Raytheon Company awarded $110M for MV-22 FRD Software Release Products, a sole-source contract

Contract Overview

Contract Amount: $110,191,547 ($110.2M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2017-01-01

End Date: 2021-09-30

Contract Duration: 1,733 days

Daily Burn Rate: $63.6K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: MV-22 FRD SOFTWARE RELEASE PRODUCTS

Place of Performance

Location: INDIANAPOLIS, MARION County, INDIANA, 46219

State: Indiana Government Spending

Plain-Language Summary

Department of Defense obligated $110.2 million to RAYTHEON COMPANY for work described as: MV-22 FRD SOFTWARE RELEASE PRODUCTS Key points: 1. Contract awarded to Raytheon Company for specialized software products related to the MV-22 aircraft. 2. The contract type is Cost Plus Fixed Fee, which can lead to cost overruns if not managed carefully. 3. This contract was not competed, raising questions about potential price discovery and value for money. 4. The duration of the contract is over 4 years, indicating a significant, long-term need. 5. The contract falls under the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' NAICS code. 6. The contract was awarded as a Delivery Order under a larger contract vehicle.

Value Assessment

Rating: questionable

Benchmarking the value of this specific software release is challenging without comparable sole-source contracts for the MV-22 FRD software. The Cost Plus Fixed Fee (CPFF) contract type, while allowing for flexibility in development, carries inherent risks of cost escalation. Without competitive bidding, it is difficult to ascertain if the fixed fee and cost reimbursement represent a fair market price. Further analysis would require access to the contractor's cost breakdown and profit margins to assess true value for money.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award. This typically occurs when a specific contractor possesses unique capabilities or intellectual property essential for the requirement, or in cases of urgent need. The lack of competition means that taxpayers did not benefit from the price reductions and innovation that can arise from a competitive bidding process. It also limits the government's ability to explore alternative solutions or providers.

Taxpayer Impact: The absence of competition means taxpayers may have paid a premium compared to what a competitive process might have yielded. This also limits the government's leverage in negotiating terms and pricing.

Public Impact

The primary beneficiaries are the Department of the Navy and potentially other branches utilizing the MV-22 Osprey aircraft, ensuring operational readiness through updated software. The services delivered involve the development and release of software products critical for the functionality and performance of the MV-22 FRD (Forward Rotor Drive) system. The geographic impact is likely concentrated around naval aviation facilities and maintenance depots where the MV-22 is operated and supported. Workforce implications may include specialized software engineers and technicians at Raytheon Company, as well as military personnel who will operate and maintain the updated systems.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potential for cost savings.
Cost Plus Fixed Fee contract type can incentivize cost overruns if not closely monitored.
Lack of transparency in the justification for sole-source award.
Potential for vendor lock-in due to specialized software development.
Long contract duration without competitive re-evaluation.

Positive Signals

Ensures continued support and development for a critical military aircraft system.
Award to an established contractor with likely existing knowledge of the MV-22 platform.
Delivery order structure suggests it's part of a broader, potentially established, contracting framework.

Sector Analysis

The aerospace and defense sector is characterized by high R&D costs, long product development cycles, and significant government procurement. Software development for military platforms like the MV-22 is a specialized niche within this sector. Comparable spending benchmarks are difficult to establish for sole-source software development contracts due to proprietary information and unique system requirements. However, the overall spending on aircraft parts and auxiliary equipment manufacturing is substantial, reflecting the ongoing modernization and maintenance needs of the U.S. military.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Furthermore, the prime contractor, Raytheon Company, is a large aerospace firm. While large prime contractors are often required to subcontract a portion of their work to small businesses, the specific subcontracting plan for this contract is not detailed here. The absence of a direct set-aside means small businesses are unlikely to be the primary recipients of this award, though they may participate as subcontractors.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. As a Cost Plus Fixed Fee contract, rigorous financial oversight is crucial to monitor costs and ensure the fixed fee remains appropriate. Transparency is limited due to the sole-source nature and the proprietary aspects of software development. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

MV-22 Osprey Program
Department of Defense Software Development Contracts
Naval Aviation Support Contracts
Aircraft Parts Manufacturing Contracts

Risk Flags

Sole-source award
Cost-plus contract type
Lack of competition

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $110.2 million to RAYTHEON COMPANY. MV-22 FRD SOFTWARE RELEASE PRODUCTS

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 $110.2 million.

What is the period of performance?

Start: 2017-01-01. End: 2021-09-30.

What is the specific functionality or improvement provided by the MV-22 FRD Software Release Products?

The specific functionality or improvement provided by the MV-22 FRD Software Release Products is not detailed in the provided data. However, 'FRD' typically refers to the Forward Rotor Drive system of the MV-22 Osprey tiltrotor aircraft. Software updates for such critical systems often aim to enhance performance, improve reliability, address safety concerns, integrate new operational capabilities, or comply with evolving regulatory or mission requirements. Without further documentation, the precise nature of these software enhancements remains unspecified, but they are crucial for the continued effective operation and modernization of the MV-22 fleet.

What is the justification for awarding this contract on a sole-source basis?

The provided data indicates the contract was 'NOT COMPETED,' implying a sole-source award. The specific justification for this sole-source determination is not included in the data. Typically, sole-source awards are justified when only one responsible source can provide the required supplies or services, often due to unique capabilities, proprietary technology, or urgent and compelling needs where competition is not feasible. For specialized software related to a specific military platform like the MV-22, the original equipment manufacturer or a highly specialized developer might be the only viable option. A formal Justification for Other Than Full and Open Competition (JOFOC) would normally be required by federal acquisition regulations.

How does the Cost Plus Fixed Fee (CPFF) contract type compare to other contract types for software development in the defense sector?

Cost Plus Fixed Fee (CPFF) is a common contract type in the defense sector, particularly for research and development or complex projects where the scope is not fully defined at the outset. In CPFF contracts, the contractor is reimbursed for allowable costs plus a fixed fee representing profit. This contrasts with Fixed-Price contracts, where the price is set regardless of costs incurred, offering more cost certainty to the government but shifting risk to the contractor. Cost-reimbursement contracts like CPFF are often used when the government wants to encourage innovation or when technical uncertainties are high, but they require robust oversight to manage costs. For software development, other types like Firm-Fixed-Price (FFP) might be used if requirements are very well-defined, or Cost-Plus-Incentive-Fee (CPIF) could be used to incentivize performance targets.

What is the historical spending trend for MV-22 FRD software development or similar components?

The provided data only includes a single contract award of $110,191,547.04 for MV-22 FRD Software Release Products from January 1, 2017, to September 30, 2021. It does not provide historical spending trends for this specific software or similar components. To analyze historical spending, one would need access to contract databases that track all awards related to the MV-22 program, specifically focusing on software, avionics, or FRD system maintenance and upgrades over multiple fiscal years. Without this broader dataset, it is impossible to determine trends, such as increasing or decreasing investment, or the frequency of such software releases.

What are the potential risks associated with a long-duration, sole-source contract for specialized software?

A long-duration, sole-source contract for specialized software carries several potential risks. Firstly, the lack of competition can lead to higher prices than might be achieved through a competitive process, as the contractor faces less pressure to offer the most cost-effective solution. Secondly, sole-source arrangements can foster vendor lock-in, making it difficult and costly to switch providers in the future, even if better alternatives emerge. Thirdly, without the regular scrutiny of a competitive bidding process, there's a risk of complacency or reduced innovation from the incumbent contractor. Finally, the Cost Plus Fixed Fee structure, if not meticulously managed, can incentivize cost overruns, as the contractor is reimbursed for costs incurred, potentially leading to budget unpredictability.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Other Aircraft Parts and Auxiliary Equipment Manufacturing

Product/Service Code: AEROSPACE CRAFT COMPONENTS AND ACCESSORIES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0042114R0007

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Rockwell Collins Australia PTY Limited

Address: 6125 E 21ST ST, INDIANAPOLIS, IN, 46219

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: $110,832,327

Exercised Options: $110,832,327

Current Obligation: $110,191,547

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0042115D0001

IDV Type: IDC

Timeline