DoD awards Raytheon $277M for Navigation Systems, raising concerns over cost-plus structure
Contract Overview
Contract Amount: $276,926,031 ($276.9M)
Contractor: Raytheon Company
Awarding Agency: Department of Defense
Start Date: 2002-12-13
End Date: 2012-09-30
Contract Duration: 3,579 days
Daily Burn Rate: $77.4K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 2
Pricing Type: COST PLUS AWARD FEE
Sector: Defense
Place of Performance
Location: PORTSMOUTH, NEWPORT County, RHODE ISLAND, 02871
Plain-Language Summary
Department of Defense obligated $276.9 million to RAYTHEON COMPANY for work described as: Key points: 1. The contract value of $277 million is significant for navigation systems. 2. Raytheon Company is a major defense contractor, indicating potential market concentration. 3. The cost-plus award fee structure presents a risk of cost overruns. 4. The sector is IT/Defense, with specific focus on navigation and guidance instruments.
Value Assessment
Rating: questionable
The contract uses a Cost Plus Award Fee (CPAF) structure, which can incentivize contractor performance but also carries a risk of higher costs compared to fixed-price contracts. Benchmarking against similar navigation system contracts is difficult without more detailed cost breakdowns.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, suggesting a competitive bidding process. However, the CPAF structure may have influenced the final pricing and the extent of price discovery.
Taxpayer Impact: The CPAF structure could lead to higher taxpayer costs if not managed effectively, despite the initial competitive award.
Public Impact
Ensures critical navigation systems for the Navy remain operational. Supports advanced technology development in the defense sector. Potential for cost overruns impacts overall defense budget allocation.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Cost-Plus Award Fee structure
- Lack of specific cost data for benchmarking
- Potential for contractor inefficiency
Positive Signals
- Awarded under full and open competition
- Raytheon is a reputable contractor
- Supports critical Navy operations
Sector Analysis
This contract falls within the IT/Defense sector, specifically focusing on the manufacturing of search, detection, navigation, guidance, aeronautical, and nautical systems. Spending in this niche area is driven by military readiness and technological advancement.
Small Business Impact
The data indicates this contract was awarded to Raytheon Company, a large prime contractor. There is no explicit information provided regarding small business participation or subcontracting.
Oversight & Accountability
The Cost Plus Award Fee (CPAF) structure requires robust oversight from the Department of the Navy to ensure contractor performance and control costs effectively. Monitoring award fee criteria is crucial for accountability.
Related Government Programs
- Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing
- Department of Defense Contracting
- Department of the Navy Programs
Risk Flags
- Cost-Plus Award Fee structure
- Potential for cost overruns
- Limited transparency on specific performance metrics
- Lack of small business subcontracting data
Tags
search-detection-navigation-guidance-aer, department-of-defense, ri, dca, 100m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $276.9 million to RAYTHEON COMPANY. See the official description on USAspending.
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 $276.9 million.
What is the period of performance?
Start: 2002-12-13. End: 2012-09-30.
What specific performance metrics are tied to the award fee to ensure value for taxpayer money?
The award fee is typically tied to contractor performance against predefined metrics such as meeting delivery schedules, quality standards, technical performance, and cost control. Detailed contract documentation would specify these metrics and their weighting to ensure the contractor is incentivized for efficiency and effectiveness, thereby maximizing value for the taxpayer.
How does the CPAF structure mitigate risks compared to other contract types for this specific system?
CPAF is intended to balance risk between the government and contractor, encouraging contractor efficiency by offering incentives for superior performance. Compared to cost-plus-fixed-fee (CPFF), it provides stronger incentives for cost savings. However, it still carries more risk of cost growth than fixed-price contracts if performance targets are not met or if scope creep occurs without proper management.
What is the projected lifecycle cost of these navigation systems, considering potential follow-on contracts?
The provided data only covers the initial award value and duration. Projecting lifecycle costs would require analyzing potential sustainment, upgrades, and future procurement needs for these navigation systems. Without data on sustainment contracts or modernization plans, a comprehensive lifecycle cost analysis is not feasible.
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: RESEARCH AND DEVELOPMENT › General Science and Technology R&D Services
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION
Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE
Offers Received: 2
Pricing Type: COST PLUS AWARD FEE (R)
Evaluated Preference: NONE
Contractor Details
Address: 1847 W MAIN RD, PORTSMOUTH, RI, 01
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Contract Characteristics
Cost or Pricing Data: YES
Timeline
Start Date: 2002-12-13
Current End Date: 2012-09-30
Potential End Date: 2012-09-30 00:00:00
Last Modified: 2012-09-18
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