Raytheon Company awarded $22.7M contract for engineering services, highlighting firm fixed-price structure

Contract Overview

Contract Amount: $22,745,849 ($22.7M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2010-05-01

End Date: 2012-04-30

Contract Duration: 730 days

Daily Burn Rate: $31.2K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: ESTABLISH LOT 2 FIRM FIXED PRICE CLINS.

Place of Performance

Location: LOUISVILLE, JEFFERSON County, KENTUCKY, 40201

State: Kentucky Government Spending

Plain-Language Summary

Department of Defense obligated $22.7 million to RAYTHEON COMPANY for work described as: ESTABLISH LOT 2 FIRM FIXED PRICE CLINS. Key points: 1. Contract utilizes a firm fixed-price structure, aiming to control costs and provide predictability. 2. Awarded under full and open competition, suggesting a competitive bidding process. 3. The contract duration of 730 days indicates a medium-term engagement for engineering services. 4. Services are categorized under Engineering Services (NAICS 541330), a common area for defense spending. 5. The contract was awarded as a delivery order, implying it's part of a larger framework agreement. 6. The geographic location of performance is Kentucky, potentially impacting local economic activity.

Value Assessment

Rating: good

The firm fixed-price nature of this contract is a positive indicator for cost control. Without specific benchmarks for similar engineering services contracts from the Department of the Army, a direct value-for-money assessment is challenging. However, the existence of full and open competition suggests that pricing was likely scrutinized against market rates. The total award amount of approximately $22.7 million over two years for specialized engineering services appears within a reasonable range for defense contracts of this nature, assuming the scope of work is substantial.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, meaning all responsible sources were permitted to submit bids. The data indicates two bids were received. While two bidders suggest some level of competition, it is on the lower end. A higher number of bidders typically leads to more robust price discovery and potentially lower prices for the government. The limited number of bids could indicate a specialized service area or a concentrated market.

Taxpayer Impact: A competitive process, even with a limited number of bidders, is generally beneficial for taxpayers as it encourages contractors to offer competitive pricing to secure the award.

Public Impact

The Department of the Army benefits from specialized engineering expertise to support its operations. Services delivered likely contribute to the maintenance, development, or enhancement of military systems or infrastructure. The geographic impact is concentrated in Kentucky, potentially creating or sustaining jobs in the region. The contract supports the defense industrial base by engaging a major contractor like Raytheon Company.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for limited competition if only two bids were received, which could impact long-term pricing.
Dependence on a single contractor for critical engineering services could pose a risk if performance issues arise.

Positive Signals

Firm fixed-price contract structure provides cost certainty for the government.
Awarded through full and open competition, indicating a fair and transparent procurement process.
Raytheon Company is a well-established defense contractor with significant experience.

Sector Analysis

Engineering services are a critical component of the defense sector, encompassing a wide range of activities from design and development to testing and evaluation. The market for these services is substantial, driven by the continuous need for technological advancement and system sustainment within the military. This contract fits within the broader category of defense procurement, where specialized technical expertise is often outsourced to private firms. Comparable spending benchmarks would typically be found within the Department of Defense's overall budget allocation for engineering and technical support services.

Small Business Impact

The provided data does not indicate any small business set-aside provisions for this contract, nor does it specify subcontracting goals for small businesses. As a large prime contractor, Raytheon Company may have its own internal policies regarding small business utilization, but this contract does not appear to have explicit requirements mandating it. Further analysis would be needed to determine if small businesses were involved as subcontractors.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Army's contracting and program management offices. Accountability measures are inherent in the firm fixed-price contract type, which obligates the contractor to deliver specified services within the agreed-upon price. Transparency is facilitated by the public availability of contract award data. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Department of Defense Engineering Services Contracts
Raytheon Company Defense Contracts
Firm Fixed Price Contracts
Delivery Orders
NAICS 541330 - Engineering Services

Risk Flags

Potential for limited competition due to low bid count.
Risk of scope creep or unforeseen technical challenges impacting contractor profitability under FFP.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $22.7 million to RAYTHEON COMPANY. ESTABLISH LOT 2 FIRM FIXED PRICE CLINS.

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 $22.7 million.

What is the period of performance?

Start: 2010-05-01. End: 2012-04-30.

What is Raytheon Company's track record with the Department of the Army for similar engineering services?

Raytheon Company, now part of RTX, has a long and extensive history of contracting with the Department of the Army and other defense agencies for a wide array of services, including engineering. Their track record generally reflects significant experience in complex defense systems, aerospace, and technology. Specific to engineering services, they have been involved in projects ranging from missile defense systems to aircraft development and sustainment. Performance reviews and past performance information, often detailed in contract award documents or available through government databases like the Federal Procurement Data System (FPDS), would provide a more granular view of their success rates, quality of work, and adherence to schedules and budgets on prior Army contracts. Without access to specific past performance ratings for this particular contract or very similar ones, it's assumed their extensive experience provides a baseline level of confidence.

How does the $22.7 million award compare to other engineering services contracts awarded by the Department of the Army?

The $22.7 million award for engineering services over two years is a substantial but not exceptionally large contract within the Department of the Army's overall procurement portfolio. The Army awards billions of dollars annually across various service categories, including engineering. Contracts for major system development, large-scale infrastructure projects, or extensive research and development efforts can easily reach hundreds of millions or even billions. Conversely, smaller, more specialized engineering support tasks might be awarded for amounts significantly less than $22.7 million. Therefore, this contract falls into a mid-to-large tier for a specific engineering services delivery order, suggesting a significant scope of work but likely not a program-defining, multi-billion dollar initiative.

What are the primary risks associated with a firm fixed-price contract for engineering services?

The primary risk with a firm fixed-price (FFP) contract for engineering services lies with the contractor. If the scope of work is not precisely defined or if unforeseen technical challenges arise, the contractor may incur costs exceeding the fixed price, leading to reduced profit margins or even a loss. For the government, the risk is that the contractor might cut corners on quality or scope to protect their profit if challenges emerge, especially if oversight is weak. Another risk is that the fixed price might be inflated upfront to account for potential contractor risks, potentially leading to the government paying more than necessary if the project proceeds smoothly. Effective scope definition and robust government oversight are crucial to mitigate these risks.

What does the 'delivery order' designation imply about this contract?

The designation 'delivery order' indicates that this contract is likely a task order issued under a larger, pre-existing indefinite-delivery/indefinite-quantity (IDIQ) contract or a similar type of basic ordering agreement (BOA). IDIQ contracts establish terms and conditions, including pricing structures and performance standards, under which the government can issue multiple delivery orders for specific quantities of goods or services over a defined period. This approach allows for flexibility and rapid procurement of services as needed, without requiring a new full-blown competition for each individual requirement. The $22.7 million represents the value of this specific order, not necessarily the total value of the underlying IDIQ contract.

How does the NAICS code 541330 (Engineering Services) typically relate to defense spending?

NAICS code 541330, 'Engineering Services,' is highly relevant to defense spending as military operations and technological development are heavily reliant on engineering expertise. This sector encompasses a broad range of services, including the design, development, and testing of military hardware, software, and infrastructure. Defense agencies frequently contract for services such as aerospace engineering, mechanical engineering, electrical engineering, civil engineering (for bases and facilities), and systems engineering. These services are critical for maintaining existing defense systems, developing new platforms (like aircraft, ships, and weapons systems), ensuring cybersecurity, and managing complex logistical operations. Therefore, a significant portion of the engineering services market is dedicated to supporting national defense requirements.

Industry Classification

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

Product/Service Code: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: RTX Corp

Address: 2603 CHALLENGER CT STE150, ORLANDO, FL, 32826

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $22,745,849

Exercised Options: $22,745,849

Current Obligation: $22,745,849

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: W900KK07D0001

IDV Type: IDC

Timeline