Raytheon Company awarded $170.6M for IB Sustaining Engineering Threat Upgrade Technical Refresh (TUTR) Task Order by Missile Defense Agency

Contract Overview

Contract Amount: $170,629,843 ($170.6M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2020-11-21

End Date: 2029-10-29

Contract Duration: 3,264 days

Daily Burn Rate: $52.3K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Defense

Official Description: IB SUSTAINING ENGINEERING - THREAT UPGRADE TECHNICAL REFRESH (TUTR) TASK ORDER

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $170.6 million to RAYTHEON COMPANY for work described as: IB SUSTAINING ENGINEERING - THREAT UPGRADE TECHNICAL REFRESH (TUTR) TASK ORDER Key points: 1. This task order represents a significant investment in sustaining critical missile defense capabilities. 2. The contract type (Cost Plus Incentive Fee) suggests a focus on performance-based outcomes with shared risk and reward. 3. The long duration (over 9 years) indicates a need for sustained engineering support for complex systems. 4. The absence of competition raises questions about potential cost efficiencies and market responsiveness. 5. The specific technical refresh nature of the task order points to ongoing modernization efforts within the Missile Defense Agency. 6. The geographic location of performance in Arizona may have implications for regional technical expertise and workforce development.

Value Assessment

Rating: fair

Benchmarking the value of this Cost Plus Incentive Fee (CPIF) contract is challenging without detailed cost breakdowns and performance metrics. CPIF contracts can be effective when well-defined, but they also carry inherent risks of cost overruns if not meticulously managed. Comparing this to similar sustainment and technical refresh contracts for complex defense systems would be necessary for a more precise value assessment. The lack of competition further complicates a direct value-for-money analysis, as it limits the opportunity for price discovery through market forces.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded as a sole-source delivery order, meaning it was not competed among multiple vendors. This approach is typically used when a specific contractor possesses unique capabilities, intellectual property, or is the only source capable of meeting the requirement. The lack of competition means that the Missile Defense Agency did not benefit from the price discovery and potential cost savings that a competitive bidding process could have provided.

Taxpayer Impact: For taxpayers, a sole-source award means there is a reduced likelihood of achieving the lowest possible price for the services rendered. Oversight and robust negotiation are critical to ensure fair pricing in such scenarios.

Public Impact

The primary beneficiaries are the Department of Defense and the Missile Defense Agency, ensuring the continued operational readiness of critical missile defense systems. The services delivered include sustaining engineering and technical refresh for threat upgrade systems, crucial for maintaining an effective defense posture. The geographic impact is primarily in Arizona, where the performance is located, potentially supporting a skilled technical workforce in that region. Workforce implications include the need for specialized engineering talent in areas related to guided missile and space vehicle manufacturing.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to higher costs than a competed contract.
Cost Plus Incentive Fee structure requires diligent oversight to prevent cost overruns.
Long contract duration increases the risk of scope creep or evolving requirements not being adequately managed.

Positive Signals

Task order addresses critical sustainment and modernization needs for missile defense.
Cost Plus Incentive Fee structure incentivizes contractor performance and efficiency.
Long-term nature of the contract provides stability for critical system support.

Sector Analysis

The Guided Missile and Space Vehicle Manufacturing sector is a highly specialized and critical component of the defense industrial base. This contract falls within the broader aerospace and defense industry, which is characterized by long development cycles, high R&D investment, and significant government procurement. Spending in this sector is driven by national security priorities and technological advancements. Comparable spending benchmarks would involve analyzing other sustainment and upgrade contracts for major defense platforms, particularly within missile defense systems.

Small Business Impact

This contract does not appear to have a small business set-aside component, nor is there information indicating significant subcontracting opportunities for small businesses. The prime contractor, Raytheon Company, is a large aerospace and defense firm. The focus on specialized engineering and technical refresh for complex defense systems may limit the direct participation of small businesses unless they are highly specialized subcontractors.

Oversight & Accountability

Oversight for this contract would primarily fall under the Missile Defense Agency's contracting and program management offices. As a Cost Plus Incentive Fee contract, performance metrics and cost controls are key areas of focus. Transparency is facilitated through contract reporting mechanisms, though detailed cost breakdowns may be proprietary. The Inspector General for the Department of Defense would have jurisdiction for audits and investigations related to potential fraud, waste, or abuse.

Related Government Programs

Missile Defense Systems Sustainment
Ballistic Missile Defense Program
Aerospace Engineering Services
Defense Technology Modernization
Guided Missile Manufacturing

Risk Flags

Sole-source award limits competitive pricing.
CPIF contract requires diligent cost oversight.
Long contract duration increases risk of scope changes.
Technical refresh complexity may lead to unforeseen challenges.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $170.6 million to RAYTHEON COMPANY. IB SUSTAINING ENGINEERING - THREAT UPGRADE TECHNICAL REFRESH (TUTR) TASK ORDER

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 $170.6 million.

What is the period of performance?

Start: 2020-11-21. End: 2029-10-29.

What is Raytheon Company's track record with the Missile Defense Agency on similar sustainment and technical refresh contracts?

Raytheon Company has a long-standing and extensive history of supporting the Missile Defense Agency (MDA) and other Department of Defense components with complex systems engineering, integration, and sustainment services. Their track record includes significant contributions to various missile defense programs, such as the Patriot missile system and various radar and command and control systems. For sustainment and technical refresh tasks, MDA typically relies on incumbent contractors like Raytheon due to their deep institutional knowledge, proprietary data, and established infrastructure. While specific performance data for past contracts is often sensitive, Raytheon's continued awards in this domain suggest a generally satisfactory performance history, though like any large defense contractor, they may have faced scrutiny or challenges on specific projects regarding cost, schedule, or technical execution. A detailed review of past performance evaluations and contract close-outs would provide a more granular understanding of their specific successes and challenges with MDA.

How does the $170.6 million cost compare to similar sustainment and technical refresh contracts for missile defense systems?

Directly comparing the $170.6 million cost of this specific task order to 'similar' contracts is challenging without a precise definition of 'similar' and access to detailed cost breakdowns. However, for large-scale, long-duration sustainment and technical refresh efforts on complex defense platforms like missile defense systems, this figure is within a plausible range. Contracts for maintaining and upgrading sophisticated military hardware, especially those involving advanced technology and long lifecycles, often run into tens or hundreds of millions of dollars over their performance periods. Factors influencing cost include the complexity of the system being sustained, the scope of the technical refresh (e.g., hardware, software, obsolescence management), the duration of the contract, and the level of engineering effort required. Given the critical nature of missile defense and the extended operational life of such systems, this award reflects a significant, multi-year investment in ensuring readiness and technological relevance.

What are the primary risks associated with a sole-source Cost Plus Incentive Fee (CPIF) contract for technical refresh?

A sole-source CPIF contract for technical refresh presents several key risks. Firstly, the sole-source nature eliminates competitive pressure, potentially leading to higher costs than if the work were competed. The government has less leverage to negotiate the best price. Secondly, the CPIF structure, while incentivizing performance, can lead to cost overruns if the target costs are not well-defined or if the incentive structure is not properly aligned with desired outcomes. The contractor may be motivated to increase costs to achieve higher fee percentages if the target cost is set too low. For technical refresh, risks include unforeseen technical challenges, obsolescence issues that are more complex than anticipated, and potential scope creep as new requirements emerge during the long performance period. Effective oversight, robust cost estimating, and clear performance metrics are crucial to mitigate these risks.

How effective is the Cost Plus Incentive Fee (CPIF) structure in ensuring program effectiveness for this type of contract?

The effectiveness of the Cost Plus Incentive Fee (CPIF) structure for this contract hinges on the clarity and attainability of the established cost and performance targets. CPIF aims to incentivize the contractor to control costs while meeting or exceeding performance objectives. If targets are well-defined, realistic, and directly linked to mission-critical outcomes for the missile defense system's technical refresh, it can drive efficiency and effectiveness. However, if targets are poorly set, the contractor might focus on achieving the fee through less critical performance areas or by inflating costs towards the upper limit. For a complex technical refresh, ensuring that the 'incentive' portion truly drives the most critical aspects of system upgrade and sustainment, rather than just general cost reduction, is paramount. Robust program management and oversight are essential to ensure the CPIF structure effectively promotes the desired program outcomes.

What are the historical spending patterns for IB SUSTAINING ENGINEERING - THREAT UPGRADE TECHNICAL REFRESH (TUTR) or similar efforts by the Missile Defense Agency?

Historical spending patterns for IB Sustaining Engineering - Threat Upgrade Technical Refresh (TUTR) or similar efforts by the Missile Defense Agency (MDA) indicate a consistent and significant investment in maintaining and modernizing its complex missile defense systems. MDA's budget typically allocates substantial funds towards sustainment, operations, and upgrades to ensure the effectiveness of its layered defense architecture. These efforts are characterized by long-term contracts, often awarded to incumbent prime contractors with deep system knowledge. Spending in this category is driven by the need to counter evolving threats, address technological obsolescence, and ensure the reliability of critical components like radar, interceptors, and command and control systems. While specific figures for TUTR-like activities would require detailed analysis of MDA's historical budget justifications and contract awards, the overall trend shows a sustained commitment to keeping these advanced systems operational and relevant, often involving multi-year procurements in the hundreds of millions or even billions of dollars across various programs.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Guided Missile and Space Vehicle Manufacturing

Product/Service Code: RESEARCH AND DEVELOPMENT › C – National Defense R&D Services

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: HQ027619R0001

Pricing Type: COST PLUS INCENTIVE FEE (V)

Evaluated Preference: NONE

Contractor Details

Parent Company: Rockwell Collins Australia PTY Limited

Address: 1151 E HERMANS RD, TUCSON, AZ, 85756

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: $170,709,585

Exercised Options: $170,709,585

Current Obligation: $170,629,843

Actual Outlays: $106,573,151

Subaward Activity

Number of Subawards: 2

Total Subaward Amount: $120,587

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: HQ085121D0001

IDV Type: IDC

Timeline