Raytheon Company awarded $104M FAA engineering services contract, a sole-source delivery order

Contract Overview

Contract Amount: $104,308,719 ($104.3M)

Contractor: Raytheon Company

Awarding Agency: Department of Transportation

Start Date: 2023-01-03

End Date: 2030-09-30

Contract Duration: 2,827 days

Daily Burn Rate: $36.9K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Other

Official Description: STARS - DELIVERY ORDER 0006 (SS4)

Place of Performance

Location: MARLBOROUGH, MIDDLESEX County, MASSACHUSETTS, 01752

State: Massachusetts Government Spending

Plain-Language Summary

Department of Transportation obligated $104.3 million to RAYTHEON COMPANY for work described as: STARS - DELIVERY ORDER 0006 (SS4) Key points: 1. Contract awarded as a sole-source delivery order, raising questions about competition and potential value. 2. Significant contract duration of nearly 8 years suggests a long-term need for engineering services. 3. Cost-plus-fixed-fee pricing structure can incentivize cost overruns if not closely monitored. 4. The contract falls under engineering services, a broad category with varying market rates. 5. No small business set-aside was applied, indicating potential missed opportunities for smaller firms. 6. The contract's value is substantial, requiring robust oversight to ensure taxpayer funds are well-spent.

Value Assessment

Rating: questionable

Benchmarking the value of this $104 million contract is challenging without specific service details and comparable contract data. The cost-plus-fixed-fee (CPFF) structure, while common for complex or evolving requirements, carries inherent risks of cost escalation if not managed diligently. The absence of competition further complicates a direct value assessment, as there's no market-driven price discovery. However, the duration of nearly eight years suggests a sustained need, which could justify the investment if the services are critical and effectively delivered.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded as a sole-source delivery order under the MASSACHUSETTS contract vehicle. The data indicates it was 'NOT COMPETED,' meaning the FAA did not solicit offers from multiple vendors. This approach is typically justified when a specific vendor possesses unique capabilities or when urgency dictates a rapid award. However, the lack of a competitive bidding process limits the opportunity for price discovery and may result in higher costs for the government compared to a fully competed scenario.

Taxpayer Impact: Sole-source awards mean taxpayers do not benefit from the cost savings that typically arise from competitive bidding. This can lead to higher overall spending for the same services.

Public Impact

The Federal Aviation Administration (FAA) is the primary beneficiary, receiving critical engineering services. These services are essential for supporting the FAA's mission, likely related to aviation infrastructure, systems, or safety. The contract's geographic impact is centered in MASSACHUSETTS, where the services are likely performed or managed. The contract may have implications for the aerospace and defense engineering workforce, particularly at Raytheon Company.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially leading to suboptimal pricing.
Cost-plus-fixed-fee contract type can incentivize higher costs if oversight is insufficient.
Long contract duration increases exposure to potential cost overruns and scope creep.
Lack of small business participation means potential missed opportunities for economic inclusion.

Positive Signals

Award to a large, established contractor like Raytheon suggests access to significant expertise and resources.
The contract addresses a long-term need, indicating strategic planning by the FAA.
Engineering services are crucial for maintaining and advancing critical national infrastructure.

Sector Analysis

This contract falls within the Engineering Services sector (NAICS code 541330), a broad industry encompassing a wide range of specialized technical services. The market for these services is substantial, driven by government and private sector demand for design, development, and consulting. Comparable spending benchmarks are difficult to establish without knowing the specific engineering disciplines involved. However, contracts of this magnitude for specialized engineering support are common within the federal government, particularly for agencies like the FAA that manage complex technological systems.

Small Business Impact

This contract was not set aside for small businesses, nor does it indicate any specific subcontracting requirements for small businesses. The award to Raytheon Company, a large prime contractor, suggests that the primary focus was on acquiring specialized engineering capabilities. This means that opportunities for small businesses to directly participate in this specific contract are likely limited, unless they are part of Raytheon's supply chain or are engaged in future subcontracting efforts not detailed here.

Oversight & Accountability

Oversight for this contract will primarily reside with the Federal Aviation Administration (FAA). As a sole-source award, the FAA will need to exercise rigorous oversight to ensure the cost-plus-fixed-fee structure does not lead to excessive spending. Transparency will depend on the FAA's reporting practices and the availability of contract performance data. Inspector General jurisdiction would typically apply to ensure the integrity of the procurement and contract execution processes.

Related Government Programs

FAA Air Traffic Control Systems Modernization
Department of Transportation Research and Development
Aerospace Engineering Support Services
Defense Contract Management Agency Services

Risk Flags

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

Frequently Asked Questions

What is this federal contract paying for?

Department of Transportation awarded $104.3 million to RAYTHEON COMPANY. STARS - DELIVERY ORDER 0006 (SS4)

Who is the contractor on this award?

The obligated recipient is RAYTHEON COMPANY.

Which agency awarded this contract?

Awarding agency: Department of Transportation (Federal Aviation Administration).

What is the total obligated amount?

The obligated amount is $104.3 million.

What is the period of performance?

Start: 2023-01-03. End: 2030-09-30.

What specific engineering services are being provided under this contract?

The provided data indicates the contract is for 'Engineering Services' under NAICS code 541330. However, the specific nature of these services is not detailed. Given the agency (FAA) and the contractor (Raytheon), these services could range from systems engineering, software development, hardware design, testing, integration, or technical consulting related to aviation infrastructure, air traffic management systems, aircraft safety, or other critical FAA operational needs. A deeper dive into the contract's statement of work would be necessary to ascertain the precise technical disciplines and deliverables.

How does the $104 million cost compare to similar engineering services contracts awarded by the FAA or other agencies?

Without specific details on the scope and duration of services, a direct cost comparison is difficult. However, $104 million over nearly eight years (approximately $13 million annually) for specialized engineering services is a significant but not unprecedented figure for federal contracts, especially those involving complex technological systems managed by agencies like the FAA. Comparable contracts would need to share similar service types, complexity, and contract duration. The sole-source nature of this award means it cannot be directly benchmarked against competitively bid contracts for value-for-money assessment.

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

The primary risks associated with this contract are twofold. Firstly, the sole-source nature means the government did not benefit from competitive bidding, potentially leading to a higher price than if multiple offers were considered. This limits price discovery and negotiation leverage. Secondly, the Cost-Plus-Fixed-Fee (CPFF) structure, while providing flexibility, can incentivize the contractor to incur higher costs to achieve the fixed fee, especially if oversight is not robust. This necessitates diligent monitoring by the FAA to ensure costs remain reasonable and aligned with the contract's objectives. The long duration also increases the risk of scope creep and cost overruns over time.

What is Raytheon Company's track record with the FAA and for similar engineering services?

Raytheon Company is a major defense contractor with extensive experience across various engineering and technical domains. While specific details of their past performance with the FAA are not provided in this data snippet, Raytheon has a long history of supporting government agencies, including the Department of Defense and NASA, with complex engineering solutions. Their track record typically involves large-scale system development, integration, and sustainment. Assessing their specific performance on FAA contracts would require reviewing past performance evaluations and contract histories.

What are the potential implications of this contract for the broader aerospace engineering market?

This contract signifies continued government investment in specialized engineering capabilities, particularly within the aerospace sector. The award to Raytheon, a large prime contractor, suggests a focus on acquiring deep technical expertise for critical FAA functions. While this provides stability for the prime, it may limit direct opportunities for smaller, specialized firms unless they are part of the subcontracting chain. The long-term nature of the contract also indicates a sustained demand for these types of services, potentially influencing workforce development and talent acquisition strategies within the industry.

How does the duration of this contract (nearly 8 years) impact its overall value and risk profile?

The nearly eight-year duration (2827 days) of this contract significantly impacts its value and risk profile. On the one hand, it suggests a stable, long-term requirement for the engineering services, allowing for in-depth project execution and potential economies of scale for the contractor. This stability can be valuable for the FAA in ensuring continuity of critical support. On the other hand, such a long period increases the risk of cost escalation due to inflation, technological obsolescence, or unforeseen project challenges. It also requires sustained oversight from the FAA to manage potential scope creep and ensure the contract remains aligned with evolving agency needs and budgets over its extended lifespan.

Industry Classification

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

Product/Service Code: MODIFICATION OF EQUIPMENT › MODIFICATION OF EQUIPMENT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: RTX Corp

Address: 1001 BOSTON POST RD E, MARLBOROUGH, MA, 01752

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: $400,000,000

Exercised Options: $104,308,719

Current Obligation: $104,308,719

Actual Outlays: $62,268,097

Subaward Activity

Number of Subawards: 4

Total Subaward Amount: $1,489,494

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: 693KA721D00001

IDV Type: IDC

Timeline