Raytheon Company awarded $12.5M for Recert Validation & Verification services by the Department of the Navy

Contract Overview

Contract Amount: $12,545,649 ($12.5M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2018-08-23

End Date: 2020-09-15

Contract Duration: 754 days

Daily Burn Rate: $16.6K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: RECERT VALIDATION&VERIFICATION

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $12.5 million to RAYTHEON COMPANY for work described as: RECERT VALIDATION&VERIFICATION Key points: 1. Contract awarded on a cost-plus-fixed-fee basis, indicating potential for cost overruns. 2. The contract was not competed, raising questions about price discovery and value for money. 3. A single award for a significant duration suggests a lack of market competition. 4. The contract's performance period spans over two years, requiring ongoing oversight. 5. The North American Industry Classification System (NAICS) code 334511 points to specialized systems manufacturing. 6. The contract is a delivery order, implying it's part of a larger indefinite-delivery/indefinite-quantity (IDIQ) contract.

Value Assessment

Rating: questionable

Benchmarking the value of this $12.5 million contract is challenging without comparable sole-source awards for similar validation and verification services. The cost-plus-fixed-fee structure, while common for complex or uncertain scope work, inherently carries a higher risk of exceeding initial estimates compared to fixed-price contracts. Without competitive bidding, it's difficult to ascertain if the pricing reflects a fair market value or if taxpayers are receiving optimal value for the funds expended.

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 limits the government's ability to leverage market forces to achieve the best possible pricing and terms.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as there is no competitive pressure to drive down prices. It also reduces transparency in the procurement process.

Public Impact

The Department of the Navy benefits from specialized validation and verification services essential for its systems. This contract supports the operational readiness and integrity of critical defense systems. The geographic impact is primarily within Arizona, where Raytheon Company is located. The contract likely supports a specialized workforce within the defense manufacturing sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated costs.
Cost-plus-fixed-fee contract type introduces risk of cost overruns.
Sole-source award limits transparency and potential for better pricing.
Long performance period requires sustained oversight to ensure value.

Positive Signals

Award to a known contractor (Raytheon Company) suggests established capabilities.
Specific NAICS code indicates a focus on specialized, high-tech manufacturing.
Delivery order structure implies it aligns with broader strategic needs.

Sector Analysis

The contract falls within the aerospace and defense sector, specifically related to the manufacturing and support of complex navigation and guidance systems. This sector is characterized by high barriers to entry, significant R&D investment, and a concentrated market of large, specialized contractors. Spending in this area is driven by national security requirements and technological advancements.

Small Business Impact

There is no indication of small business set-asides or subcontracting requirements in the provided data. As a sole-source award to a large prime contractor, the direct impact on the small business ecosystem is likely minimal, unless Raytheon Company engages small businesses for subcontracting opportunities not detailed here.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Navy's contracting and program management offices. Accountability measures would be defined in the contract terms and conditions, including performance metrics and reporting requirements. Transparency is limited due to the sole-source nature of the award.

Related Government Programs

Department of Defense Procurement
Naval Systems Procurement
Aerospace and Defense Manufacturing
Validation and Verification Services

Risk Flags

Sole-source award
Cost-plus-fixed-fee contract type
Lack of competition
Potential for cost overruns

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $12.5 million to RAYTHEON COMPANY. RECERT VALIDATION&VERIFICATION

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 $12.5 million.

What is the period of performance?

Start: 2018-08-23. End: 2020-09-15.

What is Raytheon Company's track record with the Department of the Navy for similar validation and verification services?

Raytheon Company, now part of RTX, has a long-standing relationship with the Department of the Navy, frequently securing contracts for advanced systems, including those related to navigation, guidance, and sensor technology. While specific data on 'validation and verification' services for this exact NAICS code (334511) is not detailed here, their extensive history suggests a deep understanding of naval requirements. Past performance reviews and contract histories would provide a more granular view of their success rates, on-time delivery, and adherence to quality standards in similar complex defense procurements. The company's size and established presence indicate a capacity to handle large, critical programs, though the absence of competition for this specific award means direct comparison of performance on similar sole-source contracts is the primary benchmark.

How does the cost-plus-fixed-fee (CPFF) structure compare to other contract types for this type of service?

The Cost-Plus-Fixed-Fee (CPFF) contract type is often employed when the scope of work is not precisely defined at the outset or involves significant research and development, making it difficult to estimate costs accurately. For validation and verification services, especially those involving novel or evolving technologies, CPFF can provide flexibility. However, it shifts much of the cost risk to the government, as the contractor is reimbursed for all allowable costs plus a predetermined fixed fee. This contrasts with fixed-price contracts, where the contractor assumes more risk and the government has greater cost certainty. Compared to other cost-reimbursement types like Cost-Plus-Incentive-Fee (CPIF), CPFF offers less incentive for the contractor to control costs beyond the initial fee. Therefore, while suitable for uncertainty, it requires robust government oversight to manage expenditures effectively.

What are the primary risks associated with a sole-source award for specialized defense systems?

The primary risks associated with a sole-source award for specialized defense systems like those under NAICS 334511 are threefold: inflated costs, reduced innovation, and potential vendor lock-in. Without competition, the government loses the leverage to negotiate the lowest possible price, potentially leading to higher expenditures than if multiple bids were solicited. The lack of competitive pressure can also stifle innovation, as the incumbent contractor may have less incentive to develop more cost-effective or advanced solutions. Furthermore, sole-source awards can create vendor lock-in, making it difficult and costly to switch to alternative providers in the future, even if better options emerge. This necessitates rigorous justification for sole-sourcing and strong contract management to mitigate these risks.

What is the significance of the NAICS code 334511 in the context of this contract?

The North American Industry Classification System (NAICS) code 334511, 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing,' is highly significant as it precisely defines the industry sector for this contract. It indicates that the work performed by Raytheon Company involves the manufacturing of sophisticated equipment critical for military operations, including radar systems, GPS devices, flight control instruments, and related components. This classification suggests a focus on high-technology, precision engineering, and adherence to stringent defense standards. Contracts under this code often involve complex supply chains and specialized expertise, justifying the involvement of large, established defense contractors like Raytheon.

How does the contract duration (754 days) impact the assessment of value for money?

A contract duration of 754 days (approximately two years) for a $12.5 million award requires careful consideration of value for money over its entire lifecycle. While a longer duration can indicate a stable, ongoing need for the services or products, it also means that the government is committed to this specific vendor and pricing for an extended period. For a sole-source, cost-plus-fixed-fee contract, this extended commitment amplifies the risks of cost overruns and potentially suboptimal pricing if not managed diligently. Effective value for money is achieved not just by the initial award price but by ensuring performance, managing costs throughout the period, and verifying that the delivered capabilities continue to meet evolving defense requirements. Regular performance reviews and cost monitoring are crucial to ensure value is realized over the contract's lifespan.

Industry Classification

NAICS: Manufacturing › Navigational, Measuring, Electromedical, and Control Instruments Manufacturing › Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument 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: Rockwell Collins Australia PTY Limited

Address: 2000 E EL SEGUNDO BLVD, EL SEGUNDO, CA, 90245

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: $13,209,440

Exercised Options: $13,209,440

Current Obligation: $12,545,649

Actual Outlays: $1,618,703

Subaward Activity

Number of Subawards: 7

Total Subaward Amount: $1,919,820

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0001915G0003

IDV Type: BOA

Timeline