raytheon's original design, development, and manufacturing role, granting them unique expertise in repair, refurbishment, and field engineering. This proprietary knowledge, including access to specialized tooling, diagnostic equipment, technical data packages, and trained personnel, is often not transferable or replicable by other firms without significant investment and time. The government's justification would detail the specific technical reasons why only Raytheon can provide these essential services to maintain system readiness and performance, often citing national security interests or the prohibitive cost and time required to qualify an alternative source.

How does the Cost Plus Fixed Fee (CPFF) contract structure influence cost control and potential overruns for this $35.2 million award?

The Cost Plus Fixed Fee (CPFF) contract structure reimburses the contractor for allowable costs incurred plus a predetermined fixed fee representing profit. While the fixed fee provides an incentive for the contractor to control costs (as their profit is capped), the government bears the risk of cost overruns if actual costs exceed estimates. This structure is often used when the scope of work is not precisely defined or involves uncertainties, such as complex repair and refurbishment. Effective oversight by the government is crucial to scrutinize incurred costs, ensure they are reasonable and allocable, and manage the overall project to prevent excessive spending. Without robust government oversight, CPFF contracts can be susceptible to cost growth beyond initial projections.

What are the key performance indicators (KPIs) or metrics used to evaluate Raytheon's performance under this contract?

Key performance indicators (KPIs) for this contract would likely focus on ensuring the operational readiness and reliability of the ATNAVICS/FBPAR systems. Specific metrics could include turnaround time for repairs and refurbishment, the success rate of system restoration (e.g., mean time between failures post-repair), the availability and responsiveness of field engineers, adherence to technical specifications and quality standards, and timely delivery of services. Performance would also be assessed against the contract's schedule and budget. The Department of the Army would monitor these KPIs through regular reporting, site visits, and potentially formal performance reviews to ensure Raytheon is meeting its contractual obligations effectively and efficiently.

What is the historical spending trend for ATNAVICS/FBPAR system support, and how does this $35.2 million award compare?

Without access to specific historical contract data for ATNAVICS/FBPAR systems, a direct comparison is challenging. However, the award of $35.2 million over approximately 5.7 years (August 2021 to March 2026) suggests an average annual spending of roughly $6.2 million. This figure represents a significant investment in maintaining these specialized systems. If previous contracts for similar support were also sole-source and of comparable duration, this award might align with historical spending patterns. Conversely, if previous support was competitively procured or involved fewer services, this award could represent an increase in cost or scope. Further analysis would require examining prior contract actions for these systems to identify trends in cost, duration, and competition.

What are the potential risks associated with the long duration (over 5 years) of this contract?

The long duration of this contract, spanning from August 2021 to March 2026 (approximately 1694 days or 5.7 years), presents several potential risks. Firstly, technological obsolescence is a concern; the ATNAVICS/FBPAR systems might evolve, or newer technologies could emerge, making the current support less relevant or efficient over time. Secondly, market conditions and contractor capabilities can change, potentially leading to less favorable pricing or service delivery in later years compared to what might be achievable if the contract were re-competed. Thirdly, long-term sole-source contracts can reduce the government's agility to adapt to changing requirements or to leverage new innovations from the market. Finally, sustained reliance on a single contractor for an extended period can sometimes lead to complacency or a decrease in competitive drive.

Industry Classification

NAICS: Manufacturing › Navigational, Measuring, Electromedical, and Control Instruments Manufacturing › Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing

Product/Service Code: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: RTX Corp

Address: 350 LOWELL ST, ANDOVER, MA, 01810

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: $35,222,330

Exercised Options: $35,222,330

Current Obligation: $35,222,330

Actual Outlays: $9,867,827

Subaward Activity

Number of Subawards: 7

Total Subaward Amount: $889,244

Contract Characteristics

Consolidated Contract: Yes

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: SPRBL115D0017

IDV Type: IDC

Timeline