DoD's $104.5M contract for FABT Interim Contractor Support awarded to Raytheon Company

Contract Overview

Contract Amount: $104,514,635 ($104.5M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2022-12-01

End Date: 2027-11-30

Contract Duration: 1,825 days

Daily Burn Rate: $57.3K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: FABT INTERIM CONTRACTOR SUPPORT

Place of Performance

Location: MARLBOROUGH, MIDDLESEX County, MASSACHUSETTS, 01752

State: Massachusetts Government Spending

Plain-Language Summary

Department of Defense obligated $104.5 million to RAYTHEON COMPANY for work described as: FABT INTERIM CONTRACTOR SUPPORT Key points: 1. Contract value exceeds $100M, indicating a significant investment in support services. 2. Awarded to a single, large defense contractor, suggesting a focus on established capabilities. 3. The contract duration of five years points to a long-term need for these services. 4. The Cost Plus Fixed Fee (CPFF) pricing structure carries inherent risk of cost overruns. 5. This contract falls under 'Other Communications Equipment Manufacturing', a broad category. 6. The absence of small business participation raises questions about broader economic impact.

Value Assessment

Rating: questionable

The contract value of $104.5M for interim contractor support is substantial. Without specific benchmarks for 'FABT Interim Contractor Support', it's difficult to definitively assess value for money. However, the CPFF structure, while allowing flexibility, often leads to higher costs compared to fixed-price contracts due to the contractor being reimbursed for allowable costs plus a fixed fee. This structure can incentivize cost-plus behavior rather than cost-saving measures. Comparing this to similar support contracts within the DoD, especially those with longer durations and CPFF terms, would be necessary for a more robust value assessment.

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. Sole-source awards are typically justified when only one vendor possesses the necessary capabilities, or in urgent situations. The lack of competition means there was no opportunity for price discovery through a bidding process, potentially leading to a higher price than if multiple vendors had competed. The justification for this sole-source award would need to be thoroughly reviewed to ensure it was appropriate and that alternatives were adequately considered.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive bidding. Without competition, there's less pressure on the contractor to offer the most cost-effective solution, potentially leading to less efficient use of public funds.

Public Impact

The Department of Defense, specifically the Air Force, is the primary beneficiary, receiving critical interim contractor support. The services delivered are related to 'Other Communications Equipment Manufacturing', suggesting support for communication systems or related hardware. The geographic impact is likely concentrated within the operational areas of the Department of the Air Force, potentially globally. Workforce implications could include the employment of specialized personnel by Raytheon Company to fulfill the contract requirements.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially impacting cost-effectiveness.
Cost Plus Fixed Fee (CPFF) contract type can lead to cost overruns if not closely managed.
Lack of small business set-aside or participation may limit opportunities for smaller businesses in the supply chain.
The broad 'Other Communications Equipment Manufacturing' NAICS code may obscure the specific nature and criticality of the support provided.

Positive Signals

Award to Raytheon Company, a major defense contractor, suggests access to established expertise and resources.
A five-year contract duration indicates a stable, long-term requirement, potentially leading to efficient service delivery once established.
The contract is for 'Interim Contractor Support', implying it addresses a temporary but critical gap in capabilities.

Sector Analysis

This contract falls within the broader defense industrial base, specifically related to communications equipment manufacturing and support. The defense sector is characterized by large, complex contracts often awarded to a few major prime contractors. Spending in this area is driven by national security requirements and technological advancements. Comparable spending benchmarks would typically involve analyzing other large-scale support contracts for critical defense systems, often running into tens or hundreds of millions of dollars over several years.

Small Business Impact

This contract does not appear to include a small business set-aside, as indicated by 'sb': false. Furthermore, the prime contractor, Raytheon Company, is a large business. This suggests that small businesses are unlikely to be directly involved as prime contractors on this specific award. There may be subcontracting opportunities for small businesses, but without specific subcontracting plans detailed in the award, their participation is uncertain. The absence of a direct small business set-aside means that opportunities for smaller enterprises to gain prime contract experience and revenue are limited in this instance.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and program management offices, specifically within the Department of the Air Force. Accountability measures would be tied to the terms and conditions of the Cost Plus Fixed Fee contract, including performance metrics and reporting requirements. Transparency might be limited due to the sole-source nature and the defense context, but contract award data is publicly available. Inspector General jurisdiction would apply to investigations of fraud, waste, or abuse related to the contract.

Related Government Programs

Defense Communications Systems Support
Aerospace and Defense Manufacturing
Government Contractor Support Services
Air Force Logistics and Maintenance Contracts

Risk Flags

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

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $104.5 million to RAYTHEON COMPANY. FABT INTERIM CONTRACTOR SUPPORT

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 $104.5 million.

What is the period of performance?

Start: 2022-12-01. End: 2027-11-30.

What is the specific nature of the 'FABT Interim Contractor Support' being provided?

The provided data indicates the contract is for 'FABT INTERIM CONTRACTOR SUPPORT' and falls under NAICS code 334290, 'Other Communications Equipment Manufacturing'. While the exact nature of 'FABT' is not specified, the NAICS code suggests the support relates to the manufacturing, maintenance, or integration of communication equipment. This could encompass a wide range of activities, from hardware production and testing to software integration, system upgrades, or logistical support for existing communication systems. The 'Interim' designation implies this support is intended to fill a temporary gap, possibly due to personnel shortages, transition periods, or delays in acquiring permanent solutions. Further details on the Statement of Work (SOW) would be required to fully understand the scope of services.

How does the Cost Plus Fixed Fee (CPFF) pricing structure compare to other contract types for similar services?

Cost Plus Fixed Fee (CPFF) contracts are common in defense and R&D where the scope of work is not well-defined or is expected to evolve. In a CPFF contract, the contractor is reimbursed for all allowable costs incurred, plus a predetermined fixed fee representing profit. This contrasts with fixed-price contracts, where the price is set upfront, and cost savings benefit the contractor, or cost-reimbursement contracts with incentive fees that reward performance. For services where innovation or adaptation is key, CPFF offers flexibility. However, it shifts much of the cost risk to the government, as the contractor has less incentive to control costs beyond what is necessary to achieve the fixed fee. Compared to fixed-price contracts, CPFF generally results in higher final costs for the government but allows for greater adaptability.

What are the potential risks associated with a sole-source award of this magnitude?

A sole-source award of $104.5 million carries several significant risks. Primarily, the lack of competition means the government did not benefit from a bidding process that could have driven down prices and spurred innovation. This can lead to paying a premium for the goods or services. Secondly, it limits the government's options if the contractor fails to perform adequately; finding an alternative provider for a complex, specialized service under a sole-source arrangement can be difficult and time-consuming. There's also a risk of complacency from the contractor, as there's no immediate competitive threat. Ensuring robust oversight and clear performance metrics becomes even more critical in sole-source situations to mitigate these risks and ensure value for taxpayer money.

What is Raytheon Company's track record with similar large-scale defense support contracts?

Raytheon Company (now RTX) is a major defense contractor with extensive experience in providing a wide array of services and products to the U.S. military and allied nations. They have a long history of managing large, complex contracts, including those involving communications systems, aerospace, and integrated defense solutions. Their track record typically includes both successes and challenges, common for companies of their size operating in the defense sector. Performance on specific contracts can vary based on program complexity, duration, and oversight. While specific details of past performance on contracts identical to 'FABT Interim Contractor Support' are not provided here, Raytheon's general profile suggests they possess the scale and technical capability to undertake such a requirement, though rigorous performance management by the DoD remains essential.

How does this contract's duration and value compare to historical spending patterns for similar support services within the Air Force?

The contract's duration of five years (1825 days) and value of $104.5 million place it among significant long-term support agreements within the Department of the Air Force. Historical spending patterns for similar services, particularly those related to communications equipment and interim support, often involve multi-year contracts valued in the tens to hundreds of millions of dollars. The Air Force frequently relies on contractors for specialized technical support, maintenance, and sustainment of complex systems. A five-year duration is typical for ensuring continuity of operations during critical periods. The value is substantial but not unusual for a sole-source award to a major defense contractor for essential, long-term support requirements, especially when specialized expertise is needed.

Industry Classification

NAICS: Manufacturing › Communications Equipment Manufacturing › Other Communications Equipment Manufacturing

Product/Service Code: QUALITY CONTROL, TEST, INSPECTION › EQUIPMENT AND MATERIALS TESTING

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: RTX Corp

Address: 1001 BOSTON POST RD E, MARLBOROUGH, MA, 01752

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: $128,701,109

Exercised Options: $112,574,247

Current Obligation: $104,514,635

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: FA873521D0001

IDV Type: IDC

Timeline