DoD's Air Operations Center LTM&S Contract Exceeds $509M with Raytheon, Awarded via Full and Open Competition

Contract Overview

Contract Amount: $509,640,892 ($509.6M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2017-04-24

End Date: 2024-07-01

Contract Duration: 2,625 days

Daily Burn Rate: $194.1K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 5

Pricing Type: COST PLUS FIXED FEE

Sector: IT

Official Description: IGF::OT::IGF AIR OPERATIONS CENTER (AOC) LONG TERM MODIFICATION AND SUSTAINMENT (LTM&S)

Place of Performance

Location: STERLING, LOUDOUN County, VIRGINIA, 20166

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $509.6 million to RAYTHEON COMPANY for work described as: IGF::OT::IGF AIR OPERATIONS CENTER (AOC) LONG TERM MODIFICATION AND SUSTAINMENT (LTM&S) Key points: 1. Significant contract value of over $509 million highlights the long-term commitment to AOC sustainment. 2. Raytheon Company is the sole awardee, indicating a strong incumbent position or specialized capabilities. 3. The contract's duration extends to July 2024, suggesting ongoing operational needs. 4. Awarded under 'Full and Open Competition', this method aims for the best value and pricing. 5. The 'Computer Systems Design Services' NAICS code points to a focus on complex IT infrastructure.

Value Assessment

Rating: good

The contract's Cost Plus Fixed Fee (CPFF) structure allows for cost reimbursement plus a fixed fee. While CPFF can incentivize contractor efficiency, it requires robust oversight to manage costs effectively and ensure fair pricing against the services provided.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded through full and open competition, which is the preferred method for maximizing competition and achieving the best possible pricing. This approach allows any qualified vendor to bid, fostering a competitive environment that should drive down costs and improve service quality.

Taxpayer Impact: Full and open competition generally benefits taxpayers by promoting a more efficient marketplace and potentially lower overall spending compared to sole-source or limited competition scenarios.

Public Impact

Ensures continued operational readiness for critical Air Force command and control systems. Supports advanced technological infrastructure essential for national defense. Potential for innovation in system design and sustainment through competitive pressures. Impacts the IT services sector, particularly those specializing in defense systems integration.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Fixed Fee (CPFF) requires diligent oversight to prevent cost overruns.
Sole awardee to Raytheon Company may warrant review for potential future competition opportunities.
Long contract duration could lead to scope creep or evolving requirements not fully captured in initial pricing.

Positive Signals

Awarded via Full and Open Competition, maximizing potential for competitive pricing.
Contract supports critical Air Operations Center functions, ensuring national security.
Long-term sustainment indicates a stable and predictable operational requirement.

Sector Analysis

This contract falls within the IT and Defense sectors, specifically focusing on computer systems design and sustainment for critical Air Force infrastructure. Spending benchmarks in this area are highly variable, depending on system complexity and modernization needs, but large-scale sustainment contracts like this are common for major defense platforms.

Small Business Impact

The data indicates this contract was awarded to Raytheon Company and does not specify any subcontracting goals for small businesses. Further investigation would be needed to determine the extent of small business participation through subcontracting opportunities.

Oversight & Accountability

The Cost Plus Fixed Fee (CPFF) contract type necessitates strong government oversight to ensure costs are reasonable and the fixed fee is justified. Regular audits and performance reviews are crucial for accountability and to prevent potential cost overruns.

Related Government Programs

Computer Systems Design Services
Department of Defense Contracting
Department of the Air Force Programs

Risk Flags

Cost Plus Fixed Fee (CPFF) contract type requires robust oversight.
Long contract duration may present risks of scope creep and evolving requirements.
Sole awardee to Raytheon Company could limit future competitive opportunities.
Lack of explicit small business participation data requires further inquiry.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $509.6 million to RAYTHEON COMPANY. IGF::OT::IGF AIR OPERATIONS CENTER (AOC) LONG TERM MODIFICATION AND SUSTAINMENT (LTM&S)

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 $509.6 million.

What is the period of performance?

Start: 2017-04-24. End: 2024-07-01.

What is the projected cost efficiency of the Cost Plus Fixed Fee (CPFF) structure for this long-term sustainment contract, and how is it being monitored?

The CPFF structure aims to provide a balance between contractor incentive and government cost control. While the fixed fee provides a predictable profit margin, the 'cost plus' element requires rigorous government oversight, including audits and performance metrics, to ensure that all incurred costs are reasonable, allocable, and necessary for the contract's objectives. Effective monitoring is key to realizing cost efficiency.

Given the long duration and sole awardee, what strategies are in place to ensure continued competitive pressure and prevent vendor lock-in?

While awarded via full and open competition, the long duration and sole award to Raytheon Company warrant proactive strategies. These could include regular market research, exploring opportunities for phased competition on future modifications or new contract vehicles, and clearly defining performance metrics that allow for potential future competition. Ensuring clear contract exit strategies and data rights also supports future competition.

How does the sustainment of the Air Operations Center (AOC) via this contract contribute to overall Air Force mission effectiveness and modernization efforts?

Sustaining the AOC is critical for maintaining command, control, and communications capabilities essential for Air Force operations globally. This contract ensures the reliability and availability of complex IT systems, directly supporting mission readiness. It may also incorporate modernization elements, ensuring the AOC remains capable of integrating new technologies and adapting to evolving threats, thereby enhancing overall mission effectiveness.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Computer Systems Design and Related Services › Computer Systems Design Services

Product/Service Code: IT AND TELECOM - INFORMATION TECHNOLOGY AND TELECOMMUNICATIONS › ADP AND TELECOMMUNICATIONS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 5

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Rockwell Collins Australia PTY Limited

Address: 22270 PACIFIC BLVD STE 600, DULLES, VA, 20166

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: $933,792,047

Exercised Options: $567,617,957

Current Obligation: $509,640,892

Actual Outlays: $24,219,582

Subaward Activity

Number of Subawards: 15

Total Subaward Amount: $4,259,451

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: GS00Q09BGD0047

IDV Type: GWAC

Timeline