Raytheon Company awarded $191M contract for search, detection, and navigation systems by the Department of the Navy

Contract Overview

Contract Amount: $191,015,747 ($191.0M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2008-07-21

End Date: 2014-07-31

Contract Duration: 2,201 days

Daily Burn Rate: $86.8K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: CEC PRODUCTION FY08

Place of Performance

Location: SEMINOLE, PINELLAS County, FLORIDA, 33777

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $191.0 million to RAYTHEON COMPANY for work described as: CEC PRODUCTION FY08 Key points: 1. Contract awarded through full and open competition, suggesting a competitive bidding process. 2. The contract duration of 2201 days (approx. 6 years) indicates a long-term need for these systems. 3. The award value of $191M over six years suggests a significant investment in defense technology. 4. The contract is for firm-fixed-price, which shifts cost risk to the contractor. 5. The North American Industry Classification System (NAICS) code 334511 points to specialized manufacturing in navigation and detection instruments. 6. The contract was awarded to a single entity, Raytheon Company, a major defense contractor.

Value Assessment

Rating: good

The contract value of $191M over approximately six years averages to about $31.8M annually. Without specific benchmarks for similar search, detection, and navigation systems, a precise value-for-money assessment is challenging. However, given the specialized nature of defense systems and the firm-fixed-price structure, the pricing is likely competitive within the defense sector. Raytheon's established presence in this market suggests they can deliver these complex systems at a reasonable cost, though further benchmarking against comparable contracts would provide a more definitive evaluation.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES,' indicating that while the competition was intended to be broad, specific sources may have been excluded for defined reasons. This suggests a structured procurement process. The number of bidders is not specified, but the 'full and open' designation implies multiple interested parties were likely considered. This level of competition generally promotes price discovery and encourages competitive pricing.

Taxpayer Impact: A full and open competition, even with exclusions, aims to secure the best value for taxpayers by allowing multiple qualified vendors to bid, potentially driving down costs.

Public Impact

The Department of the Navy benefits from advanced search, detection, and navigation systems essential for its operations. These systems are critical for national security and military readiness. The contract supports the defense industrial base, particularly in specialized electronics manufacturing. The geographic impact is primarily within Florida, where the contract was awarded, potentially creating or sustaining jobs in that region.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for vendor lock-in if the systems are highly proprietary or require specialized maintenance.
Reliance on a single large contractor, Raytheon, could limit future competition for upgrades or replacements.
The exclusion of sources, even if justified, warrants scrutiny to ensure fair competition.

Positive Signals

Firm-fixed-price contract shifts cost risk to the contractor, potentially saving taxpayer money if costs are managed effectively.
Award to a major defense contractor like Raytheon suggests a high likelihood of successful delivery of complex technology.
The long contract duration indicates a stable, long-term requirement, allowing for efficient production planning.

Sector Analysis

The defense electronics manufacturing sector is characterized by high barriers to entry due to complex technology requirements, stringent quality standards, and significant R&D investment. Companies like Raytheon operate within a market driven by government procurement, where contracts are often long-term and high-value. Spending in this sector is crucial for maintaining military technological superiority. Comparable spending benchmarks would typically involve analyzing other contracts for similar sensor, navigation, and guidance systems awarded by various military branches.

Small Business Impact

The contract details do not indicate any specific small business set-asides. Given the nature of the specialized defense systems and the prime contractor being Raytheon, it is likely that any small business involvement would be through subcontracting opportunities. Analysis of Raytheon's subcontracting plan would be necessary to determine the extent of small business participation and its impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Navy's contracting and program management offices. The firm-fixed-price nature of the contract provides a degree of accountability for cost overruns, as the contractor assumes that risk. Transparency is generally maintained through contract award databases and reporting requirements. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Naval Sea Systems Command (NAVSEA) Contracts
Defense Advanced Research Projects Agency (DARPA) Programs
Tactical Technology Development
Aerospace and Defense Manufacturing
Navigation and Guidance Systems Procurement

Risk Flags

Potential for cost overruns if scope changes significantly.
Risk of performance degradation if quality is compromised under fixed price.
Dependency on a single large contractor for critical systems.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $191.0 million to RAYTHEON COMPANY. CEC PRODUCTION FY08

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 $191.0 million.

What is the period of performance?

Start: 2008-07-21. End: 2014-07-31.

What is Raytheon Company's track record with the Department of Defense for similar systems?

Raytheon Company, now part of RTX Corporation, has a long and extensive history of providing advanced defense systems, including search, detection, and navigation technologies, to the Department of Defense and allied nations. They are a primary contractor for numerous critical platforms and systems across all branches of the military. Their portfolio includes radar systems, sonar, electronic warfare suites, and guidance systems for aircraft, ships, and missiles. Historically, Raytheon has demonstrated a strong capability in delivering complex, high-technology solutions, though like any large defense contractor, they have also faced scrutiny regarding cost, performance, and delivery timelines on specific programs. A detailed review of their past performance on contracts with similar NAICS codes and contract types would be necessary for a comprehensive assessment.

How does the $191M contract value compare to other similar procurements for navigation and detection systems?

Benchmarking the $191M contract value requires comparing it against similar procurements for specialized search, detection, and navigation systems within the defense sector. Contracts for such advanced technologies can vary significantly based on system complexity, quantity, technological sophistication, and the specific platform (e.g., aircraft, ship, ground vehicle). For instance, a radar system for a fighter jet might differ vastly in cost from a sonar system for a submarine. Without access to a comprehensive database of comparable contracts, including their scope, duration, and specific capabilities, it is difficult to definitively state whether $191M represents a high, low, or average value. However, given the approximate six-year duration, the annual average of roughly $31.8M suggests a substantial, long-term investment in critical defense capabilities.

What are the primary risks associated with this firm-fixed-price contract for the government?

While firm-fixed-price (FFP) contracts are generally favored for shifting cost risk to the contractor, they are not without risks for the government. A primary risk is that the contractor, in an effort to maximize profit under an FFP agreement, might cut corners on quality, materials, or testing, potentially leading to subpar performance or reduced system lifespan. Another risk is that the initial price might be inflated if the contractor anticipates unforeseen difficulties or if the government's cost estimation is inaccurate. Furthermore, if significant design changes or scope creep occur after contract award, the government may face substantial change order costs, negating some of the FFP benefits. Lastly, if the contractor faces severe financial distress or goes out of business, the government could face significant disruption and costs to find an alternative supplier.

What is the expected program effectiveness and impact of these systems on naval operations?

The systems procured under this contract are described as 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing.' These are fundamental capabilities for naval operations. Effective search and detection systems are crucial for situational awareness, threat identification (e.g., enemy vessels, aircraft, submarines), and surveillance. Advanced navigation systems ensure precise positioning and course plotting for vessels and aircraft, which is vital for mission success, safety, and efficiency. Guidance systems are essential for directing weapons or autonomous vehicles. The effectiveness of these specific systems will depend on their technological maturity, integration with existing naval platforms, and the training of personnel. Successful implementation is expected to enhance the Navy's operational readiness, tactical advantage, and overall mission accomplishment in diverse maritime environments.

How has federal spending in the 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' sector evolved over recent fiscal years?

Federal spending within the NAICS code 334511 (Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing) is predominantly driven by the Department of Defense and other national security agencies. Over recent fiscal years, spending in this sector has generally remained robust, reflecting the ongoing need for advanced military technology and modernization. Factors influencing spending include geopolitical tensions, the development of new threats, and the lifecycle of existing defense systems. While specific year-over-year figures fluctuate based on major program awards and budget allocations, the overall trend indicates a sustained and significant investment in maintaining and advancing capabilities in areas such as radar, sonar, electronic warfare, and precision navigation. This particular contract, awarded in FY08 for a duration extending into FY14, represents a portion of this broader spending trend.

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: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: N0002408R5203

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 8333 BRYAN DAIRY RD, LARGO, FL, 33777

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $227,235,983

Exercised Options: $227,235,983

Current Obligation: $191,015,747

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline