Raytheon Awarded $55M DoD Contract for Tactical Control System Baseline Work

Contract Overview

Contract Amount: $54,940,273 ($54.9M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2016-04-25

End Date: 2021-03-31

Contract Duration: 1,801 days

Daily Burn Rate: $30.5K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE

Sector: IT

Official Description: IGF::OT::IGF PROCUREMENT OF FOLLOW-ON TACTICAL CONTROL SYSTEM (TCS) BASELINE WORK.

Place of Performance

Location: STERLING, LOUDOUN County, VIRGINIA, 20166

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $54.9 million to RAYTHEON COMPANY for work described as: IGF::OT::IGF PROCUREMENT OF FOLLOW-ON TACTICAL CONTROL SYSTEM (TCS) BASELINE WORK. Key points: 1. Significant contract value for specialized defense systems. 2. Sole-source award to Raytheon raises competition concerns. 3. Potential for cost overruns with Cost Plus Incentive Fee structure. 4. Focus on IT and manufacturing within the defense sector.

Value Assessment

Rating: questionable

The contract's Cost Plus Incentive Fee structure, while common in R&D, can lead to higher costs if not tightly managed. Benchmarking against similar sole-source defense system contracts is difficult without more data, but the $55M value suggests a substantial investment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award to Raytheon. This limits price discovery and potentially increases costs for taxpayers as competitive pressure is absent.

Taxpayer Impact: The lack of competition for this substantial contract may result in higher taxpayer costs compared to a competitively awarded contract.

Public Impact

Ensures continued operation and modernization of critical tactical control systems. Supports advanced manufacturing capabilities within the defense industrial base. Potential impact on future defense procurement strategies if sole-source awards become standard.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition
Cost-plus contract type
Long contract duration

Positive Signals

Critical system support
Established contractor relationship

Sector Analysis

This contract falls within the defense sector, specifically related to IT and manufacturing of specialized aircraft parts. Spending benchmarks for similar sole-source, cost-plus contracts for complex systems are highly variable and depend on specific technological requirements.

Small Business Impact

The data indicates this contract was not awarded to small businesses (ss: false, sb: false). The prime contractor, Raytheon, is a large corporation, suggesting no direct benefit to small businesses through this specific award.

Oversight & Accountability

Oversight is crucial for cost-plus contracts, especially sole-source awards. The Department of the Navy is responsible for ensuring Raytheon meets performance requirements and manages costs effectively to protect taxpayer interests.

Related Government Programs

Other Aircraft Parts and Auxiliary Equipment Manufacturing
Department of Defense Contracting
Department of the Navy Programs

Risk Flags

Sole-source award limits competition.
Cost Plus Incentive Fee structure can lead to higher costs.
Long contract duration (1801 days) increases risk exposure.
Lack of transparency in pricing due to non-competed nature.
Potential for contractor lock-in.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $54.9 million to RAYTHEON COMPANY. IGF::OT::IGF PROCUREMENT OF FOLLOW-ON TACTICAL CONTROL SYSTEM (TCS) BASELINE WORK.

Who is the contractor on this award?

The obligated recipient is RAYTHEON COMPANY.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Navy).

What is the total obligated amount?

The obligated amount is $54.9 million.

What is the period of performance?

Start: 2016-04-25. End: 2021-03-31.

What specific performance metrics are in place to ensure the 'incentive fee' component effectively controls costs and drives desired outcomes for the Tactical Control System?

The effectiveness of the incentive fee hinges on clearly defined, measurable, and achievable performance targets. These should align with critical operational needs and cost-saving objectives. Robust monitoring by the Department of the Navy is essential to validate performance against these metrics and ensure the incentive structure genuinely benefits the government by controlling costs and enhancing system capabilities.

Given the sole-source nature, what steps are being taken to mitigate the risk of cost overruns and ensure fair pricing for this $55M contract?

Mitigation strategies for sole-source, cost-plus contracts typically involve rigorous independent cost estimates, detailed audits of contractor expenses, and strong negotiation tactics by the contracting agency. The Department of the Navy should be actively engaging in continuous cost monitoring and potentially establishing clear ceilings or phased funding to manage financial exposure.

How does the continued reliance on Raytheon for this sole-source contract impact the government's ability to foster innovation and competition in the tactical control systems market?

Sole-source awards, while sometimes necessary for unique capabilities, can stifle innovation and competition by limiting market entry for other potential providers. This can lead to vendor lock-in and potentially higher long-term costs. The government may need to explore strategies like technology insertion programs or market research for future procurements to encourage a more competitive landscape.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Other Aircraft Parts and Auxiliary Equipment 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: N0001916R0027

Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE (V)

Evaluated Preference: NONE

Contractor Details

Parent Company: Rockwell Collins Australia PTY Limited

Address: 22260 PACIFIC BLVD, DULLES, VA, 20166

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: $55,662,299

Exercised Options: $55,652,618

Current Obligation: $54,940,273

Actual Outlays: $6,396,549

Subaward Activity

Number of Subawards: 11

Total Subaward Amount: $9,694,479

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline