Raytheon Company awarded $40.3M task order for FAA program management, highlighting a significant investment in navigation systems

Contract Overview

Contract Amount: $40,347,540 ($40.3M)

Contractor: Raytheon Company

Awarding Agency: Department of Transportation

Start Date: 2022-08-09

End Date: 2028-08-08

Contract Duration: 2,191 days

Daily Burn Rate: $18.4K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: TIME AND MATERIALS

Sector: Defense

Official Description: THE PURPOSE OF THIS ACTION IS TO ISSUE TASK ORDER 1 UNDER THE DFO2 IDIQ FOR PROGRAM MANAGEMENT TASKS.

Place of Performance

Location: FULLERTON, ORANGE County, CALIFORNIA, 92833

State: California Government Spending

Plain-Language Summary

Department of Transportation obligated $40.3 million to RAYTHEON COMPANY for work described as: THE PURPOSE OF THIS ACTION IS TO ISSUE TASK ORDER 1 UNDER THE DFO2 IDIQ FOR PROGRAM MANAGEMENT TASKS. Key points: 1. Value for money appears fair given the 5-year duration and the critical nature of aviation navigation systems. 2. Competition dynamics indicate a full and open process, suggesting potential for competitive pricing. 3. Risk indicators are moderate, with a Time and Materials contract type potentially leading to cost overruns if not closely managed. 4. Performance context is within the Federal Aviation Administration's mandate to ensure safe and efficient air travel. 5. Sector positioning is within the aerospace and defense industry, specifically focusing on navigation and guidance systems.

Value Assessment

Rating: fair

The $40.3 million award over five years for program management tasks represents a substantial investment. Benchmarking against similar contracts for large-scale aviation system management is challenging without more specific task details. However, the Time and Materials (T&M) contract type, while flexible, carries inherent risks of cost escalation if not meticulously monitored. The value proposition hinges on Raytheon's ability to deliver effective program management that ensures the timely and cost-efficient development and maintenance of critical FAA systems.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This task order was awarded under a full and open competition, indicating that multiple qualified bidders had the opportunity to submit proposals. The specific number of bidders is not provided, but a full and open competition generally fosters a competitive environment, which can lead to more favorable pricing and better service offerings for the government. This approach aligns with best practices for maximizing taxpayer value.

Taxpayer Impact: A full and open competition suggests that taxpayers benefit from a potentially more competitive price and a wider range of innovative solutions being considered for essential aviation infrastructure.

Public Impact

The Federal Aviation Administration (FAA) is the primary beneficiary, receiving program management support for critical navigation systems. The services delivered will contribute to the safety, efficiency, and modernization of the U.S. air traffic control system. The geographic impact is national, affecting all users of the U.S. airspace. Workforce implications may include specialized program management roles within Raytheon and potentially its subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Time and Materials contract type can lead to cost overruns if not managed tightly.
Lack of specific performance metrics in the provided data makes it difficult to assess efficiency.
The long duration of the contract (5 years) increases the potential for scope creep or evolving requirements.

Positive Signals

Awarded under full and open competition, suggesting a robust selection process.
Raytheon Company is a major defense contractor with extensive experience in complex systems management.
The contract supports critical national infrastructure (aviation navigation systems).

Sector Analysis

This contract falls within the aerospace and defense sector, specifically the segment focused on navigation, guidance, and control systems manufacturing and support. The market for such systems is characterized by high barriers to entry, significant R&D investment, and long product lifecycles. The FAA is a major procurer in this space, investing heavily in maintaining and upgrading its air traffic management infrastructure. Comparable spending benchmarks would typically involve other large-scale system integration and program management contracts within the defense and aerospace industries.

Small Business Impact

The provided data does not indicate any specific small business set-aside provisions for this task order. As a large prime contract awarded to Raytheon Company, it is possible that subcontracting opportunities may exist for small businesses within Raytheon's supply chain. However, without further information on subcontracting plans, the direct impact on the small business ecosystem is unclear.

Oversight & Accountability

Oversight for this task order will likely be managed by the Federal Aviation Administration's program management offices. Accountability measures would be tied to the contract's performance clauses and milestones. Transparency is generally maintained through contract award databases and public reporting, though specific operational details may be sensitive. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Federal Aviation Administration Air Traffic Control Modernization Programs
Department of Defense Navigation and Guidance Systems Contracts
Aerospace Systems Program Management
National Airspace System Infrastructure

Risk Flags

Potential for cost overruns due to Time and Materials contract type.
Need for robust oversight to ensure efficient execution of program management tasks.
Dependence on contractor performance for critical aviation infrastructure.

Frequently Asked Questions

What is this federal contract paying for?

Department of Transportation awarded $40.3 million to RAYTHEON COMPANY. THE PURPOSE OF THIS ACTION IS TO ISSUE TASK ORDER 1 UNDER THE DFO2 IDIQ FOR PROGRAM MANAGEMENT TASKS.

Who is the contractor on this award?

The obligated recipient is RAYTHEON COMPANY.

Which agency awarded this contract?

Awarding agency: Department of Transportation (Federal Aviation Administration).

What is the total obligated amount?

The obligated amount is $40.3 million.

What is the period of performance?

Start: 2022-08-09. End: 2028-08-08.

What is Raytheon Company's track record with the FAA on similar program management contracts?

Raytheon Company, now part of RTX, has a long history of supporting the Federal Aviation Administration (FAA) and the Department of Defense (DoD) with complex systems integration and program management. Their experience spans various critical infrastructure projects, including air traffic control systems, radar technology, and communication networks. While specific details on past FAA program management task orders awarded to Raytheon are not provided here, their extensive portfolio suggests a deep understanding of the regulatory environment, technical requirements, and operational needs of aviation authorities. Past performance reviews and contract histories available through federal procurement databases would offer a more granular assessment of their success rates, cost control, and adherence to schedules on similar engagements.

How does the $40.3 million cost compare to similar FAA program management contracts?

Directly comparing the $40.3 million cost of this specific task order to other FAA program management contracts requires access to a comprehensive database of similar awards, including their scope, duration, and complexity. However, given that this is a five-year contract supporting critical navigation systems, the annual average cost of approximately $8 million appears reasonable for managing large-scale technological programs within the aviation sector. The Federal Aviation Administration often awards multi-year, multi-million dollar contracts for system upgrades and maintenance. Without knowing the exact deliverables and the level of program management required (e.g., research, development, implementation, sustainment), a precise benchmark is difficult. However, the 'full and open competition' aspect suggests the government sought competitive pricing.

What are the primary risks associated with a Time and Materials (T&M) contract for this type of service?

The primary risk associated with a Time and Materials (T&M) contract, such as the one awarded to Raytheon for FAA program management, is the potential for cost overruns. Unlike fixed-price contracts, T&M contracts reimburse the contractor for the actual labor hours and material costs incurred, plus a fixed fee or hourly rate. This structure can incentivize longer project durations or less efficient work if not strictly monitored. For the FAA, risks include exceeding the $40.3 million ceiling if the scope expands or if labor hours are not managed efficiently. Effective oversight, detailed tracking of hours, and clear definition of tasks are crucial to mitigate these risks and ensure the contract remains within budget and delivers value.

How does this contract contribute to the overall effectiveness of the U.S. National Airspace System?

This contract is crucial for the effective operation and modernization of the U.S. National Airspace System (NAS). Program management tasks are essential for overseeing the development, implementation, and sustainment of navigation, detection, and guidance systems. These systems are the backbone of air traffic control, ensuring safe separation between aircraft, efficient flight paths, and reliable communication. By ensuring these complex technological programs are well-managed, the FAA can maintain the safety and efficiency of air travel, accommodate increasing air traffic demand, and integrate new technologies that enhance performance and reduce environmental impact. Effective program management directly translates to a more reliable and secure airspace.

What are the historical spending patterns for navigation and guidance systems by the FAA?

The Federal Aviation Administration (FAA) has consistently allocated significant funding towards the modernization and maintenance of its navigation, detection, guidance, aeronautical, and nautical systems. Historical spending patterns reveal a long-term commitment to upgrading the National Airspace System (NAS) with advanced technologies like NextGen. This includes investments in radar, satellite-based navigation (GPS augmentation), communication systems, and surveillance technologies. Annual spending in this category often runs into the hundreds of millions, and sometimes billions, of dollars, reflecting the scale and complexity of maintaining a safe and efficient national airspace. This $40.3 million task order represents a portion of that ongoing investment, likely focused on specific program management aspects of these larger modernization efforts.

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: RESEARCH AND DEVELOPMENT › Transportation R&D Services

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Pricing Type: TIME AND MATERIALS (Y)

Evaluated Preference: NONE

Contractor Details

Parent Company: RTX Corp

Address: 1801 HUGHES DR, FULLERTON, CA, 92833

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: $99,196,626

Exercised Options: $40,347,540

Current Obligation: $40,347,540

Actual Outlays: $34,107,181

Subaward Activity

Number of Subawards: 4

Total Subaward Amount: $842,499

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: 693KA822D00035

IDV Type: IDC

Timeline