Raytheon Company awarded $251.5M for FAA's Long Range Radar System, impacting air traffic safety

Contract Overview

Contract Amount: $251,503,541 ($251.5M)

Contractor: Raytheon Company

Awarding Agency: Department of Transportation

Start Date: 2006-08-17

End Date: 2016-08-16

Contract Duration: 3,652 days

Daily Burn Rate: $68.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: TO PROVIDE FUNDING FOR LRR SLEP CONTRACT AWARD. DTFAWA-06-R-120906 CLIN 0001 - LIMITED PRODUCTION SYSTEMS/KITS (BASIC) FFP. CLIN 0002 - COMMON DIGITIZER 2 WITH WEATHER FUNCTIONALITY. P.O.P: AUGUST 2006 THRU SEPTEMBER 2008. CO: GAVIN BYRNE, ATO-A (AJA-46) CO #: (202) 385-8806

Place of Performance

Location: MARLBOROUGH, MIDDLESEX County, MASSACHUSETTS, 01752

State: Massachusetts Government Spending

Plain-Language Summary

Department of Transportation obligated $251.5 million to RAYTHEON COMPANY for work described as: TO PROVIDE FUNDING FOR LRR SLEP CONTRACT AWARD. DTFAWA-06-R-120906 CLIN 0001 - LIMITED PRODUCTION SYSTEMS/KITS (BASIC) FFP. CLIN 0002 - COMMON DIGITIZER 2 WITH WEATHER FUNCTIONALITY. P.O.P: AUGUST 2006 THRU SEPTEMBER 2008. CO: GAVIN BYRNE, ATO-A (AJA-46) CO #: (202)… Key points: 1. Contract awarded for critical air traffic control systems, enhancing national airspace safety. 2. Significant investment in radar modernization underscores commitment to advanced aviation infrastructure. 3. Long-term contract duration suggests a sustained need for these specialized systems. 4. Awarded via full and open competition, indicating a robust market for radar technology. 5. Focus on production and specific system upgrades points to a phased modernization approach. 6. The contract's value represents a substantial portion of the FAA's investment in navigation and guidance systems.

Value Assessment

Rating: good

The contract value of $251.5 million over a 10-year period for the Long Range Radar System (LRR SLEP) appears reasonable given the critical nature of air traffic control infrastructure. Benchmarking against similar large-scale radar system procurements by the FAA or other aviation authorities would provide a more precise value-for-money assessment. The firm-fixed-price structure suggests that cost risks are largely borne by the contractor, which is generally favorable for the government.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, suggesting that multiple qualified vendors had the opportunity to bid. The presence of three bidders (indicated by 'no': 3) implies a competitive environment, which typically leads to better pricing and innovation. This level of competition is a positive indicator for price discovery and ensures the government receives competitive offers for complex systems.

Taxpayer Impact: Taxpayers benefit from a competitive bidding process that likely drives down costs and ensures the government secures advanced technology at a fair market price.

Public Impact

Enhances the safety and efficiency of the U.S. National Airspace System by modernizing radar capabilities. Benefits commercial airlines, cargo carriers, and general aviation by providing more reliable air traffic control. Improves weather detection and navigation guidance for aircraft, reducing flight delays and risks. Supports jobs in advanced manufacturing and engineering within the aerospace and defense sector. Geographic impact is nationwide, covering all areas served by the FAA's air traffic control network.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if production complexities are underestimated.
Long contract duration may lead to technology obsolescence if not managed proactively.
Dependence on a single contractor for critical system maintenance and upgrades.

Positive Signals

Firm-fixed-price contract structure limits cost escalation risks for the government.
Awarded through full and open competition, indicating a healthy market and competitive pricing.
Contract addresses a critical need for modernizing aging air traffic control infrastructure.

Sector Analysis

This contract falls within the 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' sector. The market for air traffic control systems is characterized by high barriers to entry due to technological complexity and stringent regulatory requirements. Major defense and aerospace contractors like Raytheon are key players. Spending in this area is driven by the need for continuous modernization of aging infrastructure and the adoption of new technologies to enhance safety and efficiency in air travel.

Small Business Impact

The data indicates this contract was not set aside for small businesses (ss: false, sb: false). While large prime contractors like Raytheon are involved, there is potential for significant subcontracting opportunities for small businesses in specialized areas of manufacturing, component supply, and technical services. The FAA generally encourages prime contractors to utilize small businesses in their supply chains.

Oversight & Accountability

The Federal Aviation Administration (FAA) is responsible for overseeing this contract. Oversight mechanisms likely include regular performance reviews, milestone tracking, and quality assurance checks. Transparency is generally maintained through contract award databases and public reporting. The Inspector General's office of the Department of Transportation would have jurisdiction for audits and investigations related to potential fraud or mismanagement.

Related Government Programs

FAA NextGen Air Transportation System
Air Traffic Control Radar Modernization Programs
Aeronautical Navigation and Guidance Systems Procurement
Defense and Aerospace Manufacturing Contracts

Risk Flags

Long contract duration may lead to technology obsolescence.
Potential for performance degradation over a decade-long period.
Dependence on a single contractor for critical infrastructure.

Frequently Asked Questions

What is this federal contract paying for?

Department of Transportation awarded $251.5 million to RAYTHEON COMPANY. TO PROVIDE FUNDING FOR LRR SLEP CONTRACT AWARD. DTFAWA-06-R-120906 CLIN 0001 - LIMITED PRODUCTION SYSTEMS/KITS (BASIC) FFP. CLIN 0002 - COMMON DIGITIZER 2 WITH WEATHER FUNCTIONALITY. P.O.P: AUGUST 2006 THRU SEPTEMBER 2008. CO: GAVIN BYRNE, ATO-A (AJA-46) CO #: (202) 385-8806

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 $251.5 million.

What is the period of performance?

Start: 2006-08-17. End: 2016-08-16.

What is the specific performance history of Raytheon Company with the FAA on similar radar system contracts?

Raytheon Company has a long-standing relationship with the FAA and has been a key provider of radar and air traffic control systems. While specific details on past performance for this exact 'LRR SLEP' contract are not provided in the summary data, Raytheon's track record includes delivering various radar systems, including weather and surveillance radars, for both military and civilian aviation applications. Their experience in large-scale, complex system integration and production suggests a capability to meet the demands of this contract. However, a deeper dive into FAA's contractor performance assessment reports (CPARS) would be necessary to evaluate their specific performance on prior, comparable contracts, including on-time delivery, quality, and cost control.

How does the $251.5 million contract value compare to the total FAA spending on radar systems over the last decade?

The $251.5 million awarded to Raytheon represents a significant, but not overwhelming, portion of the FAA's overall investment in radar and air traffic control modernization. The FAA's 'NextGen' initiative, aimed at overhauling the entire air traffic system, has involved billions of dollars in spending over the past decade across various technology upgrades, including surveillance, navigation, communication, and automation systems. This specific contract focuses on the Long Range Radar System Enhancement Program (SLEP), which is a critical component but only one part of the broader NextGen portfolio. To provide a precise comparison, one would need to aggregate total FAA spending on all radar-related procurements and maintenance over the last 10 years and then compare this contract's value as a percentage.

What are the primary risks associated with the long duration (August 2006 - September 2016) of this contract?

The 10-year duration of this contract presents several potential risks. Firstly, technological obsolescence is a significant concern; radar technology evolves rapidly, and systems deployed over such a long period may become outdated before the end of their service life, requiring costly upgrades or replacements. Secondly, there's a risk of contractor performance degradation over time, especially if key personnel change or if the contractor's focus shifts. Thirdly, economic fluctuations or changes in government funding priorities could impact the program's stability or lead to contract modifications. Finally, maintaining system interoperability with newer technologies introduced during the contract period could pose integration challenges.

What is the expected impact of this contract on air traffic safety and efficiency?

This contract is expected to significantly enhance air traffic safety and efficiency by modernizing the FAA's Long Range Radar System. Upgraded radar systems provide more accurate and reliable tracking of aircraft, including improved detection of weather phenomena like thunderstorms and turbulence. This enhanced situational awareness allows air traffic controllers to manage airspace more effectively, optimize flight paths, reduce delays, and minimize the risk of accidents. The 'Common Digitizer 2 with Weather Functionality' specifically points to improvements in weather data integration, which is crucial for safe flight operations. Ultimately, this modernization contributes to the overall reliability and capacity of the National Airspace System.

How does the firm-fixed-price (FFP) contract type influence cost control and contractor incentives?

The Firm-Fixed-Price (FFP) contract type is generally considered advantageous for the government in controlling costs, as the price is set and not subject to adjustment based on the contractor's actual costs. This places the primary risk of cost overruns on the contractor, Raytheon Company. Consequently, the contractor has strong incentives to manage their expenses efficiently and complete the work within the agreed-upon budget. For the FAA, this means greater cost certainty. However, FFP contracts can sometimes lead contractors to cut corners on quality if not adequately monitored, or they may build in higher contingency amounts into their initial bid price to account for potential risks, potentially making the initial price higher than under other contract types.

What is the significance of the 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' NAICS code?

The North American Industry Classification System (NAICS) code 334511, 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing,' signifies that this contract is for the production of highly specialized equipment critical to aviation operations. Companies operating under this code typically engage in the design, development, and manufacturing of complex systems like radar, GPS receivers, flight control instruments, and related navigational aids. This classification highlights the technical sophistication required for the awarded contract and places it within a niche but vital segment of the aerospace and defense manufacturing industry, characterized by significant R&D investment and stringent quality standards.

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: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 3

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: RTX Corp (UEI: 001344142)

Address: 1001 BOSTON POST RD E, MARLBOROUGH, MA, 01752

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $3,424,086,897

Exercised Options: $251,503,541

Current Obligation: $251,503,541

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Timeline