Raytheon Company awarded $92.3M for flight test support and analysis, a sole-source contract

Contract Overview

Contract Amount: $92,265,920 ($92.3M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2012-05-11

End Date: 2019-06-28

Contract Duration: 2,604 days

Daily Burn Rate: $35.4K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: FLIGHT TEST SUPPORT AND ANALYSIS

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $92.3 million to RAYTHEON COMPANY for work described as: FLIGHT TEST SUPPORT AND ANALYSIS Key points: 1. Contract awarded on a sole-source basis, raising questions about price discovery and potential for overpayment. 2. Significant duration of over 2600 days suggests a long-term need for these specialized services. 3. The contract falls under Guided Missile and Space Vehicle Manufacturing, a critical defense sector. 4. Performance period spans from 2012 to 2019, indicating a historical need for these services. 5. The cost-plus-fixed-fee structure may incentivize cost overruns, requiring robust oversight. 6. No small business set-aside was utilized, potentially limiting opportunities for smaller firms in this niche.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to its sole-source nature and specific technical requirements. The cost-plus-fixed-fee (CPFF) pricing structure, while common for R&D and complex services, can lead to higher costs compared to fixed-price contracts if not managed tightly. Without competitive bids, it's difficult to ascertain if the final price represents optimal value for the government. The total award amount of $92.3 million over approximately seven years suggests a substantial investment in specialized flight test support.

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 typically occurs when only one vendor possesses the unique capabilities, technology, or security clearances required for the service. While this can ensure specialized expertise, it significantly limits price competition and may result in higher costs for the government compared to a fully competed contract. The absence of multiple bidders means there was no direct market pressure to drive down prices.

Taxpayer Impact: Sole-source awards mean taxpayers do not benefit from the cost savings typically achieved through competitive bidding. This can lead to higher overall government spending for the same level of service.

Public Impact

The Department of Defense benefits from critical flight test support and analysis for guided missile and space vehicle programs. This contract ensures the successful execution of complex testing phases, contributing to the development and validation of advanced defense technologies. The services provided are essential for maintaining national security and technological superiority in missile and space systems. Work is likely concentrated in Arizona, where the contractor's facility is located, potentially impacting the local aerospace workforce.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially leading to higher costs.
Cost-plus-fixed-fee contract type can incentivize cost overruns if not closely monitored.
Lack of small business participation may limit opportunities for smaller, innovative firms.
Long contract duration requires sustained oversight to ensure continued value and performance.

Positive Signals

Awarded to a major defense contractor with established expertise in the field.
Contract supports critical national security programs related to missile and space vehicles.
Long performance period indicates a sustained need and likely successful past performance.

Sector Analysis

The contract falls within the Guided Missile and Space Vehicle Manufacturing sector, a highly specialized and critical area of the defense industrial base. This sector is characterized by high barriers to entry, significant R&D investment, and stringent regulatory requirements. Spending in this area is driven by national security imperatives and technological advancements. Comparable spending benchmarks are difficult to establish due to the unique nature of flight test support, but overall defense spending on missile systems is substantial.

Small Business Impact

This contract was not set aside for small businesses, nor does it appear to have significant subcontracting requirements for small businesses based on the provided data. This means that opportunities for small businesses to participate in this specific contract were likely minimal. While large prime contractors often engage small businesses, the absence of a specific set-aside or explicit subcontracting goals can limit the direct impact on the small business ecosystem for this particular award.

Oversight & Accountability

Oversight for this contract would typically fall under the Defense Contract Management Agency (DCMA), responsible for ensuring contractor performance and compliance. The cost-plus-fixed-fee structure necessitates close monitoring of costs and adherence to the fixed fee. Transparency is generally maintained through contract reporting mechanisms, but specific details of cost breakdowns and performance metrics may be considered sensitive. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Missile Defense Systems
Space Launch Vehicles
Aerospace Engineering Services
Defense Research and Development
Guided Missile Manufacturing

Risk Flags

Sole-source award
Cost-plus-fixed-fee pricing structure
Lack of small business participation noted

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $92.3 million to RAYTHEON COMPANY. FLIGHT TEST SUPPORT AND ANALYSIS

Who is the contractor on this award?

The obligated recipient is RAYTHEON COMPANY.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $92.3 million.

What is the period of performance?

Start: 2012-05-11. End: 2019-06-28.

What is Raytheon Company's track record with similar sole-source, cost-plus-fixed-fee contracts within the Department of Defense?

Raytheon Company, now RTX, has a long history of performing complex defense contracts, including sole-source awards and those utilizing cost-plus-fixed-fee (CPFF) structures. CPFF contracts are common for research, development, and specialized services where costs are difficult to predict precisely. While this structure allows for flexibility and incentivizes contractor effort towards a specific goal, it also requires rigorous government oversight to manage costs effectively. Raytheon's extensive experience in aerospace and defense suggests they are capable of meeting the technical requirements. However, the effectiveness and value derived from such contracts are highly dependent on the specific program, the clarity of the SOW, and the diligence of the contracting and oversight teams. Analyzing past performance on similar contracts would involve reviewing contract close-out data, any incurred cost overruns or underruns, and performance reviews to assess overall value and efficiency.

How does the $92.3 million award compare to other flight test support contracts awarded by the DoD?

Direct comparison of this $92.3 million award for flight test support and analysis is challenging without more specific details on the scope of work and duration. Flight test support can range from basic range operations to highly complex data analysis and simulation for advanced weapon systems. Given the contract's duration (2012-2019, approximately 7 years) and its focus on guided missile and space vehicles, the total value appears substantial but potentially reasonable for specialized, long-term support. However, without competitive bidding, it's difficult to establish a true market rate. Contracts for similar, but perhaps less specialized, testing services or shorter durations might range from a few million to tens of millions annually. The sole-source nature and the specific technical requirements likely contributed to this award's size.

What are the primary risks associated with a sole-source, cost-plus-fixed-fee contract for flight test support?

The primary risks associated with this contract structure are twofold. Firstly, the sole-source nature eliminates competitive pressure, which can lead to higher prices than might be achieved in a competitive environment. The government lacks the leverage of multiple bidders vying for the contract. Secondly, the Cost-Plus-Fixed-Fee (CPFF) structure, while providing flexibility for evolving requirements, carries the risk of cost escalation. The contractor is reimbursed for allowable costs plus a predetermined fixed fee. If costs increase due to inefficiencies, scope creep not properly managed, or unforeseen technical challenges, the total contract value can rise significantly, impacting the overall budget. Robust government oversight, clear performance metrics, and stringent cost controls are essential to mitigate these risks.

How effective is the Defense Contract Management Agency (DCMA) in overseeing sole-source CPFF contracts of this magnitude?

The Defense Contract Management Agency (DCMA) is specifically tasked with providing contract administration services, including oversight of performance, cost, and schedule for a vast array of defense contracts, including sole-source CPFF awards. Their effectiveness relies on adequate staffing, expertise in the specific technical domain, and sufficient resources to conduct thorough reviews. For a contract of this magnitude ($92.3 million over several years), DCMA would assign dedicated contract management teams. These teams are responsible for auditing incurred costs, monitoring progress against the statement of work, ensuring compliance with contract terms, and identifying potential risks or inefficiencies. While DCMA has established processes, the effectiveness can vary based on the complexity of the contract, the contractor's cooperation, and the agency's internal resource allocation. Their role is critical in ensuring that the government receives the best value and that costs are reasonable and allowable.

What are the historical spending patterns for flight test support and analysis within the Department of Defense?

Historical spending patterns for flight test support and analysis within the Department of Defense are substantial and have generally trended upwards, driven by the continuous development of new and upgraded weapon systems, particularly in strategic areas like guided missiles and space vehicles. This spending is often characterized by a mix of contract types, including sole-source awards for highly specialized capabilities and competitive bids for more standardized support services. The duration of these contracts can vary significantly, from short-term test events to multi-year support programs. Factors influencing spending include geopolitical tensions, technological advancements, and budget allocations. While specific aggregate data requires deep dives into federal procurement databases, the consistent need for rigorous testing ensures sustained investment in this critical capability across various defense agencies and branches.

Industry Classification

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

Product/Service Code: GUIDED MISSLES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: RTX Corp (UEI: 001344142)

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: $95,196,287

Exercised Options: $95,097,664

Current Obligation: $92,265,920

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline