DoD's $71.9M Raytheon Contract for Electronic Equipment Repair Lacked Competition

Contract Overview

Contract Amount: $71,878,626 ($71.9M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2014-12-10

End Date: 2018-12-31

Contract Duration: 1,482 days

Daily Burn Rate: $48.5K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIXED PRICE INCENTIVE

Sector: IT

Official Description: IGF::OT::IGF HTS CLS FY15 - FY18

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $71.9 million to RAYTHEON COMPANY for work described as: IGF::OT::IGF HTS CLS FY15 - FY18 Key points: 1. Significant spending on electronic equipment repair and maintenance. 2. Sole provider, Raytheon Company, dominated this contract. 3. Lack of competition raises concerns about potential overpricing and value. 4. The IT sector is heavily reliant on such specialized maintenance services.

Value Assessment

Rating: questionable

The contract's total value of $71.9M over four years for repair services appears high, especially given the lack of competitive bidding. Benchmarking against similar contracts for electronic equipment maintenance is difficult without competitive data, but the absence of bids suggests potential for inflated costs.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded as a sole-source, 'NOT COMPETED' action. This significantly limits price discovery and negotiation leverage for the government, likely resulting in higher costs than a competitive process would yield.

Taxpayer Impact: Taxpayers may have overpaid due to the absence of competitive pressure, as the government did not explore alternative vendors or pricing structures.

Public Impact

Essential defense equipment maintenance may be subject to inflated costs. Limited transparency in pricing for critical repair services. Potential for reduced government savings on long-term maintenance contracts.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award
Lack of competition
High contract value without competitive justification

Positive Signals

Contract awarded to a known entity (Raytheon)
Services provided over a defined period

Sector Analysis

The Department of Defense relies heavily on specialized maintenance for complex electronic and precision equipment. This contract falls within the broader IT and defense services sector, where long-term sustainment contracts are common but often lack robust competition.

Small Business Impact

The contract was awarded to Raytheon Company, a large business. There is no indication that small businesses were involved as subcontractors or were considered for this sole-source award, missing an opportunity for small business participation.

Oversight & Accountability

The 'NOT COMPETED' status suggests potential weaknesses in the pre-award oversight process, as competitive alternatives were not explored. Further review is needed to understand the justification for the sole-source award and ensure accountability.

Related Government Programs

Other Electronic and Precision Equipment Repair and Maintenance
Department of Defense Contracting
Department of the Air Force Programs

Risk Flags

Lack of competition
Sole-source award
Potential for inflated pricing
Limited transparency in cost determination
Missed opportunity for small business participation

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $71.9 million to RAYTHEON COMPANY. IGF::OT::IGF HTS CLS FY15 - FY18

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 Air Force).

What is the total obligated amount?

The obligated amount is $71.9 million.

What is the period of performance?

Start: 2014-12-10. End: 2018-12-31.

What was the specific justification for awarding this contract as sole-source to Raytheon, and were any market research efforts conducted to identify potential competitors?

The provided data indicates the contract was 'NOT COMPETED.' A thorough review would require accessing the contract file to determine the specific justification cited (e.g., unique capabilities, urgent need). Market research documentation, if any, would reveal if alternative vendors were considered or if the market was deemed to have only one viable source.

How does the per-unit cost or hourly rate for these repair services compare to industry benchmarks for similar electronic equipment maintenance, considering the lack of competition?

Without competitive bids, establishing a precise benchmark is challenging. However, the absence of competition inherently raises the risk of costs exceeding fair market value. An independent cost analysis comparing the contract's pricing structure to publicly available data for similar services, adjusted for complexity and scope, would be necessary to assess potential overpricing.

What is the potential long-term financial impact on the Department of Defense if similar sole-source contracts for essential maintenance are consistently awarded without competition?

Consistently awarding sole-source contracts without competition can lead to significant long-term financial inefficiencies. The government may forgo substantial savings achievable through competitive bidding, potentially diverting funds from other critical defense needs. This practice can also stifle innovation and reduce market competition over time, further entrenching higher costs.

Industry Classification

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

Offers Received: 1

Pricing Type: FIXED PRICE INCENTIVE (L)

Evaluated Preference: NONE

Contractor Details

Parent Company: RTX Corp

Address: 1151 E HERMANS RD, TUCSON, AZ, 85756

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: $72,228,626

Exercised Options: $72,228,626

Current Obligation: $71,878,626

Actual Outlays: $1,977,771

Subaward Activity

Number of Subawards: 21

Total Subaward Amount: $1,959,157

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline