DoD's $102M Raytheon Contract for Navigation Systems: A Long-Term Investment with Fair Competition
Contract Overview
Contract Amount: $102,481,145 ($102.5M)
Contractor: Raytheon Company
Awarding Agency: Department of Defense
Start Date: 2003-01-30
End Date: 2020-03-05
Contract Duration: 6,244 days
Daily Burn Rate: $16.4K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 1
Pricing Type: COST PLUS INCENTIVE FEE
Sector: Defense
Place of Performance
Location: PORTSMOUTH, NEWPORT County, RHODE ISLAND, 02871
Plain-Language Summary
Department of Defense obligated $102.5 million to RAYTHEON COMPANY for work described as: Key points: 1. Significant long-term contract value of over $102 million. 2. Raytheon Company is the sole awardee, indicating a specific capability or established relationship. 3. The contract spans nearly 17 years, suggesting a need for sustained support or evolving technology. 4. Focus on Search, Detection, Navigation, Guidance systems highlights critical defense infrastructure.
Value Assessment
Rating: fair
The contract's Cost Plus Incentive Fee structure suggests that pricing is tied to performance and cost control, which can lead to variable final costs. Without specific benchmarks for similar navigation systems, a definitive value assessment is challenging, but the long duration implies significant investment.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, which is positive for price discovery. However, the sole award to Raytheon Company suggests that either they were the only bidder meeting requirements or offered the best value, potentially limiting the competitive pressure on price over the contract's long life.
Taxpayer Impact: While competition was initially open, the long-term sole award to one entity may not maximize taxpayer savings over the contract's extensive duration.
Public Impact
Ensures continued operation and modernization of critical naval navigation and guidance systems. Supports advanced defense capabilities for the Department of the Navy. Potential for technological advancements in search and detection systems. Long-term commitment implies stability for defense supply chains.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Long contract duration (nearly 17 years) may lead to cost overruns or outdated technology.
- Sole awardee to Raytheon Company could indicate limited competition over time.
- Cost Plus Incentive Fee structure can lead to unpredictable final costs.
Positive Signals
- Awarded under full and open competition.
- Addresses critical defense needs for navigation and guidance systems.
- Long-term contract provides stability for a key defense contractor.
Sector Analysis
This contract falls within the 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' sector. Spending in this area is crucial for national defense, with significant government investment in advanced technological systems. Benchmarks are difficult without specific system comparisons, but the value indicates a substantial program.
Small Business Impact
The data does not indicate any specific subcontracting goals or participation from small businesses. The primary awardee is a large corporation, suggesting that opportunities for small businesses would likely be through subcontracting, which is not detailed here.
Oversight & Accountability
The long duration of this definitive contract necessitates ongoing oversight to ensure cost control, adherence to performance requirements, and adaptation to technological advancements. The Cost Plus Incentive Fee structure requires careful monitoring of incentives and cost drivers by the Department of Defense.
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
- Long contract duration increases risk of cost escalation and technological obsolescence.
- Sole awardee may limit competitive pressure on pricing over time.
- Cost Plus Incentive Fee structure can lead to unpredictable final costs.
- Lack of detail on small business participation.
Tags
search-detection-navigation-guidance-aer, department-of-defense, ri, definitive-contract, 100m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $102.5 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 $102.5 million.
What is the period of performance?
Start: 2003-01-30. End: 2020-03-05.
What was the rationale for awarding a single definitive contract for nearly 17 years under full and open competition, and how was long-term value ensured?
The rationale likely stems from the specialized nature of the navigation systems and the need for sustained, integrated support. Full and open competition at the outset aimed to secure the best initial offer. Long-term value is typically managed through contract clauses, performance incentives, and periodic reviews, though the extended duration inherently carries risks of cost escalation and technological obsolescence.
How does the Cost Plus Incentive Fee (CPIF) structure impact the final cost and taxpayer exposure for this extensive contract?
The CPIF structure incentivizes the contractor (Raytheon) to control costs and meet performance targets. If costs are lower than target and performance is met or exceeded, both the government and contractor share in the savings. Conversely, if costs exceed targets, the contractor bears a greater share of the overrun, but the government's final cost can still be higher than initially projected, especially over a long contract period.
What are the potential risks associated with a nearly 17-year contract for navigation systems, and what mitigation strategies are in place?
Key risks include technological obsolescence, as navigation technology evolves rapidly. Cost overruns are also a concern due to the long timeframe and CPIF structure. Mitigation strategies likely involve built-in review periods, opportunities for contract modification or re-competition for upgrades, and robust government oversight to manage performance and costs throughout the contract's life.
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 › C – National Defense R&D Services
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION
Offers Received: 1
Pricing Type: COST PLUS INCENTIVE FEE (V)
Contractor Details
Address: 1847 W MAIN RD, PORTSMOUTH, RI, 02871
Business Categories: Category Business, Not Designated a Small Business
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: NO
Timeline
Start Date: 2003-01-30
Current End Date: 2020-03-05
Potential End Date: 2020-03-05 00:00:00
Last Modified: 2020-06-25
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