DoD Awards Raytheon $24.7M for System Engineering, Lacking Competition
Contract Overview
Contract Amount: $24,671,720 ($24.7M)
Contractor: Raytheon Company
Awarding Agency: Department of Defense
Start Date: 2024-06-28
End Date: 2026-09-30
Contract Duration: 824 days
Daily Burn Rate: $29.9K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: COST PLUS FIXED FEE
Sector: Defense
Official Description: FUNCTIONAL AREA SYSTEM ENGINEERING
Place of Performance
Location: INDIANAPOLIS, MARION County, INDIANA, 46240
State: Indiana Government Spending
Plain-Language Summary
Department of Defense obligated $24.7 million to RAYTHEON COMPANY for work described as: FUNCTIONAL AREA SYSTEM ENGINEERING Key points: 1. Significant contract value of $24.7 million awarded to a single large business. 2. Lack of competition raises concerns about potential overpricing and reduced innovation. 3. Contract duration of 824 days suggests a substantial, ongoing need for services. 4. The award falls under 'Other Aircraft Parts and Auxiliary Equipment Manufacturing', indicating a specific niche.
Value Assessment
Rating: questionable
The contract is Cost Plus Fixed Fee, which can lead to higher costs if not managed tightly. Without competitive benchmarks, assessing the fairness of the fee and total 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 may result in higher costs for taxpayers compared to a competitive process.
Taxpayer Impact: The absence of competition means taxpayers may be paying a premium for these system engineering services.
Public Impact
Taxpayers may be overpaying due to the lack of competitive bidding. Limited transparency into the cost drivers for system engineering services. Potential for reduced innovation as there is no market pressure to improve efficiency.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Lack of competition
- Cost-plus contract type
- No small business participation indicated
Positive Signals
- Clear contract duration
- Specific functional area defined
Sector Analysis
This contract for system engineering services falls within the broader aerospace and defense sector. Spending benchmarks for system engineering can vary widely, but lack of competition often inflates costs above typical market rates.
Small Business Impact
The data indicates no small business participation in this contract. This represents a missed opportunity to support small businesses and potentially leverage their specialized capabilities.
Oversight & Accountability
The sole-source nature of this award warrants close oversight to ensure costs are reasonable and performance meets requirements. Transparency regarding the justification for not competing is crucial.
Related Government Programs
- Other Aircraft Parts and Auxiliary Equipment Manufacturing
- Department of Defense Contracting
- Department of the Navy Programs
Risk Flags
- Sole-source award
- Cost-plus contract type
- No small business participation
- Potential for cost overruns
- Lack of competitive benchmarking
Tags
other-aircraft-parts-and-auxiliary-equip, department-of-defense, in, delivery-order, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $24.7 million to RAYTHEON COMPANY. FUNCTIONAL AREA SYSTEM ENGINEERING
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 $24.7 million.
What is the period of performance?
Start: 2024-06-28. End: 2026-09-30.
What is the specific justification for awarding this contract on a sole-source basis, and what steps are being taken to ensure cost-effectiveness?
The justification for a sole-source award typically involves unique capabilities, urgent needs, or lack of market availability. Without this specific justification, it's difficult to assess the necessity. To ensure cost-effectiveness, the Department of Defense should conduct rigorous cost analysis, scrutinize the fixed fee, and implement strong performance monitoring to prevent scope creep or inefficiencies.
How does the Cost Plus Fixed Fee structure mitigate risks associated with system engineering complexity and potential cost overruns?
Cost Plus Fixed Fee (CPFF) contracts aim to control costs by setting a fixed fee on top of allowable costs. However, the 'cost' portion can still escalate if the contractor's expenses are higher than anticipated. Effective mitigation relies on robust government oversight of incurred costs, clear definition of allowable expenses, and performance incentives that align contractor and government interests to manage complexity efficiently.
What is the expected impact of this sole-source system engineering contract on future competition and innovation within the 'Other Aircraft Parts' sector?
Sole-source awards can stifle future competition by establishing incumbent advantage and potentially discouraging new entrants. This lack of competitive pressure may reduce incentives for innovation, as the contractor faces less market risk. Over time, this could lead to higher prices and slower technological advancement within this specific sector of the defense industrial base.
Industry Classification
NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Other Aircraft Parts and Auxiliary Equipment Manufacturing
Product/Service Code: AEROSPACE CRAFT COMPONENTS AND ACCESSORIES
Competition & Pricing
Extent Competed: NOT COMPETED
Solicitation Procedures: ONLY ONE SOURCE
Solicitation ID: N0001923R0153
Offers Received: 1
Pricing Type: COST PLUS FIXED FEE (U)
Evaluated Preference: NONE
Contractor Details
Parent Company: RTX Corp
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: $40,217,893
Exercised Options: $24,671,720
Current Obligation: $24,671,720
Actual Outlays: $572,826
Subaward Activity
Number of Subawards: 8
Total Subaward Amount: $729,684
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: N0001920G0007
IDV Type: BOA
Timeline
Start Date: 2024-06-28
Current End Date: 2026-09-30
Potential End Date: 2026-09-30 00:00:00
Last Modified: 2026-01-14
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