DoD's $46.6M engineering services contract with Raytheon Company awarded via sole-source negotiation

Contract Overview

Contract Amount: $46,664,323 ($46.7M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2004-12-29

End Date: 2009-12-31

Contract Duration: 1,828 days

Daily Burn Rate: $25.5K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIXED PRICE INCENTIVE

Sector: Defense

Place of Performance

Location: SAN DIEGO, SAN DIEGO County, CALIFORNIA, 92123

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $46.7 million to RAYTHEON COMPANY for work described as: Key points: 1. Contract awarded on a sole-source basis, limiting potential cost savings from competition. 2. Fixed Price Incentive contract type suggests shared risk between government and contractor. 3. Long duration of 1828 days indicates a significant, ongoing need for services. 4. Contractor Raytheon Company is a major defense industrial base participant. 5. Services provided under NAICS code 541330 (Engineering Services) are critical for defense operations. 6. Awarded by the Department of Defense, a primary federal spending agency.

Value Assessment

Rating: questionable

Benchmarking the value of this $46.6 million contract is challenging without detailed service descriptions and performance metrics. However, the sole-source award mechanism inherently raises concerns about achieving optimal value compared to a competitively bid contract. The Fixed Price Incentive (FPI) structure aims to control costs by incentivizing the contractor to meet certain targets, but the ultimate price can still fluctuate. Without comparative data on similar engineering services contracts for defense applications, it's difficult to definitively assess if the pricing is competitive or represents a fair market value.

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 potential bidders. This approach is typically used when only one responsible source can provide the required services, or in cases of urgent need. The lack of competition means that the government did not benefit from the price discovery mechanisms that typically occur in a competitive bidding process, potentially leading to higher costs than might have been achieved otherwise.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive pressure to drive down prices. The government's negotiating position is also weakened without alternative offers.

Public Impact

The Department of Defense benefits from specialized engineering services essential for its operations. Services likely support the design, development, or maintenance of defense systems. Geographic impact is likely concentrated around defense installations or contractor facilities, primarily in California. Workforce implications include employment for engineers and technical staff at Raytheon Company.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potentially increases costs for taxpayers.
Lack of transparency in the sole-source justification could mask inefficiencies.
Long contract duration may not adapt well to evolving technological needs without careful management.

Positive Signals

Raytheon Company is a well-established defense contractor with significant expertise.
Fixed Price Incentive contract type aligns contractor and government interests on cost targets.
Awarding to a known entity can ensure continuity of critical engineering services.

Sector Analysis

This contract falls within the Engineering Services sector, a critical component of the broader Defense Industrial Base. The market for specialized defense engineering is dominated by a few large, established contractors like Raytheon. Spending in this area is driven by the need for advanced technological solutions for military applications. Comparable spending benchmarks would typically involve analyzing other large-scale engineering support contracts awarded by the DoD or other defense agencies for similar types of systems or platforms.

Small Business Impact

As this contract was awarded sole-source to Raytheon Company, there is no indication of a small business set-aside. Furthermore, without details on subcontracting plans, it is difficult to assess the impact on the small business ecosystem. Large prime contractors are often required to meet small business subcontracting goals, but the specifics would need to be examined for this particular award.

Oversight & Accountability

Oversight for this contract would typically be managed by the Department of Defense's contracting officers and the Defense Contract Management Agency (DCMA). Accountability measures are embedded within the Fixed Price Incentive contract terms, which link contractor profit to performance and cost targets. Transparency is limited due to the sole-source nature of the award; however, contract award data is publicly available. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Department of Defense Research and Development
Defense Engