Raytheon Company awarded $1.61B for JPSS Common Ground System engineering and development

Contract Overview

Contract Amount: $1,614,355,683 ($1.6B)

Contractor: Raytheon Company

Awarding Agency: Department of Commerce

Start Date: 2010-09-22

End Date: 2018-08-31

Contract Duration: 2,900 days

Daily Burn Rate: $556.7K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS AWARD FEE

Sector: Other

Official Description: ENGINEERING SERVICES AND DEVELOPMENT LEADING TO THE DELIVERY OF THE JPSS COMMON GROUND SYSTEM INSTRUMENT AND SUPPORT.

Place of Performance

Location: AURORA, ARAPAHOE County, COLORADO, 80011

State: Colorado Government Spending

Plain-Language Summary

Department of Commerce obligated $1.61 billion to RAYTHEON COMPANY for work described as: ENGINEERING SERVICES AND DEVELOPMENT LEADING TO THE DELIVERY OF THE JPSS COMMON GROUND SYSTEM INSTRUMENT AND SUPPORT. Key points: 1. Contract awarded on a cost-plus-award-fee basis, allowing for potential overruns but incentivizing performance. 2. Sole-source award indicates a lack of competition, potentially impacting price discovery. 3. Significant contract value suggests a critical program for NOAA's satellite operations. 4. Long duration (2900 days) implies a complex, multi-year development effort. 5. No small business set-aside noted, raising questions about broader economic impact. 6. The contract's focus on engineering and development points to upfront investment in system creation.

Value Assessment

Rating: fair

The contract's cost-plus-award-fee structure makes direct value-for-money assessment challenging without detailed cost breakdowns and performance metrics. Benchmarking against similar large-scale satellite ground system development contracts would be necessary for a comprehensive comparison. The award amount of $1.61 billion over nearly eight years suggests a substantial investment, but the absence of competitive bidding prevents a clear assessment of whether this represents a fair market price.

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 typically occurs when a specific contractor possesses unique capabilities or intellectual property essential for the requirement. The lack of competition limits the government's ability to leverage market forces to achieve the lowest possible price and may indicate a higher cost than if multiple bidders had vied for the contract.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive pressure. Without competing offers, it is difficult to ascertain if the negotiated price reflects the best value achievable.

Public Impact

The JPSS Common Ground System is crucial for operating the Joint Polar Satellite System, providing vital environmental data for weather forecasting and climate monitoring. Benefits include improved accuracy and timeliness of weather predictions, aiding disaster preparedness and public safety. The system supports scientific research and data dissemination to various government agencies and the public. Workforce implications likely involve specialized engineering, software development, and system integration roles.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potentially increases costs for taxpayers.
Cost-plus-award-fee structure can lead to cost overruns if not managed stringently.
Long contract duration increases the risk of scope creep and evolving requirements.
Lack of small business participation may limit opportunities for smaller innovative firms.

Positive Signals

Awarding to Raytheon Company, a known defense and aerospace contractor, suggests access to established expertise.
The significant investment indicates the critical importance of the JPSS program.
The award-fee component incentivizes contractor performance, potentially leading to a higher quality system.
Focus on engineering and development suggests a commitment to building a robust and capable system.

Sector Analysis

This contract falls within the aerospace and defense sector, specifically focusing on satellite ground systems. The market for such specialized engineering and development services is characterized by high barriers to entry due to technical complexity and significant R&D investment. Comparable spending benchmarks would involve other large-scale satellite programs, such as those managed by NASA or other national space agencies, where multi-billion dollar investments for system development are common.

Small Business Impact

The contract was not set aside for small businesses, nor does it appear to have specific subcontracting requirements for them mentioned in the provided data. This suggests that the primary contractor, Raytheon, will likely perform the majority of the work. This could limit opportunities for small businesses to participate in this significant federal contract, potentially concentrating the economic benefits with larger corporations.

Oversight & Accountability

Oversight for this contract would typically be managed by the National Oceanic and Atmospheric Administration (NOAA) contracting officers and program managers. Given the cost-plus-award-fee structure, rigorous oversight of incurred costs and performance against award criteria would be essential. Transparency would be facilitated through regular reporting requirements and potential audits by government agencies or the Inspector General, though specific IG jurisdiction for this particular contract is not detailed.

Related Government Programs

Joint Polar Satellite System (JPSS)
NOAA Satellite Operations
Geostationary Operational Environmental Satellites (GOES)
National Weather Service Systems

Risk Flags

Sole-source award
Cost-plus-award-fee contract type
Long contract duration
Lack of small business participation

Frequently Asked Questions

What is this federal contract paying for?

Department of Commerce awarded $1.61 billion to RAYTHEON COMPANY. ENGINEERING SERVICES AND DEVELOPMENT LEADING TO THE DELIVERY OF THE JPSS COMMON GROUND SYSTEM INSTRUMENT AND SUPPORT.

Who is the contractor on this award?

The obligated recipient is RAYTHEON COMPANY.

Which agency awarded this contract?

Awarding agency: Department of Commerce (National Oceanic and Atmospheric Administration).

What is the total obligated amount?

The obligated amount is $1.61 billion.

What is the period of performance?

Start: 2010-09-22. End: 2018-08-31.

What is Raytheon Company's track record with similar large-scale satellite ground system contracts?

Raytheon Company has a substantial history in aerospace and defense, including significant work on complex systems for government clients. While specific details on prior JPSS ground system contracts are not provided, Raytheon has been involved in developing and integrating command, control, and data processing systems for various satellite programs, including military and civilian applications. Their experience often encompasses the full lifecycle from design and development to testing and sustainment. Assessing their performance on previous large, sole-source, cost-plus contracts would provide further insight into their ability to manage cost, schedule, and technical performance effectively for programs of this magnitude.

How does the $1.61 billion cost compare to similar satellite ground system development efforts?

Benchmarking the $1.61 billion cost against similar satellite ground system development efforts is challenging without access to detailed cost breakdowns and the specific scope of work for comparable projects. However, large-scale satellite programs, particularly those involving complex data processing and integration for national security or critical scientific missions, often incur costs in the hundreds of millions to billions of dollars. The Joint Polar Satellite System (JPSS) is a critical national asset, and its ground system is essential for its operation. The cost reflects the complexity of integrating instruments, data processing, and dissemination capabilities over an extended period. A more precise comparison would require analyzing the technical requirements, system complexity, and duration of other major satellite ground system programs.

What are the primary risks associated with a sole-source, cost-plus-award-fee contract of this size?

The primary risks associated with a sole-source, cost-plus-award-fee (CPAF) contract of this magnitude are twofold. Firstly, the sole-source nature eliminates competitive pressure, potentially leading to higher prices than might be achieved through open bidding. The government has less leverage to negotiate the best possible price. Secondly, the CPAF structure, while incentivizing performance through award fees, inherently allows for cost reimbursement plus a fee that can be adjusted based on performance. This can lead to cost overruns if the contractor's costs exceed initial estimates and if performance targets are not met or are poorly defined. Effective oversight is crucial to mitigate these risks by scrutinizing costs, ensuring performance metrics are aligned with program goals, and managing scope changes diligently.

How effective is the award-fee mechanism in ensuring program success for the JPSS Common Ground System?

The effectiveness of the award-fee mechanism in ensuring program success for the JPSS Common Ground System hinges on the clarity, measurability, and alignment of the award criteria with critical program objectives. If the criteria are well-defined and directly linked to key performance indicators such as system reliability, data accuracy, schedule adherence, and cost control, the award fee can strongly incentivize Raytheon to meet or exceed expectations. However, if the criteria are vague or easily manipulated, the incentive may be weakened, or the contractor might focus on achieving easily attainable metrics rather than overall program success. Regular reviews and transparent communication regarding the assessment of performance against these criteria are vital for the mechanism to function as intended.

What are the historical spending patterns for the JPSS program or similar NOAA satellite initiatives?

Historical spending patterns for the JPSS program and similar NOAA satellite initiatives typically show significant upfront investment during the development and acquisition phases, followed by sustained operational and sustainment costs. Large satellite programs often span many years, with budgets fluctuating based on program milestones. For JPSS, the initial development phase, as represented by this contract, would account for a substantial portion of its lifecycle cost. Subsequent phases would involve launch, operations, data processing, and eventual system upgrades or replacements. Analyzing past NOAA satellite programs reveals a trend of multi-billion dollar investments for complex systems, underscoring the significant financial commitment required for maintaining critical environmental monitoring capabilities.

Industry Classification

NAICS: Information › Other Telecommunications › All Other Telecommunications

Product/Service Code: SPACE VEHICLES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS AWARD FEE (R)

Evaluated Preference: NONE

Contractor Details

Address: 16800 E CENTRETECH PKWY, AURORA, CO, 80011

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: $1,987,353,828

Exercised Options: $1,987,353,828

Current Obligation: $1,614,355,683

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline