Raytheon Company awarded $34.7M for PNVC System Requirements Validation, a sole-source contract

Contract Overview

Contract Amount: $34,674,024 ($34.7M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2018-03-14

End Date: 2019-11-30

Contract Duration: 626 days

Daily Burn Rate: $55.4K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: PRESIDENTIAL NATIONAL VOICE NATIONAL CONFERENCING (PNVC) SYSTEM REQUIREMENTS VALIDATION (SRV) - PHASE 1

Place of Performance

Location: SEMINOLE, PINELLAS County, FLORIDA, 33777

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $34.7 million to RAYTHEON COMPANY for work described as: PRESIDENTIAL NATIONAL VOICE NATIONAL CONFERENCING (PNVC) SYSTEM REQUIREMENTS VALIDATION (SRV) - PHASE 1 Key points: 1. Contract awarded to Raytheon Company for critical national conferencing system validation. 2. Sole-source award indicates potential lack of market competition or specialized capabilities. 3. Contract duration of 626 days suggests a substantial validation effort. 4. The contract falls under communication equipment repair and maintenance services. 5. Awarded by the Department of Defense, highlighting its strategic importance. 6. The 'Cost Plus Fixed Fee' pricing structure may lead to cost overruns if not managed carefully.

Value Assessment

Rating: fair

The contract value of $34.7 million for a system requirements validation phase appears substantial. Without comparable sole-source contracts for similar validation efforts, it is difficult to benchmark value. The 'Cost Plus Fixed Fee' (CPFF) pricing structure, while common for R&D or uncertain scope work, carries inherent risks of cost escalation if the contractor's costs exceed initial estimates. This structure necessitates robust oversight to ensure costs remain reasonable and tied to the fixed fee.

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 typically occurs when a single contractor possesses unique capabilities, proprietary technology, or is the only source capable of meeting the government's specific requirements. The lack of competition means the government did not benefit from price discovery through a bidding process, potentially leading to a higher price than if multiple offers had been considered.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive bidding. The government did not leverage market forces to secure the best possible price for these critical validation services.

Public Impact

The primary beneficiary is the Department of Defense, ensuring the integrity and functionality of its national conferencing systems. Services delivered include validation of system requirements, crucial for future development and operational readiness. The geographic impact is national, as the PNVC system likely supports high-level government communications across the United States. Workforce implications include specialized technical roles within Raytheon Company for system analysis and validation.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potentially increases cost to taxpayers.
Cost Plus Fixed Fee contract type can incentivize higher spending if not closely monitored.
Lack of transparency in the justification for sole-source award.
Potential for scope creep in a requirements validation phase under a CPFF contract.

Positive Signals

Award to a known defense contractor (Raytheon) suggests established capabilities.
Focus on system requirements validation is a critical step for ensuring effective communication systems.
Contract duration suggests a thorough and comprehensive validation process.

Sector Analysis

The defense sector relies heavily on secure and reliable communication systems. This contract for the Presidential National Voice National Conferencing (PNVC) System Requirements Validation falls within the broader IT and defense communications market. The market for specialized defense communication systems is often characterized by high barriers to entry, proprietary technology, and a limited number of qualified contractors, which can contribute to sole-source awards. Comparable spending benchmarks are difficult to establish without more specific details on the system's complexity and scope.

Small Business Impact

This contract does not appear to involve a small business set-aside. Given the sole-source nature and the likely specialized requirements of a national conferencing system, it is improbable that subcontracting opportunities for small businesses would be mandated or significant, unless Raytheon voluntarily includes them in its supply chain for specific components or services.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contract management and inspection agencies, such as the Defense Contract Management Agency (DCMA). Accountability measures would be tied to the terms of the Cost Plus Fixed Fee contract, requiring detailed cost reporting and performance metrics. Transparency might be limited due to the sole-source nature and national security implications, but contract award details are publicly available.

Related Government Programs

Presidential Communications
National Security Systems
Defense Communication Networks
IT Services for Government
System Engineering and Integration

Risk Flags

Sole-source award
Cost Plus Fixed Fee contract type
Potential for cost overruns
Lack of competitive pricing

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $34.7 million to RAYTHEON COMPANY. PRESIDENTIAL NATIONAL VOICE NATIONAL CONFERENCING (PNVC) SYSTEM REQUIREMENTS VALIDATION (SRV) - PHASE 1

Who is the contractor on this award?

The obligated recipient is RAYTHEON COMPANY.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $34.7 million.

What is the period of performance?

Start: 2018-03-14. End: 2019-11-30.

What is the specific justification provided by the Department of Defense for awarding this contract on a sole-source basis to Raytheon Company?

The provided data does not include the specific justification for the sole-source award. Typically, sole-source contracts are justified under specific circumstances outlined in federal acquisition regulations, such as when only one responsible source is available, or when the government's need is of such urgency that it would be seriously impaired without the unique capability of the proposed contractor. For a system like the Presidential National Voice National Conferencing (PNVC) system, the justification might relate to proprietary technology, unique integration expertise with existing sensitive systems, or national security requirements that limit the pool of eligible contractors. A full justification would usually be documented and available through official channels, often requiring a waiver of full and open competition.

How does the 'Cost Plus Fixed Fee' (CPFF) pricing structure for this $34.7 million contract compare to industry standards for similar system validation projects?

The 'Cost Plus Fixed Fee' (CPFF) structure is common for research, development, and complex system integration projects where the scope of work and associated costs are not precisely definable at the outset. For a system requirements validation phase, CPFF allows the contractor to incur costs while aiming for a predetermined fixed fee, incentivizing efficiency to maximize profit. Benchmarking this against industry standards is challenging without knowing the specific technical complexity and duration of the validation. However, CPFF contracts require rigorous oversight from the government to manage cost overruns, as the contractor is reimbursed for all allowable costs plus the fixed fee. If costs escalate significantly, the total expenditure can exceed initial projections, making it crucial for the government to monitor expenditures closely and ensure the fixed fee remains appropriate for the work performed.

What are the key performance indicators (KPIs) or deliverables expected from Raytheon Company under this contract for PNVC System Requirements Validation?

The provided data does not detail the specific Key Performance Indicators (KPIs) or deliverables for this contract. However, for a 'System Requirements Validation (SRV) - Phase 1' contract, typical deliverables would likely include comprehensive documentation outlining the validated requirements for the PNVC system. This could encompass functional requirements, performance specifications, interface definitions, security requirements, and operational constraints. KPIs would focus on the accuracy, completeness, and clarity of the validated requirements, adherence to the project schedule, and effective communication with government stakeholders. The 'validation' aspect implies a rigorous review and confirmation process, ensuring that the documented requirements accurately reflect the intended capabilities and operational needs of the PNVC system.

What is the historical spending pattern for the Presidential National Voice National Conferencing (PNVC) system, and how does this $34.7 million award fit into that pattern?

The provided data is limited to a single contract award and does not offer historical spending patterns for the PNVC system. To understand the broader context, one would need to examine previous contracts related to the PNVC system's development, maintenance, or upgrades. This $34.7 million award represents a specific phase – 'Phase 1' of 'System Requirements Validation.' It is plausible that this is an initial investment in defining or refining the system's needs before further development or procurement phases. Without access to historical contract databases or program documentation, it's impossible to determine if this amount is typical, an increase, or a decrease compared to past expenditures on the PNVC system.

Given the sole-source nature and CPFF structure, what are the primary risks associated with this contract for the Department of Defense?

The primary risks associated with this sole-source, CPFF contract for the Department of Defense are multifaceted. Firstly, the lack of competition inherently increases the risk of paying a higher price than might be achieved through a competitive process. Secondly, the CPFF structure, while flexible, carries the risk of cost overruns if the contractor's actual costs exceed estimates, potentially leading to budget challenges. Thirdly, sole-source awards can sometimes indicate a lack of available qualified vendors or a reliance on a single provider, which poses a risk if that provider faces financial difficulties, operational issues, or decides to exit the market. Finally, without robust oversight and clear performance metrics, there's a risk that the validation effort may not be as thorough or effective as intended, potentially leading to downstream issues in system development or operation.

Industry Classification

NAICS: Other Services (except Public Administration) › Electronic and Precision Equipment Repair and Maintenance › Communication Equipment Repair and Maintenance

Product/Service Code: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD 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: Rockwell Collins Australia PTY Limited

Address: 7887 BRYAN DAIRY RD, LARGO, FL, 33777

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: $34,914,233

Exercised Options: $34,914,233

Current Obligation: $34,674,024

Subaward Activity

Number of Subawards: 7

Total Subaward Amount: $818,066

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA821815D0001

IDV Type: IDC

Timeline