Raytheon Company awarded $607M contract for JPSS Common Ground System, absorbing prior NASA contract

Contract Overview

Contract Amount: $607,132,123 ($607.1M)

Contractor: Raytheon Company

Awarding Agency: Department of Commerce

Start Date: 2010-09-22

End Date: 2024-01-31

Contract Duration: 4,879 days

Daily Burn Rate: $124.4K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS AWARD FEE

Sector: Other

Official Description: IGF::OT::IGF ENGINEERING SERVICES AND DEVELOPMENT LEADING TO THE DELIVERY OF THE JPSS COMMON GROUND SYSTEM INSTRUMENT AND SUPPORT. THIS CONTRACT ACTION ABSORBS NASA'S CONTRACT ACTION NNG10XA03C.

Place of Performance

Location: AURORA, ARAPAHOE County, COLORADO, 80011

State: Colorado Government Spending

Plain-Language Summary

Department of Commerce obligated $607.1 million to RAYTHEON COMPANY for work described as: IGF::OT::IGF ENGINEERING SERVICES AND DEVELOPMENT LEADING TO THE DELIVERY OF THE JPSS COMMON GROUND SYSTEM INSTRUMENT AND SUPPORT. THIS CONTRACT ACTION ABSORBS NASA'S CONTRACT ACTION NNG10XA03C. Key points: 1. Contract value of $607M over its lifecycle suggests significant investment in critical infrastructure. 2. Sole-source award raises questions about competition and potential for price optimization. 3. Long contract duration (2010-2024) indicates a sustained need for these services. 4. The contract's focus on telecommunications and ground systems highlights its foundational role in data acquisition. 5. Absorption of a previous NASA contract suggests consolidation and potential efficiencies. 6. The 'Cost Plus Award Fee' structure incentivizes performance but requires careful oversight to manage costs.

Value Assessment

Rating: fair

The total contract value of $607 million is substantial, reflecting the complexity and long-term nature of the JPSS Common Ground System. Benchmarking this against similar large-scale telecommunications and satellite ground system contracts is challenging without more specific service details. However, the 'Cost Plus Award Fee' (CPAF) pricing structure, while common for complex R&D and system development, can lead to higher costs if not managed rigorously. The absorption of a prior NASA contract (NNG10XA03C) suggests a potential for cost savings through consolidation, but the overall value-for-money depends heavily on the achieved performance metrics and the final cost compared to initial estimates.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning there was no open competition. This approach is typically justified when a specific contractor possesses unique capabilities, intellectual property, or when urgency dictates a rapid award. However, the lack of competition limits the government's ability to explore alternative solutions or leverage market forces to achieve the lowest possible price. The government must have determined that Raytheon Company was the only responsible source capable of meeting the requirements.

Taxpayer Impact: For taxpayers, a sole-source award means foregoing the potential cost savings that can arise from a competitive bidding process. While justifications for sole-source awards exist, they necessitate robust oversight to ensure fair pricing and prevent cost overruns.

Public Impact

The primary beneficiaries are the National Oceanic and Atmospheric Administration (NOAA) and its operational divisions, which rely on the JPSS Common Ground System for critical weather and climate data. The contract delivers essential services for the acquisition, processing, and dissemination of environmental data from the Joint Polar Satellite System (JPSS). Geographic impact is national, supporting weather forecasting and climate monitoring across the United States. Workforce implications include employment opportunities for engineers, technicians, and support staff within Raytheon Company and its subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price discovery and potential savings.
Cost Plus Award Fee (CPAF) structure requires diligent oversight to control costs.
Long contract duration may increase risk of scope creep or evolving requirements not being optimally addressed.
Absorption of prior contract could mask underlying cost inefficiencies if not thoroughly integrated.

Positive Signals

Contract supports critical national infrastructure for weather and climate monitoring.
Long-term nature indicates sustained government need and potential for stable workload.
Award to a large, established contractor like Raytheon suggests access to significant technical expertise.
Consolidation of previous contracts may lead to streamlined operations.

Sector Analysis

This contract falls within the Telecommunications and Information Technology sector, specifically focusing on ground systems for satellite operations. The market for such specialized services is often dominated by a few large defense and aerospace contractors capable of handling the complexity and scale. The JPSS Common Ground System is a vital component of the national weather and climate infrastructure, representing a significant investment in ensuring the continuity and reliability of satellite data. Comparable spending benchmarks would likely be found in other large-scale satellite ground segment procurements or major IT infrastructure projects for government agencies.

Small Business Impact

The data indicates this contract was not set aside for small businesses (ss: false, sb: false). As a large, sole-source award to Raytheon Company, it is unlikely to involve significant direct subcontracting opportunities for small businesses unless Raytheon voluntarily includes them in its supply chain. The primary impact on the small business ecosystem would be indirect, through the overall health of the aerospace and defense contracting market. There is no explicit indication of small business subcontracting goals or performance.

Oversight & Accountability

Oversight for this contract would primarily reside with the National Oceanic and Atmospheric Administration (NOAA) contracting officers and program managers. As a Cost Plus Award Fee (CPAF) contract, performance metrics and cost controls are critical areas of oversight. Transparency is facilitated through contract awards databases, but detailed performance reports and cost breakdowns are typically internal. Inspector General jurisdiction would apply to investigations of fraud, waste, or abuse related to the contract.

Related Government Programs

JPSS Program
NOAA Satellite Operations
NASA Satellite Ground Systems
National Weather Service Systems
Environmental Satellite Data Processing

Risk Flags

Sole-source award
Cost-plus contract type
Long contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Commerce awarded $607.1 million to RAYTHEON COMPANY. IGF::OT::IGF ENGINEERING SERVICES AND DEVELOPMENT LEADING TO THE DELIVERY OF THE JPSS COMMON GROUND SYSTEM INSTRUMENT AND SUPPORT. THIS CONTRACT ACTION ABSORBS NASA'S CONTRACT ACTION NNG10XA03C.

Who is the contractor on this award?

The obligated recipient is RAYTHEON COMPANY.

Which agency awarded this contract?

Awarding agency: Department of Commerce (National Oceanic and Atmospheric Administration).

What is the total obligated amount?

The obligated amount is $607.1 million.

What is the period of performance?

Start: 2010-09-22. End: 2024-01-31.

What is the specific performance history of Raytheon Company on this contract, particularly concerning award fee criteria?

Detailed performance history and specific award fee determinations for Raytheon Company on this contract are not publicly available in the provided data. As a Cost Plus Award Fee (CPAF) contract, performance is evaluated against pre-defined criteria, and award fees are granted based on the level of achievement. Raytheon's ability to consistently meet or exceed these criteria would influence the final cost of the contract. Without access to NOAA's internal performance reviews and award fee decisions, a precise assessment of their track record on this specific contract is not possible. However, Raytheon's general reputation as a major defense contractor suggests a capacity for complex system development, but specific contract performance is always subject to detailed oversight.

How does the final cost of $607 million compare to the initial estimated cost or budget for the JPSS Common Ground System?

The provided data indicates a total obligated amount (a) of $607,132,122.75 for this contract. However, this figure represents the total value awarded or obligated over the contract's lifespan, not necessarily the initial estimated cost or budget. Without access to the original contract solicitation, baseline estimates, or subsequent contract modifications and funding actions, it is impossible to determine if the final cost represents an increase or decrease relative to initial projections. The 'Cost Plus Award Fee' (CPAF) structure inherently allows for costs to fluctuate based on performance and incurred expenses, making direct comparison to a fixed initial estimate difficult without comprehensive contract history.

What are the key risks associated with the long duration (2010-2024) of this contract, and how are they being managed?

The extended duration of this contract presents several risks, including technological obsolescence, evolving user requirements, and potential cost overruns due to prolonged management. Technology developed early in the contract lifecycle may become outdated by the end, requiring costly upgrades or workarounds. User needs for weather and climate data can change over more than a decade, potentially leading to scope creep or the system not fully meeting current requirements. Managing these risks typically involves robust contract change management processes, regular reviews of technological advancements, and proactive engagement with stakeholders to adapt requirements. The 'Cost Plus Award Fee' structure, while flexible, also requires diligent oversight to ensure costs remain aligned with value delivered over such a long period.

What specific services does the JPSS Common Ground System Instrument and Support entail, beyond general telecommunications?

The contract description, 'IGF ENGINEERING SERVICES AND DEVELOPMENT LEADING TO THE DELIVERY OF THE JPSS COMMON GROUND SYSTEM INSTRUMENT AND SUPPORT,' suggests a broad scope. Beyond general telecommunications, this likely includes the design, development, integration, testing, and sustainment of the ground-based infrastructure necessary to receive, process, calibrate, archive, and distribute data from the Joint Polar Satellite System (JPSS) satellites. This encompasses software development, hardware procurement and integration, network infrastructure, data storage solutions, command and control capabilities for the satellites, and user interfaces for accessing the data. The 'Instrument and Support' aspect implies not only the initial delivery but also ongoing maintenance and operational support throughout the system's lifecycle.

How does the absorption of NASA's contract NNG10XA03C into this Raytheon contract impact overall program efficiency and cost?

The absorption of NASA's contract NNG10XA03C into Raytheon's contract suggests a consolidation effort aimed at streamlining operations and potentially achieving cost efficiencies. By bringing related work under a single contract vehicle and contractor, the Department of Commerce (via NOAA) may be reducing administrative overhead, eliminating redundant efforts, and leveraging Raytheon's established infrastructure and expertise. This consolidation could lead to better integration between different system components and a more unified approach to development and support. However, the actual impact on efficiency and cost depends on the effectiveness of the integration process and whether the consolidated contract truly eliminates duplication without introducing new complexities or higher overheads.

Industry Classification

NAICS: Information › Other Telecommunications › All Other Telecommunications

Product/Service Code: IT AND TELECOM - INFORMATION TECHNOLOGY AND TELECOMMUNICATIONS › ADP AND TELECOMMUNICATIONS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS AWARD FEE (R)

Evaluated Preference: NONE

Contractor Details

Parent Company: RTX Corp

Address: 16800 E CENTRETECH PKWY, AURORA, CO, 80011

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: $2,269,588,463

Exercised Options: $2,241,542,351

Current Obligation: $607,132,123

Actual Outlays: $10,247,462

Subaward Activity

Number of Subawards: 50

Total Subaward Amount: $13,084,890

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline