Raytheon Company awarded $274.7M for JPALS LRIP UNIT by the Department of the Navy, a sole-source contract

Contract Overview

Contract Amount: $274,727,992 ($274.7M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2019-05-22

End Date: 2025-08-31

Contract Duration: 2,293 days

Daily Burn Rate: $119.8K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIXED PRICE INCENTIVE

Sector: Defense

Official Description: JPALS LRIP UNIT

Place of Performance

Location: FULLERTON, ORANGE County, CALIFORNIA, 92833

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $274.7 million to RAYTHEON COMPANY for work described as: JPALS LRIP UNIT Key points: 1. Contract awarded to a single vendor suggests potential lack of competitive pricing pressure. 2. The contract's duration of over 6 years indicates a long-term commitment to this specific solution. 3. Fixed Price Incentive (FPI) contract type aims to balance cost control with performance incentives. 4. The absence of small business set-aside flags potential missed opportunities for smaller firms. 5. This award falls within the Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing sector. 6. The significant dollar value warrants close scrutiny of performance and cost overruns.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without comparable sole-source awards for similar systems. The Fixed Price Incentive structure implies that cost targets were established, but the final price could fluctuate based on performance. Without insight into the target costs and the contractor's actual performance against those targets, a definitive value-for-money assessment is difficult. However, the substantial investment suggests a critical need for the JPALS LRIP UNIT.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, Raytheon Company, was solicited. This approach is typically used when a unique capability exists or when it's impractical to obtain competition. The lack of multiple bidders means there was no direct price comparison or negotiation against alternative solutions, potentially leading to a higher price than if it had been competed.

Taxpayer Impact: Sole-source awards can result in higher costs for taxpayers as the government does not benefit from the price reductions typically achieved through competitive bidding.

Public Impact

The primary beneficiaries are the Department of the Navy and its operational units requiring the JPALS LRIP UNIT. This contract delivers critical navigation and guidance systems essential for military operations. The contract is associated with California (SN: CALIFORNIA), indicating potential work or delivery locations within the state. The award supports jobs within Raytheon Company and its supply chain, particularly in specialized manufacturing and engineering roles.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially impacting cost-effectiveness.
Long contract duration increases exposure to potential cost escalations or performance issues over time.
Lack of small business participation may limit opportunities for smaller, innovative firms in this domain.

Positive Signals

Fixed Price Incentive contract type incentivizes contractor performance towards cost and schedule goals.
The award signifies a commitment to a specific, likely advanced, navigation and guidance technology.
The substantial funding indicates the strategic importance of the JPALS LRIP UNIT to naval operations.

Sector Analysis

The contract falls within the 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' sector, a specialized area of defense manufacturing. This industry is characterized by high R&D investment, stringent quality requirements, and often long product development cycles. Comparable spending in this sector involves advanced avionics, radar systems, and other sophisticated navigation equipment, where large, established defense contractors like Raytheon are dominant players.

Small Business Impact

This contract was not competed with a small business set-aside. The sole-source nature of the award further precludes direct subcontracting opportunities for small businesses unless initiated by the prime contractor. This suggests that the primary focus was on securing a specific capability from an established provider, rather than fostering small business participation.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. The contract type (FPI) includes mechanisms for monitoring performance against established targets. Transparency may be limited due to the sole-source nature, but contract modifications and performance reports would be subject to internal review and potentially Inspector General oversight if performance issues or fraud are suspected.

Related Government Programs

Naval Navigation Systems
Aeronautical and Nautical Instrument Manufacturing
Defense Navigation Technology
JPALS Program

Risk Flags

Sole-source award
Long contract duration
Lack of small business participation

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $274.7 million to RAYTHEON COMPANY. JPALS LRIP UNIT

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 $274.7 million.

What is the period of performance?

Start: 2019-05-22. End: 2025-08-31.

What is the historical spending trend for JPALS LRIP UNIT by the Department of the Navy?

Analyzing historical spending for the JPALS LRIP UNIT requires access to detailed contract databases beyond this single award. However, the 'LRIP' designation (Low Rate Initial Production) suggests this contract is part of a phased production rollout for a new or upgraded system. Typically, LRIP contracts are followed by full-rate production contracts if the system proves successful and meets performance requirements. The total historical spending would depend on the number of LRIP contracts awarded, their individual values, and the subsequent full-rate production phases. Without prior LRIP awards or data on subsequent production, it's difficult to establish a long-term spending trend solely from this information.

How does the unit cost of the JPALS LRIP UNIT compare to similar navigation systems?

A direct comparison of the unit cost for the JPALS LRIP UNIT is challenging without knowing the specific technical capabilities and intended operational environment of the system. The provided data does not include a per-unit cost figure, only the total award amount. Furthermore, comparing it to 'similar' systems is difficult as 'similar' can encompass a wide range of technologies and performance levels. Navigation systems for military applications, especially those involving advanced guidance and integration with other platforms, often carry a premium due to R&D, specialized manufacturing, and stringent reliability requirements. A true benchmark would require identifying systems with comparable functionality, operational scope, and technological sophistication, which is not readily available from the provided data.

What are the key performance metrics and targets for this JPALS LRIP UNIT contract?

The provided data indicates the contract type is 'FIXED PRICE INCENTIVE' (PT: FIXED PRICE INCENTIVE), which implies that specific performance metrics and target costs were established between the Department of the Navy and Raytheon Company. However, the exact details of these metrics (e.g., accuracy, reliability, operational range, integration capabilities) and the associated target prices are not included in the summary data. These details would typically be found in the contract's statement of work and associated exhibits. The incentive structure suggests that exceeding certain performance targets could lead to higher profits for the contractor, while failing to meet them could result in reduced profit or penalties, depending on the contract's specific clauses.

What is Raytheon Company's track record with sole-source navigation system contracts?

Raytheon Company, as a major defense contractor, has a significant history of being awarded sole-source contracts, particularly for advanced and specialized systems where they possess unique capabilities or are the incumbent provider. Their track record with sole-source navigation systems would likely involve numerous contracts across various military branches for technologies ranging from tactical guidance to strategic positioning. Assessing this track record would involve examining past contract awards, performance reviews, and any associated cost or schedule issues. Given their established position in the defense industry, it is probable that they have successfully delivered numerous sole-source navigation solutions, though the efficiency and cost-effectiveness of such awards can vary.

What are the potential risks associated with a sole-source award for a critical system like JPALS LRIP UNIT?

The primary risk associated with a sole-source award for a critical system like the JPALS LRIP UNIT is the potential for inflated costs due to the lack of competitive pressure. Without competing bids, the government may not achieve the most favorable pricing. Additionally, there's a risk of vendor lock-in, where the government becomes heavily reliant on a single supplier, making future transitions or technology upgrades more complex and potentially expensive. Performance risks also exist; while the FPI contract type aims to mitigate this, a sole-source provider might have less urgency to innovate or address issues compared to a contractor facing competition. Finally, the absence of competition can sometimes mask inefficiencies in the contractor's operations or supply chain.

How does the duration of this contract (2293 days) impact program risk and cost?

A contract duration of 2293 days (approximately 6.3 years) for the JPALS LRIP UNIT introduces several risk and cost considerations. Longer durations increase the exposure to economic fluctuations, such as inflation, which can impact the cost of labor and materials, especially under fixed-price arrangements if not adequately indexed. There's also a higher risk of technological obsolescence; by the end of the contract period, the system's technology might be less advanced compared to emerging alternatives. Programmatic risks include potential shifts in military requirements or strategic priorities that could render the system less relevant. From a cost perspective, longer contracts often involve more complex management and oversight, and the potential for scope creep or unforeseen issues to arise over an extended period can lead to cost overruns if not managed diligently.

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: N0001918R1031

Offers Received: 1

Pricing Type: FIXED PRICE INCENTIVE (L)

Evaluated Preference: NONE

Contractor Details

Parent Company: Rockwell Collins Australia PTY Limited

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: $282,658,578

Exercised Options: $274,727,992

Current Obligation: $274,727,992

Actual Outlays: $9,189,374

Subaward Activity

Number of Subawards: 28

Total Subaward Amount: $4,302,855

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline