Raytheon awarded $157M for AN/USG-3B systems, a sole-source contract with a long performance period

Contract Overview

Contract Amount: $157,011,139 ($157.0M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2012-09-28

End Date: 2022-06-30

Contract Duration: 3,562 days

Daily Burn Rate: $44.1K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: AN/USG-3B FOR E2D AA16:AA20

Place of Performance

Location: SEMINOLE, PINELLAS County, FLORIDA, 33777

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $157.0 million to RAYTHEON COMPANY for work described as: AN/USG-3B FOR E2D AA16:AA20 Key points: 1. Contract awarded to a single vendor, raising questions about price competitiveness. 2. Long contract duration suggests a sustained need for these specialized systems. 3. The firm fixed-price structure shifts some risk to the contractor. 4. Performance is in Florida, a state with significant defense industry presence. 5. The contract value is substantial, indicating a critical defense capability. 6. No small business set-aside was utilized for this procurement.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to its sole-source nature and the specialized equipment involved. Without competitive bids, it's difficult to ascertain if the $157 million represents a fair market price. The long performance period (over 9 years) could indicate either a stable, predictable need or a lack of urgency in seeking more cost-effective alternatives. The firm fixed-price (FFP) award type suggests that the contractor bears the risk of cost overruns, which is generally favorable for the government, but the absence of competition limits the ability to validate the initial pricing.

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. The data does not provide justification for this sole-source award, such as a specific technological requirement or a lack of available alternatives. The absence of a competitive bidding process means that taxpayers did not benefit from potential price reductions that could arise from multiple companies vying for the contract.

Taxpayer Impact: Sole-source awards limit the government's ability to secure the best possible price, potentially leading to higher costs for taxpayers. Without competition, there is less incentive for the contractor to offer the most competitive pricing.

Public Impact

The primary beneficiaries are the Department of the Navy and potentially other Department of Defense entities requiring the AN/USG-3B system. The contract delivers critical search, detection, navigation, and guidance systems for aeronautical and nautical applications. The geographic impact is concentrated in Florida, where the contract is being performed. This contract supports specialized roles within the defense industry, likely requiring a skilled technical workforce.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition for a significant contract value raises concerns about potential overpayment.
The sole-source justification is not provided, making it difficult to assess necessity.
Long contract duration without apparent re-competition could indicate missed opportunities for cost savings.

Positive Signals

Firm Fixed Price (FFP) contract type shifts cost overrun risk to the contractor.
The contract supports critical defense capabilities, ensuring operational readiness.
Performance in Florida aligns with existing defense industry infrastructure.

Sector Analysis

The contract falls under the 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' sector. This is a specialized segment within the broader aerospace and defense industry, characterized by high technological requirements and significant R&D investment. The market is often dominated by a few large, established defense contractors. Comparable spending benchmarks are difficult to establish without more specific system details, but contracts for advanced defense electronics and systems can range from tens to hundreds of millions of dollars.

Small Business Impact

This contract was not awarded as a small business set-aside, nor does it indicate any subcontracting requirements for small businesses. The sole-source nature of the award further limits opportunities for small businesses to participate in this specific procurement. The impact on the small business ecosystem for this contract is likely minimal, as the primary awardee is a large corporation.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Navy's contracting and program management offices. Transparency is limited due to the sole-source nature and lack of publicly available justification. Accountability measures are inherent in the contract terms, particularly the firm fixed-price structure, but the effectiveness of oversight in ensuring optimal value is questionable without competitive benchmarking. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Naval Aviation Systems
Defense Electronics Procurement
Search and Detection Systems
Aeronautical and Nautical Instruments
Sole-Source Defense Contracts

Risk Flags

Sole-source award without clear justification.
Lack of competitive bidding may lead to suboptimal pricing.
Long contract duration could impact technology relevance over time.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $157.0 million to RAYTHEON COMPANY. AN/USG-3B FOR E2D AA16:AA20

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 $157.0 million.

What is the period of performance?

Start: 2012-09-28. End: 2022-06-30.

What is the specific justification for awarding this contract on a sole-source basis to Raytheon Company?

The provided data does not include the specific justification for the sole-source award of the AN/USG-3B contract to Raytheon Company. Typically, sole-source procurements are justified under circumstances such as unique capabilities, proprietary technology, urgent and compelling needs where only one source can reasonably fulfill the requirement, or when competition is deemed not feasible or not in the best interest of the government. Without this official justification, it is impossible to independently verify the necessity of bypassing the competitive bidding process for this $157 million contract.

How does the $157 million contract value compare to similar AN/USG-3B system procurements or related defense electronics contracts?

Direct comparisons for the AN/USG-3B system are difficult without more specific details on the quantity and configuration of the systems procured under this $157 million contract. However, the value is substantial and falls within the range of major defense electronics and systems contracts. For context, other sole-source or limited-competition contracts for advanced radar, navigation, or communication systems for military platforms can easily reach similar or higher figures, especially when spanning multiple years. The firm fixed-price nature suggests a defined scope, but the lack of competitive bids prevents a definitive value assessment against market alternatives.

What are the primary risks associated with a sole-source contract of this magnitude and duration?

The primary risk associated with a sole-source contract of this magnitude ($157 million) and duration (over 9 years) is the potential for inflated pricing due to the absence of competition. Without competing bids, the government may not achieve the best possible value for its expenditure. Other risks include vendor lock-in, where the government becomes overly reliant on a single supplier, potentially limiting future flexibility or innovation. There's also a risk that without competitive pressure, the contractor may have less incentive to proactively manage costs or improve efficiency beyond contractual minimums. Oversight becomes critical to mitigate these risks.

What is the significance of the 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' classification for this contract?

This classification indicates that the contract is for highly specialized equipment crucial for military operations, particularly in naval and aviation contexts. These systems are vital for situational awareness, target acquisition, and safe navigation. The manufacturing of such instruments requires advanced engineering, precise calibration, and adherence to stringent military specifications. This sector is typically characterized by high barriers to entry, significant R&D investment, and a limited number of qualified manufacturers, which often influences procurement strategies, including the potential for sole-source awards.

How has Raytheon Company's performance been on previous contracts, particularly those with the Department of the Navy?

Raytheon Company is a major defense contractor with a long history of performance on numerous contracts for the Department of Defense, including the Navy. While specific performance metrics for this particular AN/USG-3B contract are not yet available due to its nature and duration, Raytheon generally has a track record of delivering complex defense systems. However, like many large contractors, they may have faced past performance issues on certain contracts, including cost overruns or schedule delays, which are often documented in government performance databases. A comprehensive review would require accessing detailed past performance evaluations.

What are the implications of the contract's long duration (3562 days) for government oversight and potential future technology upgrades?

The long duration of this contract (nearly 10 years) necessitates sustained government oversight to ensure continued value and adherence to terms. It implies a long-term strategic need for the AN/USG-3B system. However, such extended periods can also pose challenges for incorporating technological advancements. The government might need to consider contract modifications, separate upgrade contracts, or future competitive procurements to ensure the systems remain current with evolving threats and technologies. Without provisions for upgrades or technology refreshes within the contract, there's a risk of the procured systems becoming outdated before the contract's end.

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: SERVICE AND TRADE EQPT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Rockwell Collins Australia PTY Limited

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, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $167,884,258

Exercised Options: $157,011,139

Current Obligation: $157,011,139

Subaward Activity

Number of Subawards: 1

Total Subaward Amount: $228,375

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline