Raytheon Company awarded $16.9M for HTS Factory Test Equipment, a sole-source contract

Contract Overview

Contract Amount: $16,906,084 ($16.9M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2018-08-31

End Date: 2020-08-31

Contract Duration: 731 days

Daily Burn Rate: $23.1K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: HTS FACTORY TEST EQUIPMENT (FATS/SLATS AND GPS)

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $16.9 million to RAYTHEON COMPANY for work described as: HTS FACTORY TEST EQUIPMENT (FATS/SLATS AND GPS) Key points: 1. Contract awarded to a single vendor suggests potential for higher costs and limited innovation. 2. The 'Cost Plus Fixed Fee' structure may incentivize cost overruns, requiring close oversight. 3. Lack of competition raises concerns about achieving optimal value for taxpayer dollars. 4. The contract duration of 731 days provides a significant period for service delivery. 5. This spending falls within the broader category of electronic equipment repair and maintenance. 6. The contract's value is moderate within the context of defense procurement.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to the sole-source nature and the 'Cost Plus Fixed Fee' pricing structure. Without competitive bids, it's difficult to ascertain if the fixed fee adequately reflects the effort required or if it allows for excessive profit margins. The total award of $16.9 million for factory test equipment repair and maintenance over two years warrants scrutiny to ensure it aligns with industry standards for similar services, though direct comparisons are hampered by the lack of publicly available data on comparable sole-source contracts.

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 approach is typically used when only one vendor possesses the necessary capabilities, technology, or proprietary knowledge. The absence of competition means there was no direct price discovery through bidding, potentially leading to less favorable pricing for the government compared to a competitive procurement. The limited competition raises questions about whether alternative solutions or more cost-effective providers were overlooked.

Taxpayer Impact: Sole-source awards can result in higher costs for taxpayers as the government lacks the leverage that competition provides to negotiate lower prices. This can lead to a less efficient use of public funds.

Public Impact

The Department of Defense benefits from the specialized test equipment necessary for its operations. Services delivered include the repair and maintenance of High-Throughput Screening (HTS) Factory Test Equipment (FATS/SLATS and GPS). The geographic impact is primarily within Arizona, where the contract is managed. The contract supports specialized technical roles within the defense sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially increasing costs.
Cost Plus Fixed Fee contract type can incentivize higher spending if not tightly managed.
Lack of transparency in pricing due to sole-source nature.
Limited public data makes independent value assessment difficult.

Positive Signals

Contract awarded to a known entity (Raytheon Company) with established defense sector presence.
Specific equipment maintenance ensures operational readiness for critical defense systems.
Contract duration provides stability for service provision.

Sector Analysis

The defense sector relies heavily on specialized equipment for testing and maintenance of complex systems. This contract for HTS Factory Test Equipment falls under the broader umbrella of electronic and precision equipment repair and maintenance. The market for such specialized services is often characterized by high barriers to entry due to technical expertise and security requirements. Comparable spending benchmarks are difficult to establish precisely due to the proprietary nature of much defense testing equipment and the sole-source awards common in this niche.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb: false'. Furthermore, there is no explicit mention of subcontracting requirements for small businesses. This suggests that small businesses are unlikely to be direct beneficiaries or participants in this specific contract, potentially limiting their opportunities within this particular procurement vehicle.

Oversight & Accountability

Oversight for this contract is managed by the Defense Contract Management Agency (DCMA). As a definitive contract, it is subject to standard government oversight procedures. However, the 'Cost Plus Fixed Fee' structure necessitates particularly diligent monitoring of costs and performance to ensure the fixed fee remains appropriate and that expenditures are reasonable and allocable. Transparency regarding the specific oversight mechanisms and performance metrics is limited in the provided data.

Related Government Programs

Defense Contract Management
Electronic Equipment Maintenance
Factory Test Equipment
Sole Source Procurements
Cost Plus Fixed Fee Contracts

Risk Flags

Sole Source Award
Cost Plus Fixed Fee Structure
Lack of Competition
Limited Transparency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $16.9 million to RAYTHEON COMPANY. HTS FACTORY TEST EQUIPMENT (FATS/SLATS AND GPS)

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 $16.9 million.

What is the period of performance?

Start: 2018-08-31. End: 2020-08-31.

What is Raytheon Company's track record with similar sole-source 'Cost Plus Fixed Fee' contracts within the Department of Defense?

Raytheon Company, now part of RTX, has a long history of contracting with the Department of Defense, often involving complex systems and services. While specific data on their sole-source 'Cost Plus Fixed Fee' contracts for test equipment is not detailed here, this contract type is not uncommon for specialized defense needs where competition is limited. Historically, 'Cost Plus Fixed Fee' contracts require robust government oversight to manage potential cost overruns and ensure the fixed fee is justified by the scope of work and contractor's risk. Raytheon's extensive experience in defense suggests they possess the technical capabilities, but the sole-source nature and pricing structure remain key areas for scrutiny to ensure fair value.

How does the $16.9 million award compare to industry benchmarks for HTS Factory Test Equipment maintenance?

Directly comparing the $16.9 million award to industry benchmarks for HTS Factory Test Equipment maintenance is challenging due to several factors. Firstly, the contract was sole-sourced, meaning competitive pricing data is absent. Secondly, 'Cost Plus Fixed Fee' contracts inherently obscure the true cost of labor and materials, as the government reimburses costs plus a predetermined profit. Thirdly, the specific nature of HTS test equipment is highly specialized, with proprietary elements that limit broad market comparisons. Without access to detailed cost breakdowns or data from competitive procurements for similar equipment, it's difficult to definitively state whether this award represents optimal value for money.

What are the primary risks associated with a sole-source 'Cost Plus Fixed Fee' contract for defense equipment?

The primary risks associated with a sole-source 'Cost Plus Fixed Fee' (CPFF) contract for defense equipment are twofold. Firstly, the sole-source nature eliminates competitive pressure, potentially leading to inflated pricing and reduced incentive for the contractor to innovate or optimize costs. The government pays for what it costs plus a fixed profit, which might be higher than in a competitive scenario. Secondly, the CPFF structure itself carries risk; while the fee is fixed, the government bears the risk of cost overruns. This necessitates stringent oversight from the contracting agency to ensure costs are reasonable, allocable, and necessary, and that the fixed fee adequately compensates the contractor for the defined scope of work without being excessive.

What is the historical spending pattern for HTS Factory Test Equipment (FATS/SLATS and GPS) by the Department of Defense?

Historical spending patterns for HTS Factory Test Equipment (FATS/SLATS and GPS) by the Department of Defense are not readily available in a consolidated public format. This specific type of equipment is highly specialized, and spending is likely distributed across various contracts, agencies, and fiscal years. The provided data indicates a single definitive contract worth $16.9 million awarded in 2018. To understand broader historical trends, one would need to analyze procurement databases for similar equipment maintenance and support contracts over extended periods, potentially identifying patterns of sole-source awards or specific vendor reliance.

What performance metrics or deliverables are typically associated with this type of contract?

For a 'Cost Plus Fixed Fee' contract involving the maintenance and repair of HTS Factory Test Equipment, typical performance metrics and deliverables would focus on ensuring the operational readiness and functionality of the equipment. This includes timely response to maintenance requests, successful repair of identified faults, adherence to maintenance schedules, and potentially performance standards related to equipment uptime or accuracy. Deliverables would likely include maintenance logs, repair reports, parts usage documentation, and potentially periodic performance reports demonstrating compliance with service level agreements. The fixed fee is tied to the contractor successfully performing these services within the agreed-upon scope.

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: INSTRUMENTS AND LABORATORY EQPT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

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: $16,906,084

Exercised Options: $16,906,084

Current Obligation: $16,906,084

Subaward Activity

Number of Subawards: 52

Total Subaward Amount: $8,356,713

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline