DoD's $545M Engineering Services Contract with Raytheon: A Decade of Sole-Source Spending

Contract Overview

Contract Amount: $545,841,969 ($545.8M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2004-10-01

End Date: 2015-09-30

Contract Duration: 4,016 days

Daily Burn Rate: $135.9K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS AWARD FEE

Sector: Defense

Place of Performance

Location: STERLING, LOUDOUN County, VIRGINIA, 20166

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $545.8 million to RAYTHEON COMPANY for work described as: Key points: 1. Significant long-term commitment ($545M over 10 years) to a single provider. 2. Sole-source award raises questions about competition and potential price inefficiencies. 3. Contract type (Cost Plus Award Fee) can incentivize performance but may lead to higher costs. 4. Engineering Services sector is critical for defense, but lack of competition is a concern.

Value Assessment

Rating: questionable

The contract's Cost Plus Award Fee structure, while incentivizing performance, lacks a clear benchmark for value. Without competitive bidding, it's difficult to assess if the $545M spent represents a fair market price for the engineering services rendered over a decade.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

The 'NOT COMPETED' designation indicates a sole-source award, bypassing competitive processes. This significantly limits price discovery and potentially leads to higher costs for taxpayers as there was no market pressure to drive down the price.

Taxpayer Impact: The lack of competition likely resulted in higher costs than a competitively awarded contract, impacting taxpayer value.

Public Impact

Taxpayers may have overpaid due to the absence of competitive bidding over a 10-year period. The long duration of the contract limits opportunities for other companies to offer innovative solutions or competitive pricing. Lack of transparency in pricing mechanisms for sole-source contracts can erode public trust.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

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

Positive Signals

Established provider for critical services
Potential for strong performance incentives (Award Fee)

Sector Analysis

This contract falls within the Engineering Services sector (NAICS 541330), crucial for defense operations. Spending benchmarks for sole-source engineering services are difficult to establish, but the $545M over 10 years represents a substantial, long-term commitment.

Small Business Impact

The data does not indicate any specific provisions or set-asides for small businesses in this sole-source contract, suggesting limited direct impact or opportunity for SMBs.

Oversight & Accountability

The 'NOT COMPETED' status warrants scrutiny regarding the justification for bypassing full and open competition. Oversight should focus on ensuring the necessity of sole-source awards and the reasonableness of pricing.

Related Government Programs

Engineering Services
Department of Defense Contracting
Defense Contract Management Agency Programs

Risk Flags

Lack of competition
Potential for cost overruns
Limited transparency in pricing
Long-term sole-source commitment
Difficulty in assessing value for money

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $545.8 million to RAYTHEON COMPANY. See the official description on USAspending.

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 $545.8 million.

What is the period of performance?

Start: 2004-10-01. End: 2015-09-30.

What was the specific justification for awarding this contract on a sole-source basis, and were alternative solutions considered?

The justification for sole-source awards typically involves unique capabilities, urgent needs, or lack of market availability. Without detailed documentation, it's impossible to confirm the specific rationale for this Raytheon contract. A thorough review would be needed to assess if alternatives were genuinely absent or if the justification was robust enough to warrant bypassing competition.

How was the 'Award Fee' determined, and what metrics were used to ensure fair pricing and contractor performance?

Award Fee structures are performance-based, with the fee determined by subjective evaluations against pre-defined criteria. The specifics of these metrics and the evaluation process are crucial for understanding how contractor performance was incentivized and how costs were managed. Without transparency into these details, it's difficult to assess if the awarded fees were justified and contributed to overall value.

What is the estimated cost savings that could have been achieved if this contract had been competitively procured?

Estimating cost savings from a hypothetical competitive procurement is challenging without detailed market analysis. However, studies consistently show that competitive bidding can yield significant savings, often ranging from 10% to 30% or more, compared to sole-source awards. Given the $545M value over 10 years, potential savings could be substantial.

Industry Classification

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

Product/Service Code: SPECIAL STUDIES/ANALYSIS, NOT R&D › SPECIAL STUDIES - NOT R and D

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS AWARD FEE (R)

Evaluated Preference: NONE

Contractor Details

Address: 7700 ARLINGTON BLVD, FALLS CHURCH, VA, 22042

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline