Raytheon awarded $316.9M for airborne radar systems, highlighting a sole-source procurement for critical defense technology

Contract Overview

Contract Amount: $316,915,208 ($316.9M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2004-08-30

End Date: 2011-06-30

Contract Duration: 2,495 days

Daily Burn Rate: $127.0K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 200411!000014!1700!AA4H0 !NAVAIRSYSCO !N0001904C0123 !A!N! !N! ! !20040830!20080930!001425206!001425206!001339159!N!RAYTHEON COMPANY !6380 HOLLISTER AVE !GOLETA !CA!93117!30378!083!06!GOLETA !SANTA BARBARA !CALIFORNIA!+000043254508!N!N!000205157277!5841!RADAR EQUIPMENT, AIRBORNE !A1A!AIRFRAMES AND SPARES !000 !* !334511!E! !3! ! ! ! ! !99990909!B! ! !A! !D!U!J!1!001!N!1A!A!Y!F! ! !N!C!N! ! ! !A!A!A!A!000!A!B!Y! ! ! !Y! ! !0001! !

Place of Performance

Location: GOLETA, SANTA BARBARA County, CALIFORNIA, 93117

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $316.9 million to RAYTHEON COMPANY for work described as: 200411!000014!1700!AA4H0 !NAVAIRSYSCO !N0001904C0123 !A!N! !N! ! !20040830!20080930!001425206!001425206!001339159!N!RAYTHEON COMPANY !6380 HOLLISTER AVE !GOLETA !CA!93117!30378!083!06!GOLETA !SANT… Key points: 1. The contract value of $316.9 million for airborne radar systems represents a significant investment in advanced defense capabilities. 2. A 'NOT COMPETED' status indicates a lack of competitive bidding, potentially impacting price discovery and value for money. 3. The duration of the contract, spanning over 8 years (2495 days), suggests a long-term need for these specialized systems. 4. The primary contractor, Raytheon Company, is a major defense manufacturer, implying established capabilities but also potential market concentration. 5. The Product Service Code (PSC) '334511' for radar equipment points to a highly specialized and technologically advanced segment of the defense market. 6. The contract's geographic location in California (st: CA) aligns with the state's significant defense industry presence.

Value Assessment

Rating: questionable

The contract value of $316.9 million for airborne radar systems is substantial. Without competitive bidding, it is difficult to benchmark the pricing against market rates or similar contracts. The absence of competition raises concerns about whether the government secured the best possible price. Further analysis would be needed to compare the unit costs or overall value proposition against alternative solutions or historical data for similar systems, if available.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a 'NOT COMPETED' basis, meaning it was not subject to a full and open competition. This typically occurs when a specific capability is only available from a single source, or in urgent situations. The lack of multiple bidders means there was no direct price comparison or incentive for vendors to offer their most competitive pricing. This approach can limit the government's ability to explore a wider range of technological solutions and potentially secure better terms.

Taxpayer Impact: Sole-source procurements can lead to higher costs for taxpayers as the government may not benefit from the cost savings typically achieved through competitive bidding processes. This can result in less efficient use of public funds.

Public Impact

The primary beneficiaries are the U.S. Navy and potentially other branches of the Department of Defense requiring advanced airborne radar capabilities. The contract delivers critical airborne radar systems, essential for surveillance, targeting, and situational awareness in military operations. The geographic impact is primarily within the defense sector, supporting national security objectives. Workforce implications include employment opportunities within Raytheon Company and its supply chain, particularly in specialized engineering and manufacturing roles.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated prices and reduced value for taxpayer money.
Sole-source awards can stifle innovation by limiting exposure to alternative technologies from other vendors.
Long contract duration (over 8 years) increases the risk of technological obsolescence or changing requirements.
Dependence on a single contractor for critical defense systems poses a supply chain risk.
Limited transparency in the procurement process due to the non-competitive nature.

Positive Signals

Award to a major defense contractor (Raytheon) suggests access to established expertise and reliable production capabilities.
Focus on advanced airborne radar systems addresses a critical military need, enhancing national security.
The contract specifies 'FIRM FIXED PRICE', which shifts some cost risk to the contractor.
The contract is for a specific, specialized product (radar equipment), indicating a targeted and potentially necessary procurement.

Sector Analysis

The defense industry, particularly the segment focused on aerospace and defense electronics, is characterized by high R&D investment, long product cycles, and significant government procurement. Airborne radar systems are a critical component of modern military aircraft, providing essential intelligence and targeting capabilities. The market is dominated by a few large prime contractors, including Raytheon. Spending in this sector is driven by evolving geopolitical threats and the need for technological superiority. Comparable spending benchmarks would typically involve analyzing other large sole-source or competitively awarded contracts for similar radar systems or defense electronics.

Small Business Impact

This contract does not appear to have a small business set-aside component (ss: false, sb: false). As a sole-source award to a large prime contractor, it is unlikely to involve significant subcontracting opportunities specifically targeted at small businesses through set-asides. While Raytheon may engage small businesses in its supply chain, the direct award mechanism does not prioritize small business participation. This could limit the direct economic benefit to the small business ecosystem from this specific contract.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy and the Department of Defense's contracting and auditing agencies. Given the sole-source nature, oversight would focus on ensuring the contractor meets the specified technical requirements and delivery schedules within the fixed price. Transparency may be limited due to the non-competitive award. Inspector General (IG) jurisdiction would apply if any fraud, waste, or abuse were suspected. Accountability measures would be contractually defined, focusing on performance metrics and adherence to terms.

Related Government Programs

Airborne Radar Systems Procurement
Defense Electronics Manufacturing
Naval Aviation Support Systems
Sole-Source Defense Contracts
Raytheon Company Contracts

Risk Flags

Sole-source procurement
Lack of competition
Long contract duration
Potential for cost overruns
Risk of technological obsolescence
Supply chain dependency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $316.9 million to RAYTHEON COMPANY. 200411!000014!1700!AA4H0 !NAVAIRSYSCO !N0001904C0123 !A!N! !N! ! !20040830!20080930!001425206!001425206!001339159!N!RAYTHEON COMPANY !6380 HOLLISTER AVE !GOLETA !CA!93117!30378!083!06!GOLETA !SANTA BARBARA !CALIFORNIA!+000043254508!N!N!000205157277!5841!RADAR EQUIPMENT, AIRBORNE !A1A!AIRFRAMES AND SPARES !000 !* !334511!E! !3! ! ! ! ! !999

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 Navy).

What is the total obligated amount?

The obligated amount is $316.9 million.

What is the period of performance?

Start: 2004-08-30. End: 2011-06-30.

What is Raytheon Company's track record with similar sole-source defense contracts?

Raytheon Company, as a major defense contractor, has a long history of securing both competitive and sole-source contracts across various defense platforms. Analyzing their past sole-source awards for complex systems like radar would provide insight into their performance, pricing consistency, and potential patterns of receiving non-competitive bids. Publicly available data may show trends in contract modifications, cost overruns, or delivery performance on similar sole-source agreements. A deeper dive would involve examining specific contract histories for adherence to original terms and conditions, and assessing whether the government consistently received fair value in such arrangements. Without specific comparative data points for this contract, general trends suggest that while large contractors are capable, sole-source awards inherently reduce the pressure to optimize pricing compared to competitive scenarios.

How does the $316.9 million contract value compare to other airborne radar system procurements?

The $316.9 million value for this airborne radar system contract is substantial, reflecting the complexity and advanced technology involved. To benchmark this value, one would ideally compare it against other recent procurements of similar radar systems, considering factors like system capabilities (e.g., range, resolution, multi-functionality), platform integration, and quantity. If this contract was competitively bid, the price per unit or per system could be directly compared. However, as a sole-source award, direct comparison is challenging. Industry reports and defense budget analyses might provide average spending figures for airborne radar development and procurement. Without specific comparable contract data points, it's difficult to definitively state if $316.9 million represents a high, low, or average cost. However, the significant sum underscores the critical nature and high cost associated with state-of-the-art defense electronics.

What are the primary risks associated with this sole-source contract for airborne radar systems?

The primary risks associated with this sole-source contract include potential cost overruns if pricing is not adequately scrutinized, and a lack of incentive for the contractor to innovate or improve efficiency due to the absence of competition. There's also a risk of technological obsolescence over the contract's long duration (over 8 years), as advancements in radar technology may outpace the system being procured. Furthermore, reliance on a single supplier for critical defense equipment introduces supply chain vulnerability. The government may also face challenges in negotiating future modifications or upgrades, potentially at less favorable terms. Finally, the lack of competitive transparency can obscure whether the government is achieving optimal value for taxpayer investment.

How effective are sole-source procurements like this in meeting critical defense needs?

Sole-source procurements can be effective in meeting critical defense needs when a unique capability is required that only one supplier can provide, or in urgent situations where time constraints preclude competition. For highly specialized systems like advanced airborne radar, a single contractor might possess the proprietary technology, intellectual property, or manufacturing expertise necessary. In such cases, a sole-source award ensures timely acquisition of essential capabilities. However, effectiveness is contingent on robust government oversight to ensure fair pricing and performance, and to mitigate the inherent risks of non-competition. While potentially effective for urgent or unique needs, they are generally less efficient and potentially more costly than competitive processes for standard or widely available technologies.

What are the historical spending patterns for airborne radar systems by the Department of the Navy?

Historical spending patterns for airborne radar systems by the Department of the Navy typically show consistent investment in advanced sensor technology to maintain air superiority and situational awareness. This spending often involves a mix of competitive bids for new system development and sole-source or limited competition awards for upgrades, sustainment, or specialized variants of existing platforms. Major defense contractors like Raytheon, Northrop Grumman, and others are frequent recipients of such contracts. Spending levels can fluctuate based on defense budgets, strategic priorities, and the introduction of new threats or technologies. Analyzing past budgets and contract awards reveals a long-term commitment to acquiring and maintaining sophisticated radar capabilities, often involving multi-year procurements and significant R&D investments.

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: COMM/DETECT/COHERENT RADIATION

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 6380 HOLLISTER AVE, GOLETA, CA, 24

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Cost or Pricing Data: NO

Timeline