DoD Awards $831M IDIQ to Raytheon for Sentinel Manpads, Lacking Competition

Contract Overview

Contract Amount: $8,309,613 ($8.3M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2021-12-28

End Date: 2026-06-30

Contract Duration: 1,645 days

Daily Burn Rate: $5.1K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: TO TO BASE IDIQ FOR SENTINEL MANPANDS.

Place of Performance

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

State: Maryland Government Spending

Plain-Language Summary

Department of Defense obligated $8.3 million to RAYTHEON COMPANY for work described as: TO TO BASE IDIQ FOR SENTINEL MANPANDS. Key points: 1. Significant contract value for critical defense equipment. 2. Sole-source award raises concerns about price discovery and potential overspending. 3. Lack of competition limits opportunities for other manufacturers and innovation. 4. Focus on a single prime contractor for a key weapon system.

Value Assessment

Rating: questionable

The contract type is Cost Plus Fixed Fee, which can incentivize contractors to increase costs to maximize their fee. Without competitive bidding, it's difficult to assess if the pricing is reasonable compared to market rates for similar man-portable air-defense systems.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This is a sole-source award, meaning it was not competed. This significantly limits price discovery and may lead to higher costs for taxpayers as there is no market pressure to offer the best price.

Taxpayer Impact: The lack of competition for this critical defense system likely results in higher costs for taxpayers than if it had been competitively procured.

Public Impact

Ensures continued supply of a vital air defense weapon system. Potential for increased costs due to sole-source nature. Limited transparency on pricing mechanisms without competitive benchmarks. Impacts readiness if alternative suppliers are not developed. Raytheon Company is the sole provider under this contract.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award
Cost-plus contract type
Long contract duration
No small business participation noted

Positive Signals

Provides critical defense capability
Ensures supply chain for Sentinel system

Sector Analysis

This contract falls within the Defense sector, specifically for the manufacturing of search, detection, and navigation systems. Spending in this area is critical for national security, but often involves high-value, specialized procurements.

Small Business Impact

There is no indication of small business participation in this contract. Sole-source awards often bypass opportunities for small businesses to compete for subcontracts or prime contracts.

Oversight & Accountability

The sole-source nature of this award warrants close oversight to ensure costs are managed effectively and that the government is receiving fair value. Future procurements should explore competitive options.

Related Government Programs

Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing
Department of Defense Contracting
Department of the Army Programs

Risk Flags

Sole-source award limits competition and price discovery.
Cost Plus Fixed Fee contract type can lead to cost overruns.
Potential for reduced innovation due to lack of competitive pressure.
Long contract duration increases exposure to cost increases.
No small business participation identified.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $8.3 million to RAYTHEON COMPANY. TO TO BASE IDIQ FOR SENTINEL MANPANDS.

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 $8.3 million.

What is the period of performance?

Start: 2021-12-28. End: 2026-06-30.

What is the justification for awarding this contract sole-source, and what steps are being taken to ensure fair pricing?

The justification for a sole-source award typically involves unique capabilities or urgent needs. However, for a system like Sentinel, it's crucial to understand the specific rationale. Robust cost analysis and negotiation by the Department of Defense are essential to mitigate the risks associated with non-competitive pricing and ensure taxpayer funds are used efficiently.

What are the long-term risks associated with relying on a single supplier for such a critical defense system?

Long-term risks include potential supply chain disruptions if the sole supplier faces issues, lack of innovation due to absent competition, and continued susceptibility to higher pricing. Dependence on one provider can also reduce strategic flexibility and bargaining power for the government in future negotiations or sustainment efforts.

How does the Cost Plus Fixed Fee structure impact the overall value and effectiveness of this contract?

A Cost Plus Fixed Fee (CPFF) contract provides the contractor with reimbursement for allowable costs plus a fixed fee. While it can be used when cost uncertainty is high, it may incentivize cost overruns as the fee is a percentage of the costs. This structure requires diligent oversight to ensure costs remain reasonable and the fixed fee provides adequate profit without excessive taxpayer burden.

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: IT AND TELECOM - SECURITY AND COMPLIANCE

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: 6260 GUARDIAN GATEWAY, ABERDEEN PROVING GROUND, MD, 21005

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: $8,309,613

Exercised Options: $8,309,613

Current Obligation: $8,309,613

Subaward Activity

Number of Subawards: 2

Total Subaward Amount: $291,636

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: W56JSR17D0018

IDV Type: IDC

Timeline