Raytheon Company awarded $136.7M for Strategic Systems Engineering Services by GSA

Contract Overview

Contract Amount: $136,676,769 ($136.7M)

Contractor: Raytheon Company

Awarding Agency: General Services Administration

Start Date: 2017-06-16

End Date: 2021-04-30

Contract Duration: 1,414 days

Daily Burn Rate: $96.7K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: STRATEGIC SYSTEMS ENGINEERING SERVICES IGF::OT::IGF

Place of Performance

Location: HUNTSVILLE, MADISON County, ALABAMA, 35898

State: Alabama Government Spending

Plain-Language Summary

General Services Administration obligated $136.7 million to RAYTHEON COMPANY for work described as: STRATEGIC SYSTEMS ENGINEERING SERVICES IGF::OT::IGF Key points: 1. Contract awarded through full and open competition, suggesting a competitive bidding process. 2. The contract type is Cost Plus Fixed Fee, which can lead to cost overruns if not managed carefully. 3. Performance period spans over three years, indicating a significant, long-term engagement. 4. The contract is for engineering services, a critical component of federal IT and defense infrastructure. 5. The award amount is substantial, requiring robust oversight to ensure value for money. 6. The contract was awarded by the General Services Administration, a key procurement agency.

Value Assessment

Rating: fair

The contract's Cost Plus Fixed Fee structure warrants careful monitoring to ensure costs remain within reasonable bounds. Benchmarking this specific service against similar engineering contracts is challenging without more granular data on the scope of work. However, the fixed fee component provides some cost control, unlike pure cost-reimbursement contracts. The total award of $136.7 million over approximately three years suggests a significant investment, and its value will depend heavily on the successful delivery of strategic engineering solutions.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple bidders had the opportunity to submit proposals. The presence of two bidders (no: 2) suggests a moderate level of competition for this specific award. While full and open competition is generally preferred for maximizing price discovery and ensuring fair access to government contracts, a low number of bidders can sometimes limit the competitive pressure on pricing.

Taxpayer Impact: Full and open competition is beneficial for taxpayers as it generally leads to more competitive pricing and a wider selection of qualified contractors, potentially reducing overall expenditure.

Public Impact

The primary beneficiaries are likely federal agencies requiring advanced strategic systems engineering expertise. Services delivered are expected to support the development and enhancement of critical government systems. The contract has a geographic impact in Alabama (st: AL, sn: ALABAMA), where Raytheon Company's operations are based. Workforce implications include employment opportunities for engineers and technical specialists within Raytheon and its subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Fixed Fee contracts can incentivize contractors to increase costs to maximize profit, requiring stringent oversight.
A low number of bidders (2) in a full and open competition may indicate high barriers to entry or limited market availability for these specialized services.
The duration of the contract (1414 days) increases the risk of scope creep or evolving requirements not being adequately managed.

Positive Signals

Awarded through full and open competition, which is the government's preferred method for ensuring broad market access.
The fixed fee component provides a defined profit margin, offering some predictability for the contractor and cost control for the government.
The contract is with a well-established defense contractor, Raytheon Company, suggesting a level of proven capability.

Sector Analysis

This contract falls within the Engineering Services sector, which is a vital component of the broader professional, scientific, and technical services industry. This sector supports numerous government functions, particularly in defense, aerospace, and technology development. The market for strategic systems engineering is characterized by high technical barriers to entry and a concentration of specialized firms. Comparable spending benchmarks would typically be found within large-scale defense or IT system development contracts, where complex engineering solutions are required.

Small Business Impact

This contract does not appear to have a small business set-aside (ss: false, sb: false). As a large prime contract awarded to Raytheon Company, there may be opportunities for small businesses to participate as subcontractors. However, the extent of small business subcontracting is not detailed in the provided data, and its impact on the small business ecosystem would depend on the specific subcontracting plan and execution.

Oversight & Accountability

Oversight for this contract would primarily reside with the General Services Administration (GSA) and the relevant program offices within the agencies utilizing the engineering services. Accountability measures would be tied to the contract's performance metrics and milestones. Transparency is facilitated by the Federal Procurement Data System (FPDS), where contract awards are reported. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Defense Engineering Services
Strategic Systems Development
Federal IT Services
Aerospace Engineering Support
Government Contracting

Risk Flags

Cost Plus Fixed Fee contract type carries inherent cost escalation risks.
Low number of bidders (2) in a full and open competition may indicate limited market competition.
Long contract duration increases the potential for scope creep and requirement changes.

Frequently Asked Questions

What is this federal contract paying for?

General Services Administration awarded $136.7 million to RAYTHEON COMPANY. STRATEGIC SYSTEMS ENGINEERING SERVICES IGF::OT::IGF

Who is the contractor on this award?

The obligated recipient is RAYTHEON COMPANY.

Which agency awarded this contract?

Awarding agency: General Services Administration (Federal Acquisition Service).

What is the total obligated amount?

The obligated amount is $136.7 million.

What is the period of performance?

Start: 2017-06-16. End: 2021-04-30.

What is the historical spending pattern for Strategic Systems Engineering Services by the General Services Administration?

Analyzing historical spending patterns for 'Strategic Systems Engineering Services' specifically by the General Services Administration (GSA) requires access to comprehensive federal procurement databases. The provided data point represents a single award of $136.7 million to Raytheon Company. To establish a pattern, one would need to examine GSA's spending over multiple fiscal years, identifying trends in the volume, value, and types of engineering services contracts awarded. This would involve looking at the number of contracts, average award values, and the specific agencies within GSA that procure these services. Without broader historical data, it's difficult to determine if this $136.7 million award is typical, an outlier, or indicative of a growing investment in this service area by GSA.

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

The Cost Plus Fixed Fee (CPFF) contract type is often used when the scope of work is not precisely defined, or when there is uncertainty about the costs involved, making it suitable for research and development or complex engineering projects. In a CPFF contract, the contractor is reimbursed for allowable costs plus a predetermined fixed fee, representing their profit. This contrasts with Fixed Price contracts, where the price is set regardless of the actual costs incurred, offering more cost certainty to the government but potentially higher risk for the contractor. Cost-reimbursement contracts (like Cost Plus Incentive Fee or Cost Plus Award Fee) also exist, offering different incentive structures for cost control and performance. For strategic systems engineering, CPFF can be advantageous if innovation and flexibility are paramount, but it requires robust government oversight to manage costs effectively and prevent contractor overspending, as the incentive for cost efficiency is primarily driven by the fixed fee rather than a direct share in cost savings.

What are the key performance indicators (KPIs) typically associated with Strategic Systems Engineering Services contracts?

Key Performance Indicators (KPIs) for Strategic Systems Engineering Services contracts are designed to measure the contractor's success in delivering complex technical solutions while adhering to project constraints. Common KPIs include technical performance metrics (e.g., system reliability, accuracy, efficiency), schedule adherence (meeting milestones and final delivery dates), cost control (managing expenditures within the approved budget, especially critical for CPFF contracts), quality of deliverables (e.g., design documents, prototypes, test results), and adherence to security and compliance requirements. For strategic systems, KPIs might also encompass innovation, successful integration of new technologies, and the achievement of specific operational capabilities defined in the contract's Statement of Work (SOW). Effective KPIs are crucial for the government to assess value, manage risks, and ensure the contractor meets the strategic objectives of the project.

What is Raytheon Company's track record with similar large-scale federal engineering contracts?

Raytheon Company, now part of RTX, has a long and extensive track record of performing large-scale federal engineering and defense contracts across various agencies, including the Department of Defense and NASA. They are a major defense contractor known for expertise in areas such as aerospace, defense electronics, cybersecurity, and systems integration. Historical data indicates Raytheon has successfully managed numerous complex, multi-billion dollar programs. While specific performance details for every contract are not publicly available, their sustained position as a prime contractor suggests a general capability to meet contractual requirements. However, like any large contractor, they may have faced challenges or scrutiny on specific projects, underscoring the importance of ongoing contract oversight regardless of the contractor's reputation.

What are the potential risks associated with a Cost Plus Fixed Fee contract for strategic systems?

The primary risk associated with a Cost Plus Fixed Fee (CPFF) contract, particularly for complex strategic systems, is the potential for cost escalation. While the fee is fixed, the contractor is reimbursed for all allowable costs. If the government's oversight is insufficient or if the initial cost estimates were inaccurate, the total contract cost can significantly exceed projections. This can occur due to scope creep, unforeseen technical challenges, or inefficient contractor performance. Another risk is the contractor's potential lack of incentive to control costs aggressively, as their profit is fixed regardless of the final cost. This necessitates robust government monitoring of expenditures, rigorous auditing of costs, and clear definition of allowable costs in the contract terms to mitigate these risks and ensure the government receives good value.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Solicitation ID: ID04160057

Offers Received: 2

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Rockwell Collins Australia PTY Limited

Address: 22260 PACIFIC BLVD, STERLING, VA, 20166

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $575,055,514

Exercised Options: $575,055,514

Current Obligation: $136,676,769

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: GS00Q14OADU328

IDV Type: IDC

Timeline