Raytheon Company awarded $197M for interim contractor support and production by the Air Force

Contract Overview

Contract Amount: $197,019,757 ($197.0M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2019-07-29

End Date: 2027-01-08

Contract Duration: 2,720 days

Daily Burn Rate: $72.4K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: INTERIM CONTRACTOR SUPPORT AND PRODUCTION

Place of Performance

Location: EL SEGUNDO, LOS ANGELES County, CALIFORNIA, 90245

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $197.0 million to RAYTHEON COMPANY for work described as: INTERIM CONTRACTOR SUPPORT AND PRODUCTION Key points: 1. Contract value of $197 million over its period of performance. 2. Awarded to Raytheon Company, a major defense contractor. 3. The contract is for interim support and production, suggesting a critical but potentially temporary need. 4. The contract duration is substantial, spanning over 2700 days. 5. The procurement method was 'NOT COMPETED', raising questions about potential cost efficiencies. 6. The contract type is 'COST PLUS FIXED FEE', which can incentivize cost overruns if not managed carefully.

Value Assessment

Rating: questionable

Benchmarking the value of this $197 million contract is challenging without more specific details on the services provided. However, the 'NOT COMPETED' status and 'COST PLUS FIXED FEE' structure suggest a higher risk of suboptimal pricing compared to a fully competed, fixed-price contract. The long duration also means that potential cost escalations could significantly impact the final expenditure. Further analysis would require comparing the specific deliverables and performance metrics against industry standards and similar sole-source procurements.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded using a 'NOT COMPETED' procedure, indicating that the Air Force did not solicit bids from multiple offerors. This typically occurs when only one source is capable of meeting the requirement, or in situations where urgency or national security preclude a competitive process. The lack of competition limits the government's ability to leverage market forces to achieve the best possible price and terms.

Taxpayer Impact: The absence of competition means taxpayers may not benefit from the cost savings that typically arise from a competitive bidding process, potentially leading to a higher overall cost for the goods or services procured.

Public Impact

The U.S. Department of the Air Force is the primary beneficiary, receiving essential support and production services. The contract ensures the continuity of operations and readiness for specific systems or platforms. The geographic impact is likely concentrated around Raytheon's facilities and Air Force installations where the supported systems are deployed. Workforce implications include employment opportunities at Raytheon and potentially its subcontractors, contributing to the defense industrial base.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated costs for taxpayers.
Cost-plus-fixed-fee contracts can incentivize contractors to increase costs if not closely monitored.
The long contract duration increases the risk of cost escalation over time.
Limited transparency due to sole-source award makes it difficult to assess value for money.

Positive Signals

Ensures critical interim contractor support and production continuity for the Air Force.
Awarded to a known defense contractor with established capabilities.
The contract provides a clear period of performance, allowing for planning.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on system and instrument manufacturing for search, detection, navigation, guidance, aeronautical, and nautical applications. The U.S. defense sector is characterized by large, complex contracts often awarded through non-competitive means due to specialized requirements and national security considerations. Spending in this area is substantial, with significant government investment in maintaining and upgrading military capabilities.

Small Business Impact

The data indicates that small business participation is not a primary focus of this contract, as the 'sb' field is false. There is no explicit mention of small business set-asides. This suggests that the prime contractor, Raytheon Company, will likely handle the majority of the work, with potential subcontracting opportunities that may or may not be directed towards small businesses. The impact on the small business ecosystem is likely minimal unless specific subcontracting plans are mandated and executed.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Air Force's contracting and program management offices. Given the 'NOT COMPETED' status and 'COST PLUS FIXED FEE' structure, rigorous oversight of expenditures, performance, and compliance is crucial. The Inspector General's office for the Department of Defense may also conduct audits or investigations to ensure accountability and prevent fraud, waste, and abuse. Transparency is limited due to the sole-source nature of the award.

Related Government Programs

Air Force Weapon Systems Support
Defense Production Act Investments
Aerospace Manufacturing Contracts
Navigational Systems Procurement
Search and Detection Equipment

Risk Flags

Sole-source award
Cost-plus contract type
Long contract duration
Lack of transparency in justification

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $197.0 million to RAYTHEON COMPANY. INTERIM CONTRACTOR SUPPORT AND PRODUCTION

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 $197.0 million.

What is the period of performance?

Start: 2019-07-29. End: 2027-01-08.

What specific systems or platforms does this 'interim contractor support and production' contract pertain to?

The provided data does not specify the exact systems or platforms covered by this contract. The North American Industry Classification System (NAICS) code 334511, 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing,' offers a broad category. However, to understand the precise application, one would need to consult the contract's statement of work (SOW) or related documentation. This information is crucial for assessing the criticality of the support and the justification for a sole-source award, as well as for benchmarking costs against similar support for specific military hardware.

What is the justification for awarding this contract on a sole-source basis ('NOT COMPETED')?

The justification for a sole-source award typically falls under specific exceptions to full and open competition, such as when only one responsible source is available or capable of meeting the requirement, or in cases of urgent and compelling need. For a contract valued at $197 million with a long duration, the government would need to document a strong rationale, potentially related to unique technical capabilities, proprietary technology, or critical national security needs that preclude competition. Without this documentation, the lack of competition raises concerns about potential price inflation and reduced value for taxpayer funds.

How does the 'COST PLUS FIXED FEE' (CPFF) contract type influence cost control and contractor incentives?

A Cost Plus Fixed Fee (CPFF) contract reimburses the contractor for allowable costs incurred, plus a predetermined fixed fee representing profit. While the fixed fee provides some incentive for the contractor to control costs (as their profit is capped), it can also lead to less aggressive cost management compared to fixed-price contracts. Contractors may be less motivated to find cost savings if they know their fee is fixed regardless of the final cost. This structure requires robust government oversight to scrutinize costs and ensure they are reasonable and allocable to the contract to prevent cost overruns.

What are the potential risks associated with the long contract duration of over 2700 days?

A contract duration of over 2700 days (approximately 7.4 years) presents several risks. Firstly, it increases the likelihood of cost escalation due to inflation, changes in labor rates, and material costs over an extended period. Secondly, it can lead to technological obsolescence if the supported systems or the contractor's methods become outdated. Thirdly, maintaining effective oversight and contract management over such a long period can be challenging for government personnel. Finally, it reduces the government's flexibility to adapt to changing requirements or to seek better value through future competitions.

How does this contract's value and scope compare to other similar interim support contracts within the Department of Defense?

Without specific details on the services rendered and the systems supported, a direct comparison is difficult. However, $197 million is a significant sum for interim support. Typically, interim contracts are intended to bridge gaps until a more permanent solution or full production is established. The long duration and substantial value suggest this might be more than a short-term bridge, potentially indicating a complex or critical support requirement. Benchmarking would require identifying contracts with similar NAICS codes, contract types, and service descriptions within the DoD, ideally those that were competitively procured to establish a baseline for value.

What is Raytheon Company's track record with similar sole-source, cost-plus contracts for the Air Force?

Raytheon Company is a major defense contractor with extensive experience in various contract types, including cost-plus arrangements, and frequently holds sole-source contracts with the Department of Defense, including the Air Force. Their track record generally reflects a capacity to deliver complex systems and support. However, the specific performance on past sole-source, cost-plus contracts would need to be reviewed through contract performance reports (e.g., CPARS), historical spending data, and any audit findings to assess their efficiency, cost control, and adherence to contract terms in similar situations. This contract's specific performance will build upon that history.

Industry Classification

NAICS: Manufacturing › Navigational, Measuring, Electromedical, and Control Instruments Manufacturing › Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing

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: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: RTX Corp

Address: 2000 E EL SEGUNDO BLVD, EL SEGUNDO, CA, 90245

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: $242,729,374

Exercised Options: $208,978,287

Current Obligation: $197,019,757

Actual Outlays: $2,213,561

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline