Raytheon Company awarded $380M for Cooperative Engagement Capability (CEC) systems, a sole-source contract

Contract Overview

Contract Amount: $379,896,942 ($379.9M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2013-09-27

End Date: 2019-10-31

Contract Duration: 2,225 days

Daily Burn Rate: $170.7K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: COOPERATIVE ENGAGEMENT CAPABILITY (CEC)

Place of Performance

Location: SEMINOLE, PINELLAS County, FLORIDA, 33777

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $379.9 million to RAYTHEON COMPANY for work described as: COOPERATIVE ENGAGEMENT CAPABILITY (CEC) Key points: 1. Contract awarded as sole-source, limiting competitive price discovery. 2. Significant investment in advanced defense systems for naval platforms. 3. Long-term contract duration suggests ongoing program support needs. 4. Focus on search, detection, and navigation systems highlights critical military capabilities. 5. Contract awarded to a single, established defense contractor.

Value Assessment

Rating: fair

The contract value of approximately $380 million over its period of performance is substantial. However, without a competitive bidding process, it is difficult to benchmark the value for money effectively. The cost-plus-fixed-fee (CPFF) contract type can incentivize cost overruns if not managed rigorously. Comparisons to similar sole-source procurements for advanced defense systems would be necessary for a more precise value assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning there was no open competition. This approach is typically used when a unique capability is required, or when only one responsible source can provide the product or service. The lack of competition means that taxpayers did not benefit from potential cost savings that could arise from a bidding process.

Taxpayer Impact: Sole-source awards limit the government's ability to negotiate the best possible price, potentially leading to higher costs for taxpayers compared to competitively awarded contracts.

Public Impact

Enhances the combat effectiveness of U.S. Navy vessels through advanced sensor and data-linking capabilities. Supports the development and sustainment of critical defense technology. Primarily benefits the U.S. Navy's operational readiness and strategic positioning. Implies continued employment and investment within the defense industrial base, particularly for Raytheon.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially increasing costs.
Cost-plus-fixed-fee structure requires diligent oversight to control expenditures.
Long contract duration may obscure true market value without periodic re-competition.

Positive Signals

Addresses a critical, unique capability for naval defense.
Awarded to a contractor with demonstrated expertise in complex defense systems.
Supports long-term program stability and technological advancement.

Sector Analysis

The Cooperative Engagement Capability (CEC) falls within the broader defense electronics and systems manufacturing sector. This sector is characterized by high research and development costs, long product lifecycles, and significant government procurement. The market is dominated by a few large prime contractors, including Raytheon. Spending on advanced combat systems like CEC is crucial for maintaining technological superiority in naval warfare.

Small Business Impact

This contract does not appear to have a specific small business set-aside. As a sole-source award to a large prime contractor, the primary subcontracting opportunities would likely flow through Raytheon. The extent to which small businesses will benefit depends on Raytheon's subcontracting plan and their engagement with the small business industrial base.

Oversight & Accountability

Oversight for this contract would primarily be managed by the Defense Contract Management Agency (DCMA), ensuring compliance with contract terms and conditions. The cost-plus-fixed-fee nature necessitates rigorous financial oversight to monitor costs and prevent overruns. Transparency is generally maintained through contract reporting mechanisms, though specific details of cost breakdowns may be proprietary.

Related Government Programs

Naval Combat Systems
Advanced Radar and Sensor Technology
Defense Communication Systems
Missile Defense Programs

Risk Flags

Sole-source award
Cost-plus contract type
Long contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $379.9 million to RAYTHEON COMPANY. COOPERATIVE ENGAGEMENT CAPABILITY (CEC)

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 $379.9 million.

What is the period of performance?

Start: 2013-09-27. End: 2019-10-31.

What is the historical spending trend for the Cooperative Engagement Capability (CEC) program?

Historical spending data for the Cooperative Engagement Capability (CEC) program indicates a significant and sustained investment by the Department of Defense. While this specific contract represents a large sum, it is part of a larger, ongoing effort to equip naval platforms with advanced situational awareness and engagement capabilities. Analyzing prior contract awards, modifications, and task orders related to CEC would reveal a multi-year spending trajectory, likely showing consistent funding for development, production, and sustainment. This trend underscores the program's strategic importance and the long-term commitment to its operational readiness and technological evolution. Without access to a comprehensive contract history database, precise year-over-year spending figures are unavailable, but the scale of this award suggests substantial prior and anticipated future investment.

How does the pricing structure (Cost Plus Fixed Fee) typically impact program costs compared to other contract types?

The Cost Plus Fixed Fee (CPFF) contract type, used here, reimburses the contractor for allowable costs incurred, plus a predetermined fixed fee representing profit. This structure is often employed for research and development or complex systems where cost estimation is difficult. While it allows for flexibility and encourages contractor innovation, it carries a risk of cost overruns if not managed diligently. The fixed fee provides a predictable profit margin for the contractor, but the government bears the risk of escalating costs. Compared to Firm-Fixed-Price (FFP) contracts, where the contractor assumes more cost risk, CPFF can lead to higher overall program costs for the government if cost controls are weak. However, for highly uncertain or novel projects, it can be more appropriate than FFP, provided robust oversight is in place.

What are the key performance indicators (KPIs) used to assess the success of the CEC program?

Key Performance Indicators (KPIs) for the Cooperative Engagement Capability (CEC) program would likely focus on its effectiveness in enhancing naval warfare capabilities. These could include metrics related to system reliability and uptime, the accuracy and range of target detection and tracking, the speed and success rate of data dissemination to other platforms, and the overall improvement in engagement success rates for defensive and offensive weapon systems. Additionally, KPIs might measure the system's integration capabilities with various naval platforms and other command and control systems. Performance would also be assessed against delivery schedules and budget adherence, although the CPFF structure shifts some cost risk to the government. Ultimately, the program's success is measured by its contribution to the Navy's mission readiness and its ability to provide a decisive tactical advantage.

What is Raytheon's track record with sole-source defense contracts of this magnitude?

Raytheon Company has a substantial track record of being awarded large-scale, sole-source defense contracts, particularly in areas of advanced technology and systems integration. As a major defense prime contractor, it frequently engages in contracts where its unique capabilities or existing platform integration make it the only viable source. These contracts often span multiple years and involve significant dollar values, similar to the CEC award. While sole-source awards are necessary for certain specialized procurements, they necessitate rigorous government oversight to ensure fair pricing and effective performance. Raytheon's history with such contracts indicates experience in managing complex programs and fulfilling critical defense requirements, but also highlights the ongoing need for vigilant contract management by the awarding agencies to maximize value for the taxpayer.

Are there any known risks associated with the long-term sustainment and modernization of the CEC system?

Yes, there are several potential risks associated with the long-term sustainment and modernization of complex defense systems like the Cooperative Engagement Capability (CEC). One significant risk is technological obsolescence; as technology rapidly advances, the CEC system may require continuous upgrades to remain effective against evolving threats. Another risk is the increasing cost of sustainment over the system's lifecycle, including maintenance, repair, and spare parts, especially if sole-source components become scarce or expensive. Contractor dependency is also a risk; reliance on a single provider like Raytheon for sustainment and upgrades can limit flexibility and potentially lead to higher costs. Furthermore, integration challenges can arise when attempting to incorporate new technologies or interface with next-generation platforms. Finally, budget fluctuations within the Department of Defense could impact the funding available for necessary modernization efforts, potentially delaying or curtailing upgrades.

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

Solicitation ID: N0002413R5212

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Rockwell Collins Australia PTY Limited

Address: 7887 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: $423,739,690

Exercised Options: $406,918,220

Current Obligation: $379,896,942

Actual Outlays: $75,335

Subaward Activity

Number of Subawards: 63

Total Subaward Amount: $12,489,724

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline