DoD's $152M Raytheon Contract for Missile Defense O&S: A Cost Plus Incentive Fee Award
Contract Overview
Contract Amount: $152,353,856 ($152.4M)
Contractor: Raytheon Company
Awarding Agency: Department of Defense
Start Date: 2019-10-31
End Date: 2024-06-30
Contract Duration: 1,704 days
Daily Burn Rate: $89.4K/day
Competition Type: NOT COMPETED
Pricing Type: COST PLUS INCENTIVE FEE
Sector: Defense
Official Description: IGF FY20 AN/TP-2 O&S INFRASTRUCTURE
Place of Performance
Location: WOBURN, MIDDLESEX County, MASSACHUSETTS, 01801
Plain-Language Summary
Department of Defense obligated $152.4 million to RAYTHEON COMPANY for work described as: IGF FY20 AN/TP-2 O&S INFRASTRUCTURE Key points: 1. The contract is a significant award to Raytheon Company for missile defense operations and support. 2. As a Cost Plus Incentive Fee (CPIF) contract, it incentivizes performance but carries inherent cost escalation risks. 3. The lack of competition raises concerns about potential overpricing and limited market leverage. 4. The IT and Defense sectors are heavily reliant on such specialized support contracts.
Value Assessment
Rating: questionable
The CPIF structure allows for cost overruns, with the government paying costs plus a fee that adjusts based on performance. Without a competitive benchmark, assessing the fairness of the base fee and target cost is difficult.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was not competed, indicating a sole-source award. This limits price discovery and negotiation leverage for the government, potentially leading to higher costs than a competitive process would yield.
Taxpayer Impact: The absence of competition means taxpayers may be paying a premium for these services, as there was no market pressure to drive down costs.
Public Impact
Ensures continued operational readiness of critical missile defense systems. Supports advanced technological maintenance and sustainment, crucial for national security. Potential for cost overruns due to the CPIF contract type and lack of competition. Long contract duration (nearly 5 years) ties up significant resources.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Lack of competition
- Cost Plus Incentive Fee structure
- Long contract duration
- Sole-source award
Positive Signals
- Essential service for national security
- Awarded to a known prime contractor
Sector Analysis
This contract falls within the Defense sector, specifically supporting advanced missile defense systems. Spending benchmarks for similar specialized O&S contracts are difficult to ascertain due to proprietary data and unique system requirements, but large sole-source awards often warrant close scrutiny.
Small Business Impact
The data indicates the prime contractor is Raytheon Company and does not specify any small business subcontracting. Further investigation would be needed to determine if small businesses are involved in the supply chain for this contract.
Oversight & Accountability
The sole-source nature of this award necessitates robust oversight to ensure cost control and performance. The CPIF structure requires careful monitoring of costs and incentive fee payouts to prevent excessive spending.
Related Government Programs
- Other Electronic and Precision Equipment Repair and Maintenance
- Department of Defense Contracting
- Missile Defense Agency Programs
Risk Flags
- Potential for cost overruns due to CPIF structure
- Lack of competitive bidding limits price discovery
- Long-term commitment without demonstrated cost efficiency
- Sole-source award may indicate limited market options or strategic sourcing
- High dollar value warrants close scrutiny
Tags
other-electronic-and-precision-equipment, department-of-defense, ma, delivery-order, 100m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $152.4 million to RAYTHEON COMPANY. IGF FY20 AN/TP-2 O&S INFRASTRUCTURE
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 $152.4 million.
What is the period of performance?
Start: 2019-10-31. End: 2024-06-30.
What is the estimated cost savings if this contract had been competed?
Quantifying exact savings from a hypothetical competition is challenging without detailed market analysis. However, sole-source awards, especially for complex systems, often result in higher prices compared to competitive bids. Savings could range from 10-30% depending on the market dynamics and the specific services procured.
What are the specific performance metrics tied to the incentive fee?
The contract details do not specify the performance metrics linked to the incentive fee. Typically, these could include system availability, response times for maintenance, successful test firings, or adherence to budget targets. Understanding these metrics is crucial for evaluating the effectiveness of the CPIF structure.
How does the cost of this contract compare to similar O&S contracts for other defense systems?
Direct comparison is difficult due to the unique nature of missile defense systems and the specific services provided by Raytheon. However, the $152 million award over five years suggests a substantial investment. Benchmarking against other large, sole-source sustainment contracts for complex defense platforms would be necessary for a more informed assessment.
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: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT
Competition & Pricing
Extent Competed: NOT COMPETED
Solicitation Procedures: ONLY ONE SOURCE
Solicitation ID: HQ014718R0001
Pricing Type: COST PLUS INCENTIVE FEE (V)
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: $160,036,437
Exercised Options: $160,036,437
Current Obligation: $152,353,856
Actual Outlays: $46,058,337
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
Start Date: 2019-10-31
Current End Date: 2024-06-30
Potential End Date: 2024-06-30 00:00:00
Last Modified: 2025-09-30
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