Raytheon Company awarded $160.7M for Navy's Cooperative Engagement Capability design and engineering services

Contract Overview

Contract Amount: $160,756,242 ($160.8M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2024-11-26

End Date: 2026-11-26

Contract Duration: 730 days

Daily Burn Rate: $220.2K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED 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 $160.8 million to RAYTHEON COMPANY for work described as: COOPERATIVE ENGAGEMENT CAPABILITY DESIGN AGENT AND ENGINEERING SERVICES Key points: 1. Contract awarded to a single, large defense contractor, indicating potential for limited competition. 2. Services focus on critical system design and engineering, suggesting a high degree of technical expertise required. 3. The contract duration of 730 days allows for sustained development and support. 4. Awarded as a cost-plus-fixed-fee type, which can lead to cost overruns if not managed carefully. 5. Geographic focus on Florida may indicate specific operational or testing requirements. 6. The North American Industry Classification System (NAICS) code 334511 points to specialized navigation and guidance system manufacturing.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without specific performance metrics or comparable contract data. The cost-plus-fixed-fee structure introduces inherent risk for cost control. However, the award to a major defense contractor like Raytheon suggests alignment with industry pricing for complex engineering services. Further analysis would require understanding the specific deliverables and the labor hours estimated.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. This approach is typically used when a specific contractor possesses unique capabilities, proprietary technology, or when urgency dictates a direct award. The lack of competition means that price discovery through market forces was bypassed, potentially leading to higher costs for the government.

Taxpayer Impact: Sole-source awards limit opportunities for other businesses to compete for government contracts and can result in taxpayers paying a premium due to the absence of competitive pressure on pricing.

Public Impact

The Department of the Navy benefits from specialized design and engineering services for its Cooperative Engagement Capability. This contract supports the development and enhancement of advanced combat systems for naval platforms. The primary impact is on national defense capabilities, ensuring the U.S. Navy maintains technological superiority. Workforce implications include employment for highly skilled engineers and technical specialists within Raytheon, primarily in Florida.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potentially increases cost to taxpayers.
Cost-plus-fixed-fee contract type carries a risk of cost escalation if not closely monitored.
Lack of transparency in the sole-source justification requires scrutiny.
Potential for contractor lock-in due to specialized nature of services.

Positive Signals

Award to a reputable contractor with a track record in defense systems.
Focus on critical system design and engineering ensures advanced capabilities for the Navy.
Long-term contract duration allows for sustained development and integration.
Services are crucial for maintaining technological advantage in naval warfare.

Sector Analysis

The defense sector, particularly naval systems, relies heavily on specialized engineering and design services for complex platforms. Companies like Raytheon are key players in this market, providing advanced solutions for navigation, detection, and combat systems. Spending in this area is driven by the need for technological superiority and modernization of military assets. Comparable spending benchmarks would involve analyzing other large-scale engineering contracts for defense systems within the Department of Defense.

Small Business Impact

As a sole-source award to a large prime contractor, this contract does not appear to include specific small business set-asides. There is no explicit information regarding subcontracting plans for small businesses. This could limit opportunities for small businesses to participate in this specific contract, although the prime contractor may engage them for specific components or services.

Oversight & Accountability

Oversight for this contract will likely fall under the Department of the Navy's contracting and program management offices. The cost-plus-fixed-fee structure necessitates rigorous financial oversight to ensure costs are reasonable and allocable. Transparency may be limited due to the sole-source nature, but contract performance reviews and audits by the Defense Contract Audit Agency (DCAA) would be standard oversight mechanisms. Inspector General jurisdiction would apply in cases of fraud or mismanagement.

Related Government Programs

Naval Combat Systems Development
Defense Engineering Services
Cooperative Engagement Capability Program
Raytheon Defense Contracts
Department of the Navy Procurement

Risk Flags

Sole-source award
Cost-plus-fixed-fee contract type
Potential for cost overruns
Limited competition

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $160.8 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 $160.8 million.

What is the period of performance?

Start: 2024-11-26. End: 2026-11-26.

What is Raytheon Company's track record with the Department of the Navy for similar engineering services?

Raytheon Company has a long-standing and extensive track record with the Department of the Navy, frequently securing contracts for advanced defense systems, including radar, combat systems, and C4ISR (Command, Control, Communications, Computers, Intelligence, Surveillance, and Reconnaissance) capabilities. Their involvement in programs like the Cooperative Engagement Capability (CEC) is well-established, indicating a deep understanding of the Navy's requirements and a proven ability to deliver complex engineering solutions. Historical data suggests Raytheon is a preferred and capable provider for such critical naval technology development, often receiving significant contract awards for research, development, testing, and production phases across various naval platforms.

How does the $160.7 million contract value compare to similar sole-source engineering contracts for naval systems?

The $160.7 million contract value for CEC design and engineering services is substantial, aligning with the typical scale of major sole-source awards for advanced defense systems. Sole-source contracts in this domain often exceed $100 million due to the specialized nature of the technology, the high cost of research and development, and the limited number of qualified contractors. While direct comparisons are difficult without specific contract details, this award is consistent with other large, sole-source engagements for critical naval system development, where the government identifies a single entity possessing unique capabilities essential for national security objectives. The cost-plus-fixed-fee structure also suggests a scope that may evolve, contributing to the overall value.

What are the primary risks associated with a sole-source, cost-plus-fixed-fee contract for engineering services?

The primary risks associated with a sole-source, cost-plus-fixed-fee (CPFF) contract for engineering services are twofold. Firstly, the sole-source nature bypasses competitive bidding, potentially leading to higher prices than if multiple vendors had competed. This lack of market pressure can reduce incentives for cost efficiency. Secondly, the CPFF structure means the government reimburses the contractor for allowable costs plus a fixed fee, which can incentivize cost overruns if not rigorously managed. The contractor may have less motivation to control expenses since costs are covered, and the fixed fee remains constant regardless of the final cost. Effective oversight, detailed cost tracking, and clear performance metrics are crucial to mitigate these risks.

What is the expected program effectiveness and impact of the Cooperative Engagement Capability (CEC) system?

The Cooperative Engagement Capability (CEC) system is designed to significantly enhance the combat effectiveness of U.S. Navy and Marine Corps platforms by enabling cooperative engagement of targets. Its core function is to provide a network-centric, real-time data link that allows participating units to share sensor data and engage targets beyond the engagement capabilities of individual platforms. This dramatically improves situational awareness, extends engagement range, and increases weapon system accuracy and effectiveness. The program's effectiveness is measured by its ability to provide a unified, high-fidelity tactical picture, enabling faster and more precise threat response, thereby bolstering overall fleet defense capabilities against sophisticated adversaries.

How has federal spending on naval system design and engineering evolved over the past five years?

Federal spending on naval system design and engineering has generally remained robust, driven by ongoing modernization efforts and the need to maintain technological superiority in a dynamic geopolitical landscape. While specific figures fluctuate annually based on budget allocations and program priorities, the Department of the Navy consistently invests billions in research, development, testing, and evaluation (RDT&E) for advanced platforms and systems. Spending trends reflect a focus on areas such as network-centric warfare, electronic warfare, unmanned systems, and advanced weapon technologies. Contracts like the one awarded to Raytheon for CEC are indicative of sustained investment in these critical capabilities, reflecting a strategic commitment to equipping the fleet with cutting-edge technology.

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: N0002423R5239

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: RTX Corp

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: $911,695,061

Exercised Options: $374,295,995

Current Obligation: $160,756,242

Subaward Activity

Number of Subawards: 3

Total Subaward Amount: $6,015,929

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline