Raytheon Company awarded $1.6B contract for Ophthalmic Goods Manufacturing, with 6 bidders

Contract Overview

Contract Amount: $16,198,245 ($16.2M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2010-09-30

End Date: 2013-06-30

Contract Duration: 1,004 days

Daily Burn Rate: $16.1K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 6

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: ENVG(O)

Place of Performance

Location: MCKINNEY, COLLIN County, TEXAS, 75071

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $16.2 million to RAYTHEON COMPANY for work described as: ENVG(O) Key points: 1. Contract value of $1.6 billion suggests a significant scale of operations for ophthalmic goods. 2. The presence of 6 bidders indicates a competitive market for this type of defense procurement. 3. A firm fixed-price contract type generally transfers risk to the contractor, potentially stabilizing costs. 4. The contract duration of approximately 3 years (1004 days) allows for sustained production and delivery. 5. The geographic location of Texas (TX) for performance may point to specific manufacturing capabilities or logistics hubs. 6. The NAICS code 339115 covers the manufacturing of medical instruments and supplies, placing this within a specialized industrial sector.

Value Assessment

Rating: good

Benchmarking the value of $1.6 billion for ophthalmic goods manufacturing is challenging without specific product details. However, the scale suggests a substantial requirement by the Department of Defense. The firm fixed-price nature of the award is a positive indicator for cost control, assuming the contractor can manage their expenses effectively within the agreed price. The number of bidders (6) suggests a reasonably competitive environment, which typically leads to better pricing than a sole-source award.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, with six distinct bidders participating. This level of competition is generally favorable as it encourages multiple companies to offer their best pricing and technical solutions to secure the award. The presence of six bidders suggests that the market for these ophthalmic goods is sufficiently robust to support multiple manufacturers and that the solicitation was likely well-publicized and accessible.

Taxpayer Impact: A competitive bidding process with multiple participants helps ensure that taxpayer dollars are used efficiently by driving down prices and encouraging innovation from contractors.

Public Impact

The primary beneficiaries are likely military personnel who require specialized ophthalmic equipment and supplies. The contract delivers essential ophthalmic goods, crucial for vision health and readiness within the armed forces. Performance in Texas (TX) indicates a potential impact on the regional economy and workforce in that state. The manufacturing of these goods supports jobs within the defense industrial base, specifically in the medical supply sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if contractor's fixed-price estimates are inaccurate.
Dependence on a single contractor for a critical supply chain could pose a risk.
Ensuring consistent quality and compliance with military specifications over the contract term.

Positive Signals

Firm fixed-price contract structure shifts cost risk to the contractor.
Full and open competition suggests a healthy market and potential for competitive pricing.
The award to a known entity like Raytheon Company may indicate a track record of performance.

Sector Analysis

The ophthalmic goods manufacturing sector, classified under NAICS code 339115, is a specialized segment of the broader medical device industry. This sector produces a range of products, including eyeglasses, contact lenses, and optical instruments. Federal spending in this area is often driven by the healthcare needs of military personnel and veterans. Comparable spending benchmarks would depend heavily on the specific types and quantities of ophthalmic goods procured, but a $1.6 billion contract indicates a significant, long-term requirement.

Small Business Impact

The provided data indicates that small business participation (sb) was false, and there is no mention of small business set-asides. This suggests that the contract was not specifically targeted towards small businesses. Consequently, the primary contractor, Raytheon Company, would be responsible for any subcontracting efforts. The impact on the small business ecosystem would depend on whether Raytheon actively seeks out small businesses for subcontracting opportunities to fulfill parts of this large contract.

Oversight & Accountability

Oversight for this contract would typically fall under the purview of the Department of Defense's contracting and program management offices, potentially involving the Defense Contract Management Agency (DCMA) given the mention of SA. Accountability measures are inherent in the firm fixed-price contract type, which penalizes the contractor for cost overruns. Transparency is generally maintained through contract award databases, though specific performance details might be sensitive. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Military Medical Supplies
Defense Health Agency Procurement
Medical Equipment Manufacturing
Ophthalmic Services Contracts
Veteran Affairs Medical Contracts

Risk Flags

Potential for quality control issues in specialized manufacturing.
Contractor's specific expertise in ophthalmic goods manufacturing needs verification.
Risk of cost escalation if fixed-price estimates are inaccurate.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $16.2 million to RAYTHEON COMPANY. ENVG(O)

Who is the contractor on this award?

The obligated recipient is RAYTHEON COMPANY.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $16.2 million.

What is the period of performance?

Start: 2010-09-30. End: 2013-06-30.

What is Raytheon Company's track record in manufacturing ophthalmic goods or similar medical supplies for the federal government?

Raytheon Company is primarily known for its extensive work in aerospace and defense, particularly in areas like missiles, radar, and cybersecurity. While they are a large and diversified defense contractor, their direct involvement in the manufacturing of ophthalmic goods is less commonly highlighted. It's possible this contract is handled by a specific division or subsidiary, or that Raytheon is acting as a prime contractor managing specialized manufacturing partners. A deeper dive into their contract history and specific product lines would be needed to fully assess their expertise in this niche medical manufacturing area. Their general experience with large-scale government contracts suggests they have the project management capabilities to oversee such an award, but the specific technical manufacturing expertise for ophthalmic goods would need verification.

How does the $1.6 billion contract value compare to historical federal spending on ophthalmic goods?

The $1.6 billion contract value represents a substantial portion of federal spending on ophthalmic goods. Without access to comprehensive historical spending data specifically for ophthalmic goods manufacturing across all federal agencies, a direct comparison is difficult. However, for a single contract awarded over a period of approximately three years, this figure suggests a significant and sustained demand. Typically, federal spending on medical supplies can fluctuate based on geopolitical events, military readiness requirements, and healthcare policy changes. A contract of this magnitude indicates that the Department of Defense has a critical and ongoing need for these specific ophthalmic products, potentially exceeding typical annual expenditures for this category.

What are the primary risks associated with a firm fixed-price contract of this magnitude for ophthalmic goods?

The primary risk with a firm fixed-price (FFP) contract of this magnitude is that the contractor, Raytheon Company, bears the financial burden if their costs exceed the agreed-upon price. This could lead to reduced profit margins or even losses for the contractor if they miscalculate production expenses, material costs, or labor. For the government, the risk is that the contractor might cut corners on quality or performance to maintain profitability, especially if unforeseen issues arise during manufacturing. Additionally, if the fixed price was set too high due to insufficient competition or inaccurate market data, taxpayers could be overpaying. Ensuring robust quality assurance and performance monitoring by the government is crucial to mitigate these risks.

How effective is full and open competition in ensuring value for money for this type of specialized manufacturing contract?

Full and open competition is generally considered the most effective method for ensuring value for money in federal contracting, including for specialized manufacturing like ophthalmic goods. By allowing all responsible sources to submit bids, the government maximizes the potential for receiving competitive pricing and innovative solutions. The fact that six bidders participated in this contract suggests a healthy competitive landscape, which typically drives down prices and encourages contractors to offer their best terms. This process helps prevent monopolies or oligopolies from dictating prices and ensures that the government procures goods and services at a fair market rate, thereby maximizing the value of taxpayer investment.

What are the potential workforce implications of a $1.6 billion contract for ophthalmic goods manufacturing in Texas?

A contract of this magnitude, if performed in Texas, could have significant positive workforce implications for the state. It would likely lead to the creation or sustainment of numerous jobs in manufacturing, engineering, quality control, logistics, and administrative support roles. The specialized nature of ophthalmic goods manufacturing might require a skilled workforce, potentially boosting demand for technicians and specialized labor. Furthermore, it could stimulate indirect job growth in supporting industries, such as raw material suppliers, equipment maintenance providers, and transportation services. The long-term impact would depend on the duration of the contract and the contractor's commitment to local hiring and training initiatives.

Are there any specific performance metrics or quality standards that are critical for this ophthalmic goods contract?

Given the nature of ophthalmic goods, particularly for military use, critical performance metrics and quality standards would likely revolve around precision, durability, and compliance with stringent military specifications (Mil-Specs). This could include requirements for optical clarity, material biocompatibility (if applicable), resistance to environmental factors (temperature, humidity, shock), and precise adherence to dimensional tolerances. Failure to meet these standards could compromise the effectiveness of the equipment, potentially impacting the vision and readiness of military personnel. Robust quality assurance and testing protocols throughout the manufacturing process would be essential to ensure these standards are consistently met.

Industry Classification

NAICS: Manufacturing › Medical Equipment and Supplies Manufacturing › Ophthalmic Goods Manufacturing

Product/Service Code: COMM/DETECT/COHERENT RADIATION

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: W91CRB09R0089

Offers Received: 6

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 13532 N CENTRAL EXPY, DALLAS, TX, 75243

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

Financial Breakdown

Contract Ceiling: $218,040,428

Exercised Options: $16,198,245

Current Obligation: $16,198,245

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline