Raytheon awarded $258M for AN/AQS-22 sonar systems, a sole-source procurement

Contract Overview

Contract Amount: $258,424,424 ($258.4M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2012-12-20

End Date: 2022-05-31

Contract Duration: 3,449 days

Daily Burn Rate: $74.9K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: AN/AQS-22 AIRBORNE LOW FREQUENCY SONAR (ALFS) LOT X AND XI PRODUCTION PROCUREMENT OF 48 TOTAL SYSTEMS.

Place of Performance

Location: PORTSMOUTH, NEWPORT County, RHODE ISLAND, 02871

State: Rhode Island Government Spending

Plain-Language Summary

Department of Defense obligated $258.4 million to RAYTHEON COMPANY for work described as: AN/AQS-22 AIRBORNE LOW FREQUENCY SONAR (ALFS) LOT X AND XI PRODUCTION PROCUREMENT OF 48 TOTAL SYSTEMS. Key points: 1. This contract represents a significant investment in advanced sonar technology for naval operations. 2. The sole-source nature of this award warrants scrutiny regarding potential price inflation and limited market alternatives. 3. Performance risk is moderate, given the established nature of the AN/AQS-22 system. 4. The contract duration spans over nine years, indicating a long-term commitment to this capability. 5. This procurement falls within the specialized sector of defense electronics manufacturing.

Value Assessment

Rating: fair

The total award of $258.4 million for 48 AN/AQS-22 systems equates to approximately $5.38 million per system. Benchmarking this against similar complex defense systems is challenging due to the specialized nature of sonar technology and the sole-source award. Without competitive bids, it is difficult to definitively assess if this represents optimal value for money. However, the firm-fixed-price contract type offers some cost certainty to the government.

Cost Per Unit: Approximately $5.38 million per system (48 systems / $258.4M total award).

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one bidder, Raytheon Company, was solicited. This approach is typically used when a unique capability is required, or when only one source can provide the necessary goods or services. The lack of competition means that the government did not benefit from a price discovery process driven by multiple offers, potentially leading to higher costs than if the contract had been competed.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive pressure, as the government could not leverage multiple bids to secure the lowest possible price.

Public Impact

The primary beneficiaries are the U.S. Navy, which will receive advanced sonar systems for anti-submarine warfare. The contract delivers 48 AN/AQS-22 Airborne Low Frequency Sonar systems. The geographic impact is primarily within Rhode Island, where Raytheon has operations, and wherever the Navy deploys these systems. This procurement supports specialized jobs in defense manufacturing and engineering.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially increasing costs for taxpayers.
Long contract duration could lead to cost overruns if not managed effectively.
Reliance on a single supplier for critical defense technology poses a strategic risk.

Positive Signals

Firm-fixed-price contract provides cost certainty for the government.
The AN/AQS-22 is a proven system, suggesting lower technical performance risk.
Procurement of 48 systems indicates a substantial commitment to enhancing naval capabilities.

Sector Analysis

This contract falls within the defense electronics manufacturing sector, specifically focusing on advanced sonar systems. The market for such specialized military hardware is typically dominated by a few large defense contractors. The total value of this single contract is substantial, reflecting the high cost and complexity of developing and producing cutting-edge defense technology. Comparable spending benchmarks would likely involve other major defense procurements for complex weapon systems.

Small Business Impact

This contract was not set aside for small businesses, nor does it appear to have specific subcontracting requirements for small businesses mentioned in the provided data. As a sole-source award to a large prime contractor, the direct impact on the small business ecosystem is likely minimal unless Raytheon voluntarily engages small businesses for specific components or services.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and program management offices. The firm-fixed-price nature of the contract provides a degree of accountability for Raytheon to deliver within the agreed-upon price. Transparency is limited by the sole-source nature, but contract awards are generally reported. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Naval Sonar Systems Procurement
Defense Electronics Manufacturing
Anti-Submarine Warfare Systems
Raytheon Defense Contracts

Risk Flags

Sole-source procurement limits price competition.
Long contract duration increases exposure to market volatility.
Reliance on a single supplier for critical technology.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $258.4 million to RAYTHEON COMPANY. AN/AQS-22 AIRBORNE LOW FREQUENCY SONAR (ALFS) LOT X AND XI PRODUCTION PROCUREMENT OF 48 TOTAL SYSTEMS.

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 $258.4 million.

What is the period of performance?

Start: 2012-12-20. End: 2022-05-31.

What is the historical spending trend for the AN/AQS-22 system prior to this award?

The provided data does not include historical spending for the AN/AQS-22 system prior to this Lot X and XI award. However, the fact that this is a 'Lot X and XI' procurement suggests that previous lots or contract actions for this system have occurred. To understand historical spending, one would need to access contract databases for earlier awards related to the AN/AQS-22, potentially identifying earlier production runs, development contracts, or sustainment efforts. Without this historical context, it's difficult to assess if the current $258.4 million award represents an increase or decrease in spending for this capability over time.

How does the per-unit cost of the AN/AQS-22 compare to similar sonar systems from other manufacturers?

Direct comparison of the AN/AQS-22's per-unit cost ($5.38 million) to similar sonar systems from other manufacturers is challenging due to several factors. Firstly, the AN/AQS-22 is a highly specialized airborne low-frequency sonar system designed for specific naval applications, particularly anti-submarine warfare. Secondly, this contract was awarded on a sole-source basis to Raytheon, limiting the availability of competitive pricing data. Thirdly, 'similar' systems can vary significantly in capability, range, depth, and operational environment. To perform a robust comparison, one would need to identify systems with comparable technical specifications and assess their procurement costs, ideally from competitively awarded contracts. This information is not readily available from the provided data.

What are the specific performance metrics and Key Performance Parameters (KPPs) for the AN/AQS-22 system under this contract?

The provided data does not specify the Key Performance Parameters (KPPs) or detailed performance metrics for the AN/AQS-22 system under this Lot X and XI contract. Typically, such details are outlined in the contract's Statement of Work (SOW) or Performance Work Statement (PWS), which are not included here. However, as an Airborne Low Frequency Sonar (ALFS), its primary function is to detect submarines by emitting low-frequency sound pulses and analyzing the returning echoes. Key performance areas would likely include detection range, target classification accuracy, operational depth capabilities, acoustic performance in various sea states, and reliability (Mean Time Between Failures). The firm-fixed-price nature suggests that Raytheon is contractually obligated to meet certain performance standards.

What is Raytheon's track record with the AN/AQS-22 system and similar defense contracts?

Raytheon Company has a significant track record with the AN/AQS-22 system, as evidenced by this being 'Lot X and XI' production procurement, indicating prior successful awards and production. Raytheon is a major defense contractor with extensive experience in developing and manufacturing complex electronic systems, including sonar, radar, and command and control systems for various military branches. Their portfolio includes numerous large-scale defense contracts, demonstrating a capability to manage complex production, meet stringent performance requirements, and deliver systems on time and within budget for programs like the P-8 Poseidon, which utilizes the AN/AQS-22. Their long history in defense contracting suggests a mature understanding of government procurement processes and military operational needs.

What is the potential for cost growth or overruns given the long duration of this contract?

The contract has a duration of 3449 days (approximately 9.4 years) and is a Firm Fixed Price (FFP) type. While FFP contracts are designed to provide cost certainty to the government by shifting cost risk to the contractor, long durations always introduce potential for cost growth or overruns, albeit primarily borne by the contractor. Factors that could lead to issues include unforeseen increases in material costs, labor rates, or changes in government requirements (though changes under FFP can be complex and costly to negotiate). Effective program management by both the contractor and the government, including robust oversight and change control processes, is crucial to mitigate these risks over such an extended period. The 'RI' (Rhode Island) designation might indicate the primary performance location, but doesn't directly speak to cost overrun risk.

Are there any known issues or concerns regarding the reliability or effectiveness of the AN/AQS-22 system?

The provided data does not highlight any specific known issues or concerns regarding the reliability or effectiveness of the AN/AQS-22 system. The fact that this is a 'Lot X and XI' production procurement suggests that the system has likely undergone testing, validation, and has demonstrated acceptable performance in previous iterations or contracts. Defense systems, especially those in critical roles like anti-submarine warfare, undergo rigorous testing and evaluation. While no system is perfect, the continued procurement indicates that the system meets the Navy's operational requirements and has achieved a level of reliability deemed sufficient for its intended mission. Any significant, persistent issues would likely have been addressed in earlier contract phases or led to a halt in further procurement.

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: ONLY ONE SOURCE

Solicitation ID: N0001911R0061

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: RTX Corp

Address: 1847 W MAIN RD, PORTSMOUTH, RI, 02871

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: $258,424,424

Exercised Options: $258,424,424

Current Obligation: $258,424,424

Subaward Activity

Number of Subawards: 226

Total Subaward Amount: $284,485,092

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline