Raytheon Company awarded $416.5M for Navy's Cooperative Engagement Capability, a critical defense system

Contract Overview

Contract Amount: $416,473,536 ($416.5M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2019-05-08

End Date: 2025-05-15

Contract Duration: 2,199 days

Daily Burn Rate: $189.4K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Defense

Official Description: COOPERATIVE ENGAGEMENT CAPABILITY DESIGN AGENT AND ENGINEERING SERVICES

Place of Performance

Location: SEMINOLE, PINELLAS County, FLORIDA, 33777

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $416.5 million to RAYTHEON COMPANY for work described as: COOPERATIVE ENGAGEMENT CAPABILITY DESIGN AGENT AND ENGINEERING SERVICES Key points: 1. Contract value represents significant investment in advanced defense technology. 2. Sole awardee suggests specialized capabilities or limited market for this specific system. 3. Cost-plus incentive fee structure aims to balance contractor performance with cost control. 4. Long duration indicates a complex, multi-year development and sustainment effort. 5. Focus on search, detection, and navigation systems highlights strategic defense priorities. 6. Geographic concentration in Florida may point to specific operational or R&D hubs.

Value Assessment

Rating: good

The $416.5 million award for the Cooperative Engagement Capability (CEC) is substantial, reflecting the complexity and strategic importance of the system. While direct comparisons are difficult without more specific system details, the cost-plus incentive fee (CPIF) structure suggests an effort to incentivize performance and cost efficiency. The contract's duration of nearly six years implies a long-term commitment, and the pricing will need careful monitoring to ensure value for money against evolving technological requirements and potential market shifts.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple bidders had the opportunity to compete. The fact that Raytheon Company received the sole award suggests they offered the most advantageous proposal based on the evaluation criteria. The level of competition, while present, may have been limited by the highly specialized nature of the Cooperative Engagement Capability, which requires specific technical expertise and integration capabilities.

Taxpayer Impact: Full and open competition is generally favorable for taxpayers as it encourages competitive pricing and innovation, potentially leading to better value. However, the specific outcome of a sole award means that the full benefits of price reduction through intense bidding might not have been realized.

Public Impact

The U.S. Navy benefits from enhanced situational awareness and engagement capabilities through the CEC system. This contract supports the development, integration, and sustainment of advanced radar and communication systems. The primary geographic impact is within the U.S. Navy's operational theaters and supporting infrastructure. Workforce implications include highly skilled engineers, technicians, and program managers in defense contracting.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns inherent in CPIF contracts if not rigorously managed.
Long-term reliance on a single contractor for a critical defense system could pose future risks.
Technological obsolescence is a risk given the multi-year duration and rapid pace of defense innovation.

Positive Signals

Awarded through full and open competition, suggesting a competitive process.
CPIF contract structure incentivizes contractor performance and cost control.
Long contract duration allows for sustained development and integration of complex capabilities.
Raytheon's established presence in defense systems indicates relevant experience.

Sector Analysis

The Cooperative Engagement Capability (CEC) falls within the defense electronics and systems manufacturing sector, specifically focusing on advanced radar, communication, and command and control systems. This sector is characterized by high R&D investment, long product development cycles, and significant government procurement. The market is dominated by a few large defense contractors capable of handling the complexity and scale of such programs. Spending benchmarks are difficult to establish precisely without knowing the specific system configuration, but investments in advanced combat systems often run into hundreds of millions or billions of dollars over their lifecycle.

Small Business Impact

There is no indication of a small business set-aside for this contract, nor is there explicit mention of subcontracting goals for small businesses. Given the prime contractor is Raytheon Company, a large defense firm, and the nature of the work involves highly specialized engineering and system integration, the direct impact on small businesses may be limited unless Raytheon actively engages them for specific components or services. Further analysis of subcontracting plans would be needed to assess the full impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract will likely be managed by the Department of the Navy's contracting and program management offices. The Cost Plus Incentive Fee (CPIF) structure necessitates close monitoring of costs and performance metrics to ensure the government receives value. Transparency will depend on the reporting requirements stipulated in the contract and the Navy's adherence to public disclosure policies for defense contracts. Inspector General involvement is possible for audits and investigations into potential fraud, waste, or abuse.

