DoD's $46.4M Javelin JV contract for engineering hours shows limited competition and potential value concerns

Contract Overview

Contract Amount: $46,358,368 ($46.4M)

Contractor: Raytheon/Lockheed Martin Javelin JV

Awarding Agency: Department of Defense

Start Date: 2016-12-22

End Date: 2020-09-30

Contract Duration: 1,378 days

Daily Burn Rate: $33.6K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: IGF::CL,CT::IGF TASK ORDER 0004 FOR 59,132 ENGINEERING HOURS; FOR TECHNCIAL DIRECTIVE LETTER 17-04 ENTITLED "ALL UP ROUND (AUR) AFFORDABILITY" PROGRAM

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $46.4 million to RAYTHEON/LOCKHEED MARTIN JAVELIN JV for work described as: IGF::CL,CT::IGF TASK ORDER 0004 FOR 59,132 ENGINEERING HOURS; FOR TECHNCIAL DIRECTIVE LETTER 17-04 ENTITLED "ALL UP ROUND (AUR) AFFORDABILITY" PROGRAM Key points: 1. The contract was awarded on a sole-source basis, raising questions about price discovery and potential overpayment. 2. A significant portion of the contract value is tied to engineering hours, suggesting a focus on technical expertise rather than a defined deliverable. 3. The duration of the contract (over 3 years) indicates a long-term need for these specialized engineering services. 4. The specific focus on 'AUR Affordability' suggests a strategic effort to manage costs within a key defense program. 5. The contractor is a joint venture of two major defense players, Raytheon and Lockheed Martin, indicating significant industry consolidation. 6. The contract's value, while substantial, needs to be benchmarked against similar engineering support contracts for defense programs.

Value Assessment

Rating: questionable

The contract's value of $46.4 million for engineering hours is difficult to assess without specific benchmarks for similar technical directive letter support. The cost-plus-fixed-fee (CPFF) structure, while common for R&D and complex services, can lead to cost overruns if not carefully managed. The absence of a competitive bidding process further complicates a direct value-for-money assessment. Benchmarking against industry standards for engineering services in the defense sector, particularly for specialized areas like missile affordability, would be crucial to determine if the pricing is fair and reasonable.

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 only one vendor possesses the unique capabilities or proprietary knowledge required for the service. The lack of competition means that the government did not benefit from a bidding process that could have driven down prices through market forces. This raises concerns about whether the government secured the best possible price and terms.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive pressure. Without competing the requirement, there is less assurance that the selected contractor offered the most cost-effective solution available in the market.

Public Impact

The primary beneficiaries are the Department of the Army and the Javelin missile program, which receives critical engineering support. The services delivered include specialized engineering expertise focused on affordability analysis for 'All Up Round' missile systems. The contract's performance is likely concentrated within the defense industrial base, potentially impacting workforce development in specialized engineering fields. The geographic impact is primarily associated with the contractor's facilities, likely in states where Raytheon and Lockheed Martin have significant operations.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potentially increases costs for taxpayers.
Cost-plus-fixed-fee contract type can incentivize cost growth if not rigorously managed.
Lack of transparency in the sole-source justification makes it difficult to assess necessity.
The specific focus on 'affordability' might indicate underlying cost challenges in the Javelin program.

Positive Signals

Award to a joint venture of two major defense contractors suggests access to high-level expertise.
Contract addresses a critical aspect of defense program management: affordability.
Long contract duration indicates a sustained need for specialized engineering support.

Sector Analysis

This contract falls within the Engineering Services sector (NAICS 541330), a critical component of the defense industrial base. The market for defense engineering services is characterized by high barriers to entry, specialized knowledge requirements, and significant government oversight. Major defense contractors like Raytheon and Lockheed Martin dominate this space. Spending in this area is driven by the need for advanced technological development, sustainment, and modernization of military platforms. Comparable spending benchmarks would typically involve analyzing other sole-source or competed engineering support contracts for major weapon systems.

Small Business Impact

This contract does not appear to involve small business set-asides, as indicated by 'sb': false. The contractor is a joint venture of two large defense corporations. There is no explicit information regarding subcontracting plans for small businesses within this specific task order. The absence of small business participation could limit opportunities for smaller firms to contribute to this defense program and potentially reduce the overall economic benefit to the small business ecosystem.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Army's contracting and program management offices. Given the sole-source nature and CPFF structure, rigorous oversight of incurred costs, labor hours, and adherence to the technical directive letter is essential. The Inspector General's office within the Department of Defense may conduct audits or investigations into contract performance and financial management. Transparency is limited by the sole-source award, but contract modifications and performance reports should be available through official channels.

Related Government Programs

Javelin Weapon System
Missile Affordability Initiatives
Department of Defense Engineering Services
Cost Plus Fixed Fee Contracts
Sole Source Defense Procurements

Risk Flags

Sole-source award
Cost-plus contract type
Lack of competitive bidding
Potential for cost overruns

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $46.4 million to RAYTHEON/LOCKHEED MARTIN JAVELIN JV. IGF::CL,CT::IGF TASK ORDER 0004 FOR 59,132 ENGINEERING HOURS; FOR TECHNCIAL DIRECTIVE LETTER 17-04 ENTITLED "ALL UP ROUND (AUR) AFFORDABILITY" PROGRAM

Who is the contractor on this award?

The obligated recipient is RAYTHEON/LOCKHEED MARTIN JAVELIN JV.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Army).

What is the total obligated amount?

The obligated amount is $46.4 million.

What is the period of performance?

Start: 2016-12-22. End: 2020-09-30.

What is the specific justification for the sole-source award of this contract to the Javelin JV?

The provided data does not include the specific justification for the sole-source award. Typically, sole-source procurements are justified when only one responsible source is available or capable of meeting the agency's needs. This could be due to proprietary technology, unique expertise, or urgent requirements where competition is not feasible. For this contract, the justification would likely center on the unique capabilities and established role of the Raytheon/Lockheed Martin Javelin JV in supporting the Javelin missile system's development and sustainment. A thorough review of the contract file, including the Justification and Approval (J&A) document, would be necessary to understand the precise rationale and assess its validity.

How does the 'All Up Round (AUR) Affordability' technical directive compare to other engineering support contracts for similar weapon systems?

Without access to specific details of the 'All Up Round (AUR) Affordability' technical directive and comparable contracts, a direct comparison is challenging. However, affordability initiatives are common in defense programs, especially for mature systems like the Javelin, where cost reduction is a key objective. Engineering support contracts for similar weapon systems often focus on areas like system upgrades, lifecycle cost reduction, manufacturing process improvements, and supply chain optimization. The value and scope of such contracts can vary significantly based on the complexity of the system, the maturity of the technology, and the specific affordability goals. Benchmarking would require analyzing contracts with similar objectives, contractor types, and contract values within the defense sector.

What are the potential risks associated with a Cost Plus Fixed Fee (CPFF) contract for engineering services?

Cost Plus Fixed Fee (CPFF) contracts, while offering flexibility for R&D and services where costs are uncertain, carry inherent risks. For the government, the primary risk is that the contractor may have less incentive to control costs, as the fee is fixed regardless of the final cost. This can lead to cost overruns if the initial cost estimate is inaccurate or if the contractor does not manage resources efficiently. Conversely, the contractor bears the risk if the actual costs exceed the estimate, as their profit is capped by the fixed fee. Effective oversight, detailed cost tracking, and robust negotiation of the initial estimate are crucial to mitigate these risks and ensure value for money.

What is the historical spending pattern for engineering services related to the Javelin program?

The provided data only pertains to a single task order (0004) valued at approximately $46.4 million. To understand the historical spending pattern for engineering services related to the Javelin program, one would need to analyze all previous contracts, task orders, and modifications issued for this system over its lifecycle. This would involve searching federal procurement databases (like FPDS or USASpending) for all related contract actions awarded to the Javelin JV and other potential contractors. Analyzing trends in spending, contract types, and competition levels over time would reveal patterns in how engineering support has been procured and funded for the Javelin program.

What is the track record of the Raytheon/Lockheed Martin Javelin JV in delivering engineering services for defense programs?

The Raytheon/Lockheed Martin Javelin JV is a well-established entity responsible for the production and sustainment of the Javelin missile system, a critical anti-tank weapon for the U.S. Army and allied nations. Their track record in delivering this complex weapon system is generally considered strong, marked by consistent production and program execution. As a joint venture of two of the largest defense contractors, they possess extensive experience and deep technical expertise in missile technology, systems integration, and program management. Their involvement in this specific engineering services contract suggests a continuation of their established role in supporting the Javelin program's technical evolution and cost management efforts.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services

Product/Service Code: RESEARCH AND DEVELOPMENT › C – National Defense R&D Services

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 1151 E HERMANS RD BLDG 805 M\S C6, TUCSON, AZ, 85756

Business Categories: Category Business, Manufacturer of Goods, Not Designated a Small Business, Partnership or Limited Liability Partnership, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $46,358,369

Exercised Options: $46,358,368

Current Obligation: $46,358,368

Subaward Activity

Number of Subawards: 4

Total Subaward Amount: $829,021

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: W31P4Q17D0005

IDV Type: IDC

Timeline