Raytheon Company awarded $74.8M contract for search, detection, and navigation systems by the Department of Defense

Contract Overview

Contract Amount: $74,862,486 ($74.9M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2005-12-30

End Date: 2008-09-30

Contract Duration: 1,005 days

Daily Burn Rate: $74.5K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Place of Performance

Location: SEMINOLE, PINELLAS County, FLORIDA, 33777

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $74.9 million to RAYTHEON COMPANY for work described as: Key points: 1. Contract awarded on a cost-plus-fixed-fee basis, which can lead to cost overruns if not managed carefully. 2. The contract was not competed, raising questions about potential price discovery and value for money. 3. Performance period spans over three years, indicating a significant, long-term need for these systems. 4. The North American Industry Classification System (NAICS) code 334511 points to a specialized manufacturing sector. 5. Awarded by the Defense Contract Management Agency, suggesting a focus on defense-related operational needs. 6. The contract value of $74.8 million represents a substantial investment in advanced technological systems.

Value Assessment

Rating: fair

The contract's cost-plus-fixed-fee structure necessitates close monitoring to ensure costs remain within reasonable bounds. Without a competitive bidding process, it is difficult to benchmark the pricing against market rates or similar contracts. The total award value of $74.8 million is significant, and the lack of competition makes it challenging to definitively assess whether the government is receiving optimal value for its investment. Further analysis of cost breakdowns and performance metrics would be needed for a more precise valuation.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not open to competition from multiple bidders. This approach is typically used when a specific contractor possesses unique capabilities, proprietary technology, or when urgency precludes a full and open competition. The lack of competition limits the government's ability to leverage market forces to drive down prices and ensure the most cost-effective solution is selected.

Taxpayer Impact: Taxpayers may not benefit from the most competitive pricing due to the absence of a bidding process. This could potentially lead to higher costs compared to a competed contract.

Public Impact

The Department of Defense is the primary beneficiary, receiving advanced search, detection, navigation, guidance, and related systems. These systems are crucial for enhancing operational capabilities, situational awareness, and mission effectiveness within defense operations. The contract's geographic impact is centered in Florida, where the award was made. The contract supports specialized manufacturing and technical expertise within the defense industrial base.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may result in higher costs for taxpayers.
Cost-plus-fixed-fee contracts require diligent oversight to prevent cost escalation.
Sole-source awards can limit innovation by excluding potential new entrants.

Positive Signals

Award to a known entity (Raytheon Company) suggests a reliance on established capabilities.
The contract addresses critical defense needs for advanced systems.
The fixed-fee component provides some cost certainty for the government.

Sector Analysis

The contract falls within the 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' sector, a highly specialized area within the broader aerospace and defense industry. This sector is characterized by high barriers to entry, significant R&D investment, and stringent quality and performance requirements. Spending in this area is often driven by national security imperatives and technological advancements. Comparable spending benchmarks would typically be found within other large defense contracts for similar complex systems.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb: false'. Furthermore, there is no explicit mention of subcontracting requirements for small businesses. This suggests that the primary contractor, Raytheon Company, will likely perform the majority of the work, with limited direct opportunities for small businesses within this specific award. The impact on the small business ecosystem is therefore minimal for this particular contract.

Oversight & Accountability

Oversight for this contract is managed by the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor performance and compliance. The cost-plus-fixed-fee structure necessitates rigorous financial oversight to track expenditures and manage the fixed fee component. Transparency is generally maintained through contract reporting mechanisms, though specific details of cost breakdowns may be sensitive. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Defense Procurement
Aerospace and Defense Manufacturing
Navigation Systems
Radar and Sensor Technology
Military Electronics

Risk Flags

Sole-source award
Cost-plus-fixed-fee contract type
Lack of explicit small business subcontracting

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $74.9 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 (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $74.9 million.

What is the period of performance?

Start: 2005-12-30. End: 2008-09-30.

What is Raytheon Company's track record with similar Department of Defense contracts?

Raytheon Company, now part of RTX, has a long and extensive history of contracting with the Department of Defense, delivering a wide array of defense systems, including those related to search, detection, navigation, and guidance. They are a major defense contractor known for producing complex electronic warfare systems, missiles, radar, and other advanced technologies. Their track record includes numerous large-scale, high-value contracts across various military branches. While specific performance metrics for past contracts are often proprietary or aggregated in public reports, Raytheon's continued success in securing significant defense awards suggests a generally positive performance history and a strong capability to meet the demanding requirements of the DoD. However, like any large contractor, they may have faced scrutiny or challenges on specific projects, which would be detailed in contract performance reviews or GAO reports if significant issues arose.

How does the $74.8 million award compare to other contracts for similar navigation and detection systems?

The $74.8 million award for search, detection, navigation, guidance, and related systems is a substantial sum, indicative of the complexity and advanced nature of the technology involved. To benchmark this value, one would typically compare it against other sole-source or competed contracts awarded by the Department of Defense or other government agencies for similar equipment. For instance, contracts for radar systems, advanced avionics, or integrated navigation suites can range from tens of millions to billions of dollars, depending on the scope, quantity, and technological sophistication. Given this contract's sole-source nature and cost-plus-fixed-fee structure, it's challenging to make a direct value-for-money comparison without detailed cost breakdowns and performance data. However, the amount is consistent with significant procurements in the defense electronics sector, where specialized R&D and manufacturing capabilities command premium pricing.

What are the primary risks associated with a sole-source, cost-plus-fixed-fee contract of this magnitude?

The primary risks associated with a sole-source, cost-plus-fixed-fee (CPFF) contract of this magnitude ($74.8 million) are twofold. Firstly, the sole-source nature eliminates competitive pressure, which can lead to suboptimal pricing and potentially higher costs for the government compared to a competed contract. The government may not achieve the best possible value if alternative solutions or more cost-effective providers are not considered. Secondly, the CPFF structure, while providing flexibility, carries inherent risks of cost escalation. The contractor is reimbursed for allowable costs plus a predetermined fixed fee. If cost controls are weak or unforeseen issues arise, the total cost to the government can significantly exceed initial estimates. Effective oversight, detailed cost tracking, and robust negotiation are critical to mitigating these risks and ensuring the government receives the intended value.

What is the expected effectiveness or impact of these systems on defense operations?

The systems procured under this contract – search, detection, navigation, and guidance – are fundamental to modern military operations. Enhanced search and detection capabilities improve situational awareness, enabling forces to identify threats earlier and more accurately. Advanced navigation systems are critical for precise mission execution, whether for aircraft, vessels, or ground units, ensuring they reach their objectives safely and efficiently. Guidance systems are essential for the effective deployment of munitions and for controlling the trajectory of platforms. Collectively, these systems are expected to significantly bolster the operational effectiveness of the Department of Defense by improving accuracy, reducing risk to personnel, increasing mission success rates, and providing a critical technological advantage in complex operational environments. The specific impact will depend on the precise capabilities of the systems delivered.

How does this contract fit into the broader historical spending patterns for defense navigation and detection equipment?

This $74.8 million contract for search, detection, navigation, and guidance systems aligns with historical spending patterns in the defense sector, which consistently allocates significant resources to advanced technological capabilities. The Department of Defense has a long-standing requirement for sophisticated systems that provide a technological edge. Spending in areas like radar, electronic warfare, avionics, and navigation has been a staple of defense budgets for decades, driven by evolving threats and the need for superior performance. While specific dollar amounts fluctuate year-to-year based on program cycles and strategic priorities, the consistent investment in these types of systems underscores their critical importance. This contract, awarded on a sole-source basis, may reflect a specific need for proprietary technology or a continuation of an existing platform, fitting within the broader trend of substantial, ongoing investment in defense electronics and systems.

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: FIRE CONTROL EQPT.

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 1501 72ND ST N, SAINT PETERSBU, FL

Business Categories: Category Business, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Contract Characteristics

Cost or Pricing Data: YES

Timeline