Raytheon Company awarded $19.6M for PPU 4&5 Refurbishment, a sole-source contract with a 816-day duration

Contract Overview

Contract Amount: $19,617,657 ($19.6M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2017-12-21

End Date: 2020-03-16

Contract Duration: 816 days

Daily Burn Rate: $24.0K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: PPU 4&5 REFURBISHMENT IGF::OT::IGF

Place of Performance

Location: WOBURN, MIDDLESEX County, MASSACHUSETTS, 01801

State: Massachusetts Government Spending

Plain-Language Summary

Department of Defense obligated $19.6 million to RAYTHEON COMPANY for work described as: PPU 4&5 REFURBISHMENT IGF::OT::IGF Key points: 1. Contract awarded on a Cost Plus Fixed Fee basis, which can lead to cost overruns if not managed carefully. 2. The contract was not competed, raising questions about potential price efficiencies and value for money. 3. The duration of 816 days suggests a complex or long-term requirement for the refurbishment. 4. The Missile Defense Agency is the primary recipient, indicating a focus on critical defense systems. 5. The North American Industry Classification System (NAICS) code 811219 points to repair and maintenance of electronic equipment. 6. The contract was awarded as a Delivery Order under a larger agreement, suggesting a phased approach to procurement.

Value Assessment

Rating: questionable

Without a competitive bidding process, it is difficult to benchmark the value for money. The Cost Plus Fixed Fee (CPFF) contract type, while allowing for flexibility, carries inherent risks of cost escalation if the contractor's costs exceed initial estimates. The total award amount of $19.6 million for refurbishment services over 816 days requires further analysis against similar projects to determine if it represents a fair price. The lack of competition limits the ability to assess pricing against market rates.

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 security clearances. The lack of competition means there were no other bidders to compare against, potentially limiting price discovery and the government's ability to secure the most cost-effective solution.

Taxpayer Impact: For taxpayers, a sole-source award means there is a reduced likelihood of benefiting from competitive pricing that could drive down costs. It also suggests that the government may not have explored all available market options to ensure the best value.

Public Impact

The primary beneficiaries are the Department of Defense and specifically the Missile Defense Agency, which will receive refurbished PPU 4&5 systems. The services delivered involve the repair and maintenance of critical electronic and precision equipment, essential for national security. The geographic impact is likely concentrated within the operational areas of the Missile Defense Agency, potentially involving specialized facilities. Workforce implications may include the need for highly skilled technicians and engineers to perform the refurbishment, potentially supporting specialized jobs within the defense industry.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to higher costs for taxpayers.
Cost Plus Fixed Fee contract type introduces risk of cost overruns.
Sole-source award limits transparency in pricing and vendor selection.
Long contract duration (816 days) requires sustained oversight to ensure performance.

Positive Signals

Contract awarded to a known entity (Raytheon Company) with presumed expertise in defense systems.
Focus on refurbishment of critical defense equipment suggests a necessary investment for national security.
Delivery order structure may allow for phased execution and management of the refurbishment process.

Sector Analysis

The defense electronics repair and maintenance sector is a critical component of the broader aerospace and defense industry. This contract falls under the category of specialized equipment servicing, often requiring unique technical expertise and adherence to stringent quality and security standards. The market for such services is typically characterized by a limited number of highly qualified contractors, often with established relationships with government agencies. Comparable spending benchmarks are difficult to ascertain without more specific details on the PPU 4&5 systems, but large-scale refurbishment of defense assets can represent significant investments.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Furthermore, the 'ss' (small business subcontracting) is also false. This suggests that small businesses are unlikely to be directly involved as prime contractors or through mandatory subcontracting opportunities on this specific award. The focus is likely on large prime contractors with specialized capabilities, potentially limiting the direct economic benefit to the small business ecosystem for this particular contract.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense and the Missile Defense Agency. As a Cost Plus Fixed Fee contract, rigorous financial oversight is crucial to monitor expenditures and ensure costs remain within reasonable bounds relative to the fixed fee. Transparency is limited due to the sole-source nature. Accountability measures would be tied to the performance requirements outlined in the contract. Inspector General jurisdiction would apply for any investigations into fraud, waste, or abuse.

Related Government Programs

Missile Defense Systems
Defense Electronics Maintenance
Cost Plus Fixed Fee Contracts
Sole Source Procurements
Department of Defense Contracts

Risk Flags

Sole-source award lacks competitive pricing.
CPFF contract type carries risk of cost overruns.
Long contract duration requires sustained oversight.
Lack of small business participation.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $19.6 million to RAYTHEON COMPANY. PPU 4&5 REFURBISHMENT IGF::OT::IGF

Who is the contractor on this award?

The obligated recipient is RAYTHEON COMPANY.

Which agency awarded this contract?

Awarding agency: Department of Defense (Missile Defense Agency).

What is the total obligated amount?

The obligated amount is $19.6 million.

What is the period of performance?

Start: 2017-12-21. End: 2020-03-16.

What is the track record of Raytheon Company in performing similar refurbishment contracts for the Department of Defense?

Raytheon Company, now part of RTX Corporation, has a long and extensive history of performing complex defense-related contracts for the Department of Defense, including the development, manufacturing, and sustainment of various missile systems and related electronic equipment. Their track record in refurbishment projects is generally considered strong, given their deep technical expertise and established infrastructure. However, specific performance metrics for similar PPU 4&5 refurbishment contracts would require a detailed review of past performance evaluations and contract close-out data. Without access to that granular information, it's assumed their extensive experience in the defense sector positions them as a capable provider for this type of specialized service. Past performance is a key consideration in sole-source awards, suggesting the agency likely had confidence in Raytheon's ability to execute this specific requirement.

How does the $19.6 million award compare to other refurbishment contracts for similar defense systems?

Direct comparison of the $19.6 million award for PPU 4&5 refurbishment is challenging without knowing the exact specifications and scope of work for the 'PPU 4&5' systems and their complexity. Defense systems vary widely in their technological sophistication and maintenance requirements. However, for large-scale refurbishment of critical defense assets, $19.6 million over an 816-day period (approximately 2.2 years) can be considered a significant but not necessarily excessive amount, especially if the systems are highly specialized or require extensive component replacement and recalibration. Benchmarking would ideally involve comparing this contract's cost per system or cost per major component against other similar refurbishment efforts. Given the sole-source nature, a robust internal cost analysis by the agency would have been necessary to justify the price.

What are the primary risks associated with a Cost Plus Fixed Fee (CPFF) contract for refurbishment services?

The primary risk associated with a Cost Plus Fixed Fee (CPFF) contract for refurbishment services is the potential for cost overruns. In a CPFF structure, the contractor is reimbursed for all allowable costs incurred, plus a predetermined fixed fee representing profit. If the contractor's actual costs exceed initial estimates, the government bears the burden of these increased costs. This can happen due to unforeseen technical challenges, scope creep, or inefficient performance. For refurbishment, unexpected wear and tear, obsolescence of parts, or the need for more extensive repairs than initially assessed can drive up costs. Effective oversight, detailed cost tracking, and clear definition of allowable costs are critical to mitigate these risks and ensure the government receives value for its investment.

What does the 'NOT COMPETED' status imply about the necessity and justification for this contract?

The 'NOT COMPETED' status signifies that the Missile Defense Agency did not conduct a full and open competition to solicit offers from multiple potential contractors. This implies that the agency determined, based on specific criteria, that a competitive process was either not feasible or not in the government's best interest. Common justifications for sole-source awards include the existence of only one responsible source capable of meeting the requirement, urgent and compelling needs where competition would cause unacceptable delays, or specific national security concerns. The agency would have been required to document the justification for not competing the award, often involving a Justification and Approval (J&A) document, to ensure proper procurement practices were followed despite the lack of competition.

How does the contract's duration of 816 days impact oversight and potential for performance issues?

A contract duration of 816 days (approximately 2.2 years) for refurbishment services necessitates sustained and diligent oversight throughout its lifecycle. Long durations increase the risk of performance degradation, scope creep, and potential cost increases if not managed proactively. The Missile Defense Agency must implement robust project management practices, including regular progress reviews, milestone tracking, and performance assessments. Without continuous monitoring, there's a risk that the contractor's focus may wane, or that unforeseen issues arising later in the contract period could be more costly to address. Conversely, a longer duration can also allow for more thorough and meticulous refurbishment, potentially leading to higher quality outcomes if managed effectively.

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: MODIFICATION OF EQUIPMENT › MODIFICATION OF EQUIPMENT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: HQ014718R0001

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Rockwell Collins Australia PTY Limited

Address: 225 PRESIDENTIAL WAY, WOBURN, MA, 01801

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: $21,620,750

Exercised Options: $21,620,750

Current Obligation: $19,617,657

Actual Outlays: $10,263

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: HQ014718D0001

IDV Type: IDC

Timeline