Raytheon Company awarded $118M for Common Sensor Payload V3 Systems by the Department of the Army

Contract Overview

Contract Amount: $118,325,430 ($118.3M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2023-06-20

End Date: 2027-03-14

Contract Duration: 1,363 days

Daily Burn Rate: $86.8K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: PROCUREMENT OF COMMON SENSOR PAYLOAD V3 SYSTEMS, UNDEFINITIZED CONTRACT ACTION

Place of Performance

Location: MCKINNEY, COLLIN County, TEXAS, 75071

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $118.3 million to RAYTHEON COMPANY for work described as: PROCUREMENT OF COMMON SENSOR PAYLOAD V3 SYSTEMS, UNDEFINITIZED CONTRACT ACTION Key points: 1. Contract awarded to a single, established defense contractor, suggesting potential for limited competition. 2. The contract type is Firm Fixed Price, which shifts cost risk to the contractor. 3. The contract duration is over three years, indicating a significant, long-term need. 4. The North American Industry Classification System (NAICS) code 334511 points to a specialized manufacturing sector. 5. The contract is an Undefinitized Contract Action (UCA), which may indicate urgency or initial uncertainty in scope. 6. The award is a Delivery Order, suggesting it's part of a larger contract vehicle.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without more detailed cost breakdowns or comparisons to similar sensor payload procurements. The firm fixed price structure is a positive indicator for cost control, but the initial award as an Undefinitized Contract Action (UCA) suggests that final pricing may not yet be fully established or negotiated. Further analysis would be needed to compare the unit costs against industry standards for comparable sensor systems.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded as a sole-source procurement, meaning it was not competed among multiple vendors. This approach is typically used when a specific contractor possesses unique capabilities, proprietary technology, or when there is an urgent need that precludes a full and open competition. The lack of competition means that price discovery through market forces was limited, potentially leading to higher costs than if multiple bids were solicited.

Taxpayer Impact: Taxpayers may face higher costs due to the absence of competitive bidding, as the government did not benefit from price reductions that often result from a competitive process.

Public Impact

The primary beneficiaries are the Department of the Army, which will receive advanced sensor systems. The contract will deliver Common Sensor Payload V3 Systems, crucial for intelligence, surveillance, and reconnaissance (ISR) operations. The contract is being performed in Texas, indicating a geographic focus for this procurement. The award supports jobs within the defense manufacturing sector, specifically at Raytheon Company.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The sole-source nature of the award limits competitive pressure, potentially impacting cost-effectiveness.
The use of an Undefinitized Contract Action (UCA) introduces initial uncertainty regarding the final scope and cost.
Lack of transparency in the justification for sole-source award.
Potential for cost overruns if the scope of the UCA is not well-defined.
Limited opportunities for small businesses to participate directly in this prime contract.

Positive Signals

Firm Fixed Price contract type shifts cost risk to the contractor.
Award to an established contractor with a track record in defense systems.
Long-term contract duration suggests a sustained capability requirement.
Delivery Order structure implies it may be part of a broader strategic acquisition.
The sensor payload systems are critical for national security operations.

Sector Analysis

The defense electronics manufacturing sector is characterized by high R&D investment, long product development cycles, and significant government procurement. Companies like Raytheon are key players, often holding sole-source positions for specialized systems due to proprietary technology or extensive development history. The market for sensor payloads is driven by evolving military requirements for advanced intelligence, surveillance, and reconnaissance (ISR) capabilities. Comparable spending benchmarks are difficult to ascertain without specific system details, but large-scale sensor system procurements can range from tens to hundreds of millions of dollars.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by the 'sb' field being false. Furthermore, the 'ss' field is also false, suggesting no specific small business subcontracting goals were mandated at the time of this award. This means that opportunities for small businesses to participate as subcontractors may be limited and dependent on the prime contractor's discretion. The overall impact on the small business ecosystem for this specific contract is likely minimal unless Raytheon proactively engages small businesses.

Oversight & Accountability

Oversight for this contract will primarily fall under the Department of the Army's contracting and program management offices. As a sole-source award, the justification and negotiation process would be subject to review. The use of an Undefinitized Contract Action (UCA) typically involves a phased approach to definitization, requiring close monitoring of cost and scope. Transparency may be limited due to the sole-source nature, but contract modifications and performance reports would be available through federal procurement databases. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Intelligence, Surveillance, and Reconnaissance (ISR) Systems
Advanced Sensor Technology Procurement
Department of Defense Weapon Systems Acquisition
Tactical Sensor Systems
Aerospace and Defense Manufacturing

Risk Flags

Sole-source award
Undefinitized Contract Action (UCA)
Lack of competition
Potential for cost growth

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $118.3 million to RAYTHEON COMPANY. PROCUREMENT OF COMMON SENSOR PAYLOAD V3 SYSTEMS, UNDEFINITIZED CONTRACT ACTION

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 $118.3 million.

What is the period of performance?

Start: 2023-06-20. End: 2027-03-14.

What is the specific justification for awarding this contract on a sole-source basis?

The provided data indicates the contract was 'NOT COMPETED'. Typically, sole-source awards are justified under specific circumstances outlined in federal acquisition regulations, such as the existence of only one responsible source capable of providing the required supplies or services, or when urgency precludes a competitive process. For this specific contract, the justification would likely stem from Raytheon's unique technological capabilities, proprietary designs for the Common Sensor Payload V3, or a critical and immediate need that could not be met through a lengthy competitive solicitation. Without access to the official Justification for Other Than Full and Open Competition (JOFOC) document, the precise reasoning remains speculative but is rooted in the unique nature of advanced defense systems.

How does the Undefinitized Contract Action (UCA) status impact the contract's cost and timeline?

An Undefinitized Contract Action (UCA) allows the government to order supplies or services before a final contract price and terms are negotiated. This means the initial $118,325,430 is an estimated cost ceiling. The UCA status introduces risk as the final definitized price could be higher or lower than the initial estimate. The 'dur' field indicates a duration of 1363 days (approximately 3.7 years), and the 'ed' date is March 14, 2027. The definitization process requires the contractor to submit a proposal for the final price, which is then negotiated by the government. This process can extend the administrative timeline and potentially lead to price adjustments. The government aims to definitize UCAs within 180 days, but delays are common, especially for complex systems.

What is the typical performance period and cost for similar Common Sensor Payload systems?

Information on the specific performance period and cost for 'Common Sensor Payload V3 Systems' is not publicly available without detailed system specifications and comparative contract data. However, sensor payloads for military applications are complex, high-technology components. Their development and procurement cycles are often lengthy and expensive due to the advanced research, engineering, and testing involved. Contracts for such systems can range significantly in value, from tens of millions to hundreds of millions of dollars, depending on the system's capabilities, quantity, and technological sophistication. The three-year performance period (from June 2023 to March 2027) is consistent with the deployment of advanced military hardware, allowing for production, integration, and initial operational testing.

What is Raytheon Company's track record with the Department of Defense for similar sensor systems?

Raytheon Company, now part of RTX, has a long and extensive track record as a major defense contractor for the Department of Defense (DoD). They are a leading provider of advanced sensor systems, including radar, electro-optical/infrared (EO/IR) systems, and other intelligence, surveillance, and reconnaissance (ISR) payloads for various military platforms. Their history with the DoD includes numerous large-scale contracts for developing, producing, and integrating complex sensor technologies. Given their established position and expertise in this domain, it is highly probable that they possess the necessary technical qualifications, manufacturing capabilities, and past performance data that would support a sole-source award for critical sensor systems like the Common Sensor Payload V3.

What are the potential risks associated with this contract for the Department of the Army?

The primary risks associated with this contract include: 1) Cost Risk: As a sole-source UCA, there's a risk that the final negotiated price could exceed initial estimates or what might have been achieved through competition. 2) Schedule Risk: Delays in the definitization process or unforeseen technical challenges could impact the delivery timeline. 3) Performance Risk: While Raytheon has a strong track record, ensuring the V3 system meets all specified performance requirements throughout its lifecycle is crucial. 4) Technological Obsolescence: The rapid pace of technological advancement means that even new systems can face obsolescence challenges over their operational life. 5) Contractor Dependency: Reliance on a single source can create long-term dependency and limit future flexibility.

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: FIRE CONTROL EQPT.

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

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: $118,325,430

Exercised Options: $118,325,430

Current Obligation: $118,325,430

Subaward Activity

Number of Subawards: 84

Total Subaward Amount: $26,318,319

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: W56KGY19D0005

IDV Type: IDC

Timeline