Raytheon awarded $67.5M contract for fire control systems, highlighting long-term defense sector engagement

Contract Overview

Contract Amount: $67,484,790 ($67.5M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 1999-09-30

End Date: 2011-02-09

Contract Duration: 4,150 days

Daily Burn Rate: $16.3K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIXED PRICE INCENTIVE

Sector: Defense

Official Description: 199912!1700!4268!BZ005!NAVAL SEA SYSTEMS COMMAND !N0002499C5460 !A!*!* !19990930!20010531!001410539!001339159!001339159!N!5D744!RAYTHEON COMPANY INC !528 BOSTON POST RD !SUDBURY !MA!01776!57700!005!44!PORTSMOUTH !NEWPORT !RHODE ISLD!0001!+000003505306!N!N!000000000000!1265!FIRE CONTROL TRANSMITTING & RECEIVING EQ !A5 !WEAPONS !2CLN!DIRECTOR/DIRECTOR CONTROLLER !3769!1!*!*!*!B!N!Z!B !N!L!1!001!N!4A!Z!N!A!* !* !N!C!*!Z!Z!A!A!A!*!* !*!N!A!C!N!*!*!*!*!*!

Place of Performance

Location: PORTSMOUTH, NEWPORT County, RHODE ISLAND, 02871

State: Rhode Island Government Spending

Plain-Language Summary

Department of Defense obligated $67.5 million to RAYTHEON COMPANY for work described as: 199912!1700!4268!BZ005!NAVAL SEA SYSTEMS COMMAND !N0002499C5460 !A!*!* !19990930!20010531!001410539!001339159!001339159!N!5D744!RAYTHEON COMPANY INC !528 BOSTON POST RD !SUDBURY !MA!01776!57700!005!44!PORTSMOUTH !NEWPOR… Key points: 1. Contract value of $67.5 million indicates significant investment in advanced defense technology. 2. Sole-source award suggests limited market alternatives or specialized capabilities required. 3. Long contract duration (over 11 years) implies a need for sustained support and system evolution. 4. Focus on fire control systems places this contract within a critical area of naval warfare. 5. The award to Raytheon, a major defense contractor, aligns with established industry players. 6. Fixed Price Incentive contract type aims to balance cost control with performance incentives.

Value Assessment

Rating: fair

The contract value of $67.5 million for fire control transmitting and receiving equipment appears substantial. Benchmarking this against similar sole-source awards for specialized defense systems is challenging without more granular data on system complexity and scope. However, the extended duration of over 11 years (from initial award to final delivery) suggests a potentially high total cost of ownership. The fixed-price incentive structure indicates an attempt to manage costs, but the ultimate price could vary based on performance outcomes.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded as 'NOT AVAILABLE FOR COMPETITION,' indicating that the agency determined only one source could fulfill the requirement. This often occurs when a contractor possesses unique technology, intellectual property, or has a critical role in maintaining existing systems. The lack of competition means that price discovery through market forces was bypassed, potentially leading to higher costs than if multiple bids were solicited.

Taxpayer Impact: For taxpayers, a sole-source award means the absence of competitive pressure to drive down prices. This necessitates strong internal oversight and justification from the agency to ensure the price paid is reasonable and represents good value for the specialized equipment or services.

Public Impact

The U.S. Navy benefits from the acquisition of advanced fire control systems essential for naval operations. This contract supports the development, production, and sustainment of critical defense hardware. The geographic impact is primarily centered around Raytheon's facilities in Massachusetts and potentially the end-user locations within the Navy. Workforce implications include employment opportunities for engineers, technicians, and manufacturing personnel at Raytheon and its subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing, potentially increasing costs for taxpayers.
Long contract duration raises concerns about potential cost overruns and evolving technological relevance.
Lack of transparency in the justification for sole-sourcing requires careful agency review.
Fixed Price Incentive contracts can lead to higher final costs if performance targets are exceeded or incentives are heavily utilized.

Positive Signals

Award to a major defense contractor like Raytheon suggests access to established expertise and technology.
Focus on fire control systems addresses a critical national security need.
The contract type aims to incentivize contractor performance, potentially leading to better system outcomes.
Long-term engagement can foster deeper understanding and integration of complex defense systems.

Sector Analysis

This contract falls within the Defense Industrial Base sector, specifically focusing on electronic and combat systems. The market for fire control systems is highly specialized, dominated by a few large defense contractors capable of meeting stringent military specifications. Spending in this area is driven by national security priorities and the need to maintain technological superiority. Comparable spending benchmarks would typically involve other sole-source or limited-competition awards for similar complex weapon system components.

Small Business Impact

Information regarding small business participation, including set-asides or subcontracting plans, is not explicitly detailed in the provided data. As a sole-source award to a large prime contractor, the direct impact on small business set-asides is likely minimal. However, Raytheon may engage small businesses as subcontractors for specialized components or services, contributing indirectly to the small business ecosystem within the defense supply chain.

Oversight & Accountability

Oversight for this contract would typically fall under the purview of the Naval Sea Systems Command (NAVSEA) and the Defense Contract Management Agency (DCMA). These entities are responsible for monitoring contract performance, ensuring compliance with terms and conditions, and verifying delivery of goods and services. The Inspector General's office within the Department of Defense may also conduct audits or investigations to ensure fiscal responsibility and prevent fraud, waste, and abuse.

Related Government Programs

Naval Weapons Systems
Defense Electronics Manufacturing
Combat Systems Integration
Department of Defense Procurement

Risk Flags

Sole-source justification requires rigorous review to ensure necessity and fair pricing.
Long contract duration increases exposure to cost growth and technological obsolescence.
Fixed Price Incentive contracts can lead to higher final costs if targets are not well-defined or managed.
Lack of competition limits market visibility and potential for cost savings.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $67.5 million to RAYTHEON COMPANY. 199912!1700!4268!BZ005!NAVAL SEA SYSTEMS COMMAND !N0002499C5460 !A!*!* !19990930!20010531!001410539!001339159!001339159!N!5D744!RAYTHEON COMPANY INC !528 BOSTON POST RD !SUDBURY !MA!01776!57700!005!44!PORTSMOUTH !NEWPORT !RHODE ISLD!0001!+000003505306!N!N!000000000000!1265!FIRE CONTROL TRANSMITTING & RECEIVING EQ !A5 !WEAPONS !2CLN!DIRECTOR/DIRECTOR CONTROLLER !3769!1!*!*!*!B!N!Z!B !N!L!1!0

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 $67.5 million.

What is the period of performance?

Start: 1999-09-30. End: 2011-02-09.

What is the specific type of fire control system being procured and its intended application within the naval fleet?

The contract specifies 'FIRE CONTROL TRANSMITTING & RECEIVING EQ' under the Product Service Code (PSC) 'A5' (Weapons). This broadly refers to the electronic systems responsible for detecting targets, calculating firing solutions, and directing weapon systems. Given the award to NAVAL SEA SYSTEMS COMMAND, it is highly probable that these systems are intended for integration into various naval platforms, such as warships (destroyers, cruisers, aircraft carriers) or submarines. These systems are critical for the effective employment of offensive and defensive weapon suites, including missiles, guns, and electronic warfare countermeasures. The exact model or generation of the system is not detailed, but it falls under the 'WEAPONS' category, indicating a direct role in armament.

How does the $67.5 million contract value compare to historical spending on similar fire control systems by the Navy?

Direct comparison of the $67.5 million contract value to historical spending on similar fire control systems is difficult without more specific details on the system's capabilities, quantity, and the contract's scope (e.g., R&D, production, sustainment). However, the value suggests a significant procurement or upgrade. Historically, major naval weapon systems and their associated fire control components can range from tens to hundreds of millions of dollars over their lifecycle. This particular award, being a sole-source fixed-price incentive contract spanning over a decade, implies a substantial, long-term investment. To provide a precise comparison, one would need to analyze similar sole-source awards for comparable systems (e.g., Aegis components, advanced radar systems) awarded around the same period or identify specific line items for fire control equipment in past Navy budgets.

What are the key performance metrics and incentives outlined in the Fixed Price Incentive (FPI) contract structure?

A Fixed Price Incentive (FPI) contract structure aims to share the risks and rewards between the government and the contractor. Key performance metrics would typically relate to technical specifications, delivery schedules, and quality standards of the fire control transmitting and receiving equipment. The 'incentive' aspect means that the final contract price is determined by the contractor's performance against mutually agreed-upon targets. If the contractor achieves or exceeds performance targets (e.g., delivering ahead of schedule, meeting higher quality standards, achieving specific performance thresholds), they may receive a higher profit. Conversely, if performance falls short, their profit is reduced. There is usually a ceiling price that the government will not exceed, and a target cost and target profit. The FPI structure encourages the contractor to control costs and meet performance objectives, as their final profit is directly linked to these factors.

What is Raytheon's track record with the Naval Sea Systems Command and in the fire control systems domain?

Raytheon Company is a major, well-established defense contractor with a long and extensive history of providing complex systems and components to the U.S. Navy and other military branches. Their track record with the Naval Sea Systems Command (NAVSEA) is substantial, encompassing a wide array of programs, including radar, sonar, combat systems, and ordnance. Specifically in the domain of fire control systems, Raytheon has been a key player, developing and supplying critical technologies for various naval platforms. Their experience likely includes previous generations of fire control equipment, integration with combat management systems, and ongoing sustainment support. This specific contract, awarded as sole-source, suggests that NAVSEA views Raytheon as possessing the necessary expertise, proprietary technology, or existing infrastructure to fulfill this requirement effectively, building upon their established relationship and past performance.

What are the potential risks associated with a sole-source award for advanced defense equipment like fire control systems?

The primary risk associated with a sole-source award is the potential for inflated pricing due to the lack of competitive pressure. Without competing bids, the government may pay more than it would in a fully competed environment. Another risk is complacency from the contractor, who may have less incentive to innovate or improve efficiency if they are guaranteed the contract. Furthermore, reliance on a single source can create vulnerabilities if that contractor faces financial difficulties, production issues, or geopolitical challenges. There's also a risk that the government's technical requirements might not be as rigorously challenged or refined as they would be during a competitive bidding process, potentially leading to suboptimal system design or capabilities over the long term.

How does this contract fit into the broader landscape of U.S. Navy modernization and shipbuilding efforts?

This contract for fire control transmitting and receiving equipment is a crucial component of the U.S. Navy's ongoing modernization efforts, particularly concerning its combat systems and platforms. Advanced fire control systems are fundamental to the effectiveness of modern naval warfare, enabling the precise targeting and engagement of threats across various domains (air, surface, subsurface). Whether this contract supports new ship construction, upgrades to existing vessels, or the sustainment of current systems, it directly contributes to the Navy's ability to maintain its technological edge. In the context of shipbuilding, the integration of such systems is a critical path item, influencing design choices and production schedules. The long duration also suggests a commitment to supporting these systems throughout the operational life of the platforms they are installed on, aligning with the Navy's strategy for fleet readiness and future capability development.

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Offers Received: 1

Pricing Type: FIXED PRICE INCENTIVE (L)

Contractor Details

Address: 528 BOSTON POST RD, SUDBURY, MA, 05

Business Categories: Category Business, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Contract Characteristics

Cost or Pricing Data: NO

Timeline