Raytheon awarded $77.6M contract for engineering services on MK15 Close-In Weapon System

Contract Overview

Contract Amount: $107,808,297 ($107.8M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2001-12-10

End Date: 2005-09-30

Contract Duration: 1,390 days

Daily Burn Rate: $77.6K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: 200203!020061!1700!BZ005 !NAVAL SEA SYSTEMS COMMAND !N0002402C5411 !A!N! !N! !20011210!20030930!794598573!794598573!001339159!N!RAYTHEON SYSTEMS CO !1151 E HERMANS RD !TUCSON !AZ!85706!77000!019!04!TUCSON !PIMA !ARIZONA !+000000980000!N!N!000367000000!R425!ENGINEERING TECHNICAL SERVICES !A2 !MISSILE AND SPACE SYSTEMS !2EBE!MK15 CLOSE IN WPN SYS !541330!E! !3! ! ! ! ! !99990909!B! ! !A! !C!U!U!1!001!N!1A!Z!Y!Z! ! !N!C!N! ! ! !A!A!A!A!000!A!B!N! ! ! !Y! !PMS472!0001!

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $107.8 million to RAYTHEON COMPANY for work described as: 200203!020061!1700!BZ005 !NAVAL SEA SYSTEMS COMMAND !N0002402C5411 !A!N! !N! !20011210!20030930!794598573!794598573!001339159!N!RAYTHEON SYSTEMS CO !1151 E HERMANS RD !TUCSON !AZ!85706!77000!019!04!TUCSON !PIMA … Key points: 1. Contract awarded for engineering and technical services related to the MK15 Close-In Weapon System. 2. Significant portion of contract value allocated to engineering services, indicating complex technical requirements. 3. Sole-source award raises questions about competition and potential for cost savings. 4. Contract duration of nearly four years suggests a long-term need for these specialized services. 5. Geographic concentration of contractor in Arizona may have local economic implications. 6. The contract falls under the broader category of engineering services, a critical support function for defense systems.

Value Assessment

Rating: fair

The contract value of $77.6 million for engineering technical services appears substantial. Benchmarking against similar contracts for defense system engineering is challenging without more specific service details. However, the sole-source nature of the award limits direct price comparison and may indicate a premium paid for specialized expertise. Further analysis would be needed to determine if the pricing reflects fair market value given the lack of competitive bidding.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, Raytheon Systems Co., was solicited. This approach is typically used when a unique capability or proprietary technology is required, or in cases of urgent need. The lack of competition means there was no opportunity for other qualified companies to bid, potentially leading to higher costs for the government compared to a fully competed contract.

Taxpayer Impact: Taxpayers may have paid a higher price due to the absence of competitive pressure. Without multiple bids, the government had less leverage to negotiate the most cost-effective terms.

Public Impact

The primary beneficiaries are the U.S. Navy, which operates the MK15 Close-In Weapon System. Services delivered include engineering and technical support crucial for the maintenance and potential upgrades of the weapon system. The geographic impact is primarily centered around Tucson, Arizona, where Raytheon Systems Co. is located. Workforce implications include employment for engineers and technical specialists at Raytheon.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potential cost savings for taxpayers.
Lack of transparency in the justification for sole-source procurement.
Potential for cost overruns in cost-plus contracts if not closely monitored.
Contract duration may lock in pricing without opportunities for re-evaluation.

Positive Signals

Award to an established contractor with likely expertise in the specific weapon system.
Contract ensures continued support for a critical defense asset.
Clear definition of services to be provided.
Contract includes a fixed-fee component, providing some cost certainty.

Sector Analysis

This contract falls within the broader aerospace and defense sector, specifically supporting naval weapon systems. The market for specialized engineering services for defense platforms is often characterized by high barriers to entry due to technical expertise, security clearances, and established relationships. Comparable spending benchmarks for similar engineering support contracts can vary widely based on system complexity and duration, but this award represents a significant investment in maintaining and developing advanced defense capabilities.

Small Business Impact

There is no indication of small business set-asides or subcontracting plans in the provided data. As a sole-source award to a large prime contractor, the direct impact on small businesses is likely minimal unless Raytheon voluntarily includes them in its subcontracting efforts. This contract does not appear to be structured to specifically benefit the small business ecosystem.

Oversight & Accountability

Oversight for this contract would typically be managed by the Naval Sea Systems Command (NAVSEA) and potentially the Defense Contract Management Agency (DCMA). 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; however, contract awards are generally reported in federal procurement databases. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Naval Sea Systems Command (NAVSEA) Contracts
MK 15 Close-In Weapon System (CIWS) Program
Defense Engineering Services
Missile and Space Systems Procurement
Raytheon Defense Contracts

Risk Flags

Sole-source award
Cost-plus contract type
Lack of detailed performance metrics in summary data

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $107.8 million to RAYTHEON COMPANY. 200203!020061!1700!BZ005 !NAVAL SEA SYSTEMS COMMAND !N0002402C5411 !A!N! !N! !20011210!20030930!794598573!794598573!001339159!N!RAYTHEON SYSTEMS CO !1151 E HERMANS RD !TUCSON !AZ!85706!77000!019!04!TUCSON !PIMA !ARIZONA !+000000980000!N!N!000367000000!R425!ENGINEERING TECHNICAL SERVICES !A2 !MISSILE AND SPACE SYSTEMS !2EBE!MK15 CLOSE IN WPN SYS !541330!E! !3! ! ! ! ! !99990909!B

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 $107.8 million.

What is the period of performance?

Start: 2001-12-10. End: 2005-09-30.

What is the specific justification for awarding this contract on a sole-source basis to Raytheon Systems Co.?

The provided data indicates the contract was 'NOT COMPETED' and awarded on a sole-source basis. Typically, sole-source justifications are based on factors such as the existence of only one responsible source capable of providing the required services, urgent and compelling needs that preclude full and open competition, or when the contract is a follow-on to a previously competed contract where only the original contractor can provide the necessary services due to unique knowledge or proprietary data. Without a specific justification document, it is presumed that NAVSEA determined Raytheon possessed unique capabilities or proprietary knowledge essential for the MK15 Close-In Weapon System's engineering and technical services that other firms could not replicate within the required timeframe or cost parameters.

How does the total contract value of $77.6 million compare to historical spending on engineering services for the MK15 CIWS?

To accurately compare this $77.6 million contract value to historical spending on engineering services for the MK15 CIWS, a detailed analysis of past contract awards for this specific system would be required. The provided data only includes this single contract award. Historical data from sources like the Federal Procurement Data System (FPDS) or agency-specific contract databases would need to be queried for prior awards related to 'MK15 Close-In Weapon System' and 'Engineering Services' (NAICS code 541330). Factors such as inflation, system upgrades, and changes in operational tempo would need to be considered for a meaningful comparison. Without this historical context, it is difficult to ascertain if $77.6 million represents an increase, decrease, or stable level of investment.

What are the key performance indicators (KPIs) or deliverables expected under this contract?

The provided data identifies the service as 'ENGINEERING TECHNICAL SERVICES' for the 'MK15 CLOSE IN WPN SYS'. Specific Key Performance Indicators (KPIs) and detailed deliverables are not included in this summary data. Typically, such contracts would outline specific technical performance standards, milestones for design or analysis work, reporting frequencies, documentation requirements (e.g., technical reports, analyses, design documents), and potentially support for testing or integration activities. The contract's Statement of Work (SOW) would contain these precise details. Performance would likely be assessed based on adherence to technical specifications, timely delivery of reports and analyses, and the quality of engineering solutions provided.

What is Raytheon Systems Co.'s track record with the Department of Defense, particularly on similar weapon systems?

Raytheon Systems Co. (now part of RTX Corporation) has a long and extensive track record as a major defense contractor for the Department of Defense. They are known for developing and producing a wide array of defense systems, including missiles, radar, command and control systems, and integrated air defense solutions. Their involvement with the MK15 Close-In Weapon System specifically suggests a deep understanding of this platform. Historical contract data would show numerous awards to Raytheon for research, development, production, and sustainment of various defense platforms. Their performance history is generally considered robust, though like any large contractor, specific contract performance can vary. The sole-source nature of this award implies a perceived strong track record and unique capability for this particular system.

What are the potential risks associated with a cost-plus-fixed-fee (CPFF) contract type for these engineering services?

The contract type is listed as 'COST PLUS FIXED FEE' (CPFF). This means the contractor (Raytheon) is reimbursed for all allowable costs incurred, plus a predetermined fixed fee representing profit. The primary risk for the government in a CPFF contract is that the contractor has less incentive to control costs, as their profit is fixed regardless of the final cost incurred. If costs escalate significantly, the total expenditure for the government could be higher than anticipated. To mitigate this risk, the government must implement robust oversight, including detailed cost monitoring, audits, and strict adherence to the contract's scope and allowable cost principles. The fixed fee provides some level of profit certainty for the contractor but does not inherently cap the total contract cost.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES

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: 1151 E HERMANS RD, TUCSON, AZ, 85756

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline