Raytheon awarded $506M contract for communications equipment, with a significant portion extending to 2027

Contract Overview

Contract Amount: $506,407,844 ($506.4M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2000-01-31

End Date: 2027-05-31

Contract Duration: 9,982 days

Daily Burn Rate: $50.7K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 200010!2100!001287!AB07 !USA COMMUNICATIONS-ELECTRONICS !DAAB0797CC775 !A!*!P00021 !20000131!20030131!095135562!001339159!001339159!N!1L3B8!RAYTHEON COMPANY (INC) !2000 E EL SEGUNDO BLVD !EL SEGUNDO !CA!90245!28000!059!06!FULLERTON !ORANGE !CALIFORNIA!0001!+000016170140!N!N!000000000000!5820!RADIO & TV COMM EQUIPMENT, EXCEPT AIRBORNE !A1A!AIRFRAMES AND SPARES !1AHK!CH-47 CHINOOK !3728!3!*!*!B!B!A!*!D !N!J!1!001!N!1A!A!Y!C!* !* !N!C!*!A!A!A!A!A!A!* !*!N!A!C!N!*!*!*!*!*!

Place of Performance

Location: FULLERTON, ORANGE County, CALIFORNIA, 92833

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $506.4 million to RAYTHEON COMPANY for work described as: 200010!2100!001287!AB07 !USA COMMUNICATIONS-ELECTRONICS !DAAB0797CC775 !A!*!P00021 !20000131!20030131!095135562!001339159!001339159!N!1L3B8!RAYTHEON COMPANY (INC) !2000 E EL SEGUNDO BLVD !EL SEGUNDO !CA!90245!28000!059!06!FULLERTON !ORA… Key points: 1. Contract value of over $506 million indicates a substantial investment in communications and electronics. 2. The contract's extended duration suggests a long-term need for these specialized equipment and services. 3. Awarded to a single, large defense contractor, raising questions about potential competition limitations. 4. The firm-fixed-price structure aims to control costs, but the extended timeline may introduce risks. 5. This award falls within the broader defense sector, specifically supporting Army aviation and communications infrastructure. 6. The contract's scope includes radio and TV communication equipment, highlighting a focus on broadcast capabilities.

Value Assessment

Rating: fair

The total award of over $506 million is significant, but without specific benchmarks for the equipment or services provided, a precise value-for-money assessment is challenging. The contract's long duration (nearly 8 years) could lead to cost escalations if not managed carefully. Comparing this to similar, recent awards for advanced communications equipment would be necessary for a more robust value assessment. The firm-fixed-price nature provides some cost certainty, but the overall value proposition depends heavily on the actual performance and technological relevance over the contract's lifespan.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. This approach is typically used when a specific contractor possesses unique capabilities, proprietary technology, or when urgency dictates a rapid award. The lack of competition means that taxpayers did not benefit from potential price reductions or innovative solutions that might have emerged from a competitive bidding process.

Taxpayer Impact: Sole-source awards can result in higher prices for taxpayers as there is less pressure on the contractor to offer the most competitive bid. It also limits opportunities for other businesses to secure government contracts.

Public Impact

The primary beneficiaries are the Department of the Army, which receives critical communications and electronics equipment. Services delivered likely include the provision, maintenance, and potential upgrades of radio and television communication equipment. The geographic impact is likely national, supporting Army operations across various locations, with a specific mention of California and potentially other states where Raytheon operates. Workforce implications include employment at Raytheon and its subcontractors, particularly in engineering, manufacturing, and logistics related to electronics and communications systems.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially leading to higher costs for taxpayers.
Long contract duration (nearly 8 years) increases the risk of cost overruns and technological obsolescence.
Lack of transparency in the sole-source justification requires careful scrutiny.
Potential for contractor lock-in due to specialized nature of equipment and services.
Limited visibility into performance metrics and value realization over the extended period.

Positive Signals

Award to a large, established defense contractor like Raytheon suggests a high likelihood of technical capability and delivery reliability.
Firm-fixed-price contract provides a degree of cost certainty for the government.
The contract supports critical defense communications infrastructure, essential for national security.
Extended duration may indicate a strategic, long-term investment in vital capabilities.
The specific nature of the equipment (radio & TV comms) suggests a focus on essential operational needs.

Sector Analysis

This contract falls within the broader Information Technology and Defense sectors, specifically focusing on Radio & TV Communication Equipment, Except Airborne. The market for such specialized defense electronics is dominated by a few large prime contractors. The total addressable market for defense communications equipment is substantial, with significant annual government spending. This award represents a portion of that spending, likely for specific platforms or operational needs within the Army.

Small Business Impact

The contract data indicates that this was not a small business set-aside. Given the sole-source nature and the large prime contractor, there is limited direct benefit to small businesses through this specific award mechanism. However, Raytheon may engage small businesses as subcontractors, but the extent of this subcontracting is not detailed in the provided data. The focus on a large prime contractor may limit opportunities for small businesses to directly compete for this type of specialized defense electronics work.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Army's contracting and program management offices. Given the sole-source nature, there may be increased scrutiny from oversight bodies like the Government Accountability Office (GAO) or the Inspector General's office, particularly concerning the justification for the sole-source award and the contract's performance. Transparency is limited due to the non-competitive nature, but contract modifications and performance reports would be subject to internal review.

Related Government Programs

Defense Communications Systems
Army Aviation Support Equipment
Radio and Television Broadcasting Equipment
Tactical Communications Systems
Electronic Warfare Systems

Risk Flags

Sole-source award
Long contract duration
Potential for technological obsolescence
Lack of competitive bidding

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $506.4 million to RAYTHEON COMPANY. 200010!2100!001287!AB07 !USA COMMUNICATIONS-ELECTRONICS !DAAB0797CC775 !A!*!P00021 !20000131!20030131!095135562!001339159!001339159!N!1L3B8!RAYTHEON COMPANY (INC) !2000 E EL SEGUNDO BLVD !EL SEGUNDO !CA!90245!28000!059!06!FULLERTON !ORANGE !CALIFORNIA!0001!+000016170140!N!N!000000000000!5820!RADIO & TV COMM EQUIPMENT, EXCEPT AIRBORNE !A1A!AIRFRAMES AND SPARES !1AHK!CH-47 CHINOOK !3728!3!*!*!B!B!A!*!D !N!J!

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 $506.4 million.

What is the period of performance?

Start: 2000-01-31. End: 2027-05-31.

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

The provided data indicates the contract was awarded as 'NOT COMPETED' and is a 'SOLE SOURCE'. While the specific justification is not detailed in the abbreviated data, common reasons for sole-source awards in defense contracting include: unique technical capabilities or proprietary technology held by the contractor, essential interoperability requirements with existing systems, urgent and compelling needs where competition is not feasible, or when only one responsible source can provide the required supply or service. For this specific contract, it's possible Raytheon possesses unique expertise or intellectual property related to the specified radio and TV communication equipment that is critical for the Army's CH-47 Chinook program or other aviation platforms.

How does the firm-fixed-price (FFP) contract type mitigate risks associated with the long performance period?

A Firm-Fixed-Price (FFP) contract is designed to provide the government with cost certainty by establishing a final price that is not subject to adjustment based on the contractor's cost experience. For a contract spanning nearly eight years (January 31, 2000, to May 31, 2027, with an initial award date in 2000), the FFP structure aims to protect the government from potential cost overruns. However, the long duration still presents risks. If market conditions, material costs, or labor rates change significantly over the contract period, the contractor may face challenges in meeting the FFP, potentially impacting performance or leading to requests for contract modifications. Conversely, if costs decrease, the contractor benefits from the fixed price. Effective oversight is crucial to ensure the contractor manages performance efficiently within the agreed-upon price.

What are the potential implications of the extended contract end date (2027) for technological relevance?

An extended contract end date of 2027, especially for a contract awarded in 2000, raises significant concerns about technological relevance. The field of communications and electronics evolves rapidly. Equipment and systems that were state-of-the-art in the early 2000s may be outdated or nearing obsolescence by 2027. This could mean the Army is acquiring or maintaining systems that are less capable than newer alternatives, potentially impacting operational effectiveness. There's a risk that the government might be locked into supporting legacy technology, incurring higher maintenance costs, and facing difficulties in integration with newer systems. The contract should ideally include provisions for technology refresh or upgrades to mitigate this risk.

What is the historical spending pattern for this specific type of equipment or with this contractor?

The provided data shows a single definitive contract awarded to Raytheon Company with a total value of $506,407,843.91, spanning from January 31, 2000, to May 31, 2027. This suggests a significant, long-term commitment to Raytheon for this specific category of 'Radio & TV Comm Equipment, Except Airborne'. Without access to broader contract databases or historical procurement records for the Department of the Army or Raytheon, it's difficult to establish a comprehensive historical spending pattern. However, the sheer size and duration of this single award indicate a substantial and consistent investment in these capabilities over an extended period, likely reflecting ongoing operational requirements or strategic program support.

What is the significance of the PSC code '5820' and its relation to the contract's purpose?

The Product and Service Code (PSC) '5820' specifically designates 'Radio and TV Communications Equipment, Except Airborne'. This code precisely aligns with the contract's description, indicating that the procurement focuses on ground-based or non-aviation-specific radio and television communication hardware. This includes a wide range of equipment such as transmitters, receivers, antennas, signal processing units, and related components used for broadcasting and wireless communications. The contract's purpose, therefore, is centered on acquiring or maintaining these essential communication assets for the Department of the Army, likely supporting tactical operations, command and control, or broadcasting needs.

Industry Classification

NAICS: Manufacturing › Communications Equipment Manufacturing › Radio and Television Broadcasting and Wireless Communications Equipment Manufacturing

Product/Service Code: COMM/DETECT/COHERENT RADIATION

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 1801 HUGHES DR, FULLERTON, CA, 92833

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $29,781,708

Exercised Options: $29,781,708

Current Obligation: $506,407,844

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Timeline