Related Government Programs

Naval Combat Systems
Advanced Radar Technology
Command and Control Systems
Defense Communication Networks
AEGIS Combat System

Risk Flags

Long contract duration increases risk of technological obsolescence.
CPIF contracts require diligent oversight to manage costs effectively.
Sole awardee may limit future competitive pricing for sustainment.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $416.5 million to RAYTHEON COMPANY. COOPERATIVE ENGAGEMENT CAPABILITY DESIGN AGENT AND ENGINEERING SERVICES

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 $416.5 million.

What is the period of performance?

Start: 2019-05-08. End: 2025-05-15.

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

Analyzing historical spending for the CEC program requires accessing detailed contract award data over its lifecycle. Typically, such advanced defense systems involve significant upfront development costs followed by sustainment and upgrade expenditures. Without specific historical data points for this contract vehicle or related prior contracts, it's challenging to establish a precise trend. However, the current $416.5 million award suggests a substantial, ongoing investment. Generally, programs like CEC see consistent, often increasing, funding as the system is fielded, upgraded, and maintained to counter evolving threats. Future spending will likely depend on program milestones, technological advancements, and strategic defense priorities.

How does the pricing structure (CPIF) compare to other similar defense system development contracts?

The Cost Plus Incentive Fee (CPIF) structure is a common contracting method for complex defense systems where the final costs are uncertain. It allows the government to reimburse the contractor for allowable costs plus a fee that is adjusted based on performance against pre-determined targets (e.g., cost, schedule, technical performance). Compared to fixed-price contracts, CPIF offers more flexibility for the government in managing evolving requirements but requires robust oversight to prevent cost overruns. Other similar contracts might use Cost Plus Award Fee (CPAF), which also incentivizes performance but with a larger portion of the fee being discretionary, or firm-fixed-price contracts for more mature technologies. The CPIF here suggests a balance between sharing risk and incentivizing specific outcomes for the CEC system.

What are the key performance indicators (KPIs) being incentivized under this CPIF contract?

While the specific Key Performance Indicators (KPIs) for this Raytheon Company contract are not publicly detailed, CPIF contracts typically incentivize a combination of factors crucial to defense systems. These often include achieving specific technical performance thresholds (e.g., radar range, detection accuracy, data link reliability), meeting delivery schedules for system components or full integration, and controlling costs against a target. For the Cooperative Engagement Capability, KPIs might relate to the system's ability to track and engage multiple targets simultaneously, its resilience to electronic warfare, and the speed and security of its data sharing capabilities. The incentive fee is adjusted based on how well Raytheon meets or exceeds these pre-defined targets.

What is Raytheon Company's track record with the Cooperative Engagement Capability (CEC) program or similar defense systems?

Raytheon Company has a long and established history in developing and producing advanced defense systems, including radar, command and control, and communication technologies. They have been a significant player in the development and sustainment of the Cooperative Engagement Capability (CEC) program for the U.S. Navy, often serving as a prime contractor or key subcontractor. Their experience with the AEGIS Combat System and other integrated air and missile defense programs provides a strong foundation for managing complex projects like CEC. Raytheon's track record generally includes successful delivery of sophisticated systems, though like any major defense contractor, they have also faced scrutiny regarding cost, schedule, and performance on specific programs. Their extensive experience suggests a high likelihood of technical competence for this contract.

What are the potential risks associated with the long duration (2199 days) of this contract?

The long duration of this contract, approximately six years, presents several potential risks. Firstly, technological obsolescence is a significant concern; the threat landscape and available technologies can evolve rapidly, potentially making the system or its components outdated before the contract concludes. Secondly, cost escalation due to inflation, unforeseen technical challenges, or changes in material costs over such an extended period can impact the overall value. Thirdly, maintaining consistent program oversight and contractor focus over many years can be challenging. Finally, long-term reliance on a single contractor for a critical system might reduce flexibility and competitive pressure in future sustainment or upgrade phases.

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

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: N0002418R5200

Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE (V)

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: $440,716,700

Exercised Options: $440,716,698

Current Obligation: $416,473,536

Actual Outlays: $43,091,675

Subaward Activity

Number of Subawards: 147

Total Subaward Amount: $302,785,582

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline