DoD's $387.7M Raytheon Contract for Navigation Systems Lacked Competition, Awarded in 2006

Contract Overview

Contract Amount: $1,694,462,604 ($1.7B)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2006-07-29

End Date: 2018-07-17

Contract Duration: 4,371 days

Daily Burn Rate: $387.7K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: IT

Place of Performance

Location: MCKINNEY, COLLIN County, TEXAS, 75071

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $1.69 billion to RAYTHEON COMPANY for work described as: Key points: 1. The contract awarded to Raytheon Company for navigation systems was not competed, raising questions about potential overspending. 2. With a total award of $387.7 million, the lack of competition limits price discovery and may not reflect market value. 3. The long duration (2006-2018) and firm-fixed-price nature suggest potential risks if costs escalated beyond initial estimates. 4. This spending falls within the 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' sector.

Value Assessment

Rating: questionable

The contract's value of $387.7 million over 12 years, awarded without competition, makes a direct pricing assessment difficult. Without comparable contracts or competitive bids, it's hard to determine if this price was optimal.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award to Raytheon Company. The absence of competition means there was no mechanism for price discovery through market forces, potentially leading to a higher price than if multiple vendors had bid.

Taxpayer Impact: The lack of competition on this $387.7 million contract means taxpayers may have paid more than necessary, as there was no pressure from competing bids to lower the price.

Public Impact

Taxpayers may have overpaid due to the absence of competitive bidding on a significant $387.7 million contract. The long contract period (2006-2018) for navigation systems raises questions about the technology's relevance and potential for obsolescence. The Department of the Army's reliance on a single vendor for this duration could indicate a lack of strategic sourcing or market analysis.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition
Long contract duration
Potential for cost overruns
Sole-source award

Positive Signals

Awarded to a known entity (Raytheon)
Firm-fixed-price contract type

Sector Analysis

This contract falls under the 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' sector. Spending in this area is critical for military operations, but competitive procurement is essential to ensure value for money.

Small Business Impact

There is no indication that small businesses were involved in this contract, either as prime contractors or subcontractors. The sole-source nature of the award likely excluded opportunities for small business participation.

Oversight & Accountability

The long duration and sole-source nature of this contract warrant review by oversight bodies to ensure accountability and assess whether competitive procedures were bypassed inappropriately.

Related Government Programs

Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing
Department of Defense Contracting
Department of the Army Programs

Risk Flags

Lack of competition
Sole-source award
Long contract duration (2006-2018)
Potential for outdated technology
Uncertainty of fair pricing

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $1.69 billion to RAYTHEON COMPANY. See the official description on USAspending.

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 Army).

What is the total obligated amount?

The obligated amount is $1.69 billion.

What is the period of performance?

Start: 2006-07-29. End: 2018-07-17.

What was the justification for awarding this contract as sole-source, and were alternative competitive strategies considered?

The provided data indicates the contract was 'NOT COMPETED'. Without further documentation, the specific justification for this sole-source award is unknown. Typically, sole-source justifications require demonstrating that only one responsible source can provide the required supplies or services, or that a compelling urgency exists. It is unclear if alternative competitive strategies were considered or if this was a direct award based on specific requirements.

How did the firm-fixed-price structure impact the government's risk exposure over the contract's 12-year lifespan?

A firm-fixed-price (FFP) contract generally shifts most of the cost risk to the contractor. However, over a 12-year period, the initial price might not have accounted for significant technological advancements or unforeseen market fluctuations. While the government was protected from cost overruns on the original scope, the FFP could have led to the government paying a premium if the contractor's actual costs were lower than anticipated, or conversely, if costs escalated significantly, the contractor might have sought modifications or the government might have missed out on potential savings from updated technologies.

What is the current market landscape for navigation systems, and how does Raytheon's offering compare in terms of innovation and cost-effectiveness?

The market for navigation systems has likely evolved considerably since 2006. Modern systems may incorporate GPS, inertial navigation, and advanced sensor fusion, offering greater precision and reliability. Without specific details on the systems procured under this contract, a direct comparison is difficult. However, the long duration suggests the procured technology might be nearing obsolescence, and current market offerings could provide superior performance at a potentially lower cost due to advancements and increased competition in the sector.

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: COMM/DETECT/COHERENT RADIATION

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Rockwell Collins Australia PTY Limited

Address: 2501 W UNIVERSITY DRIVE M, MC KINNEY, TX, 75070

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $1,694,564,351

Exercised Options: $1,694,564,351

Current Obligation: $1,694,462,604

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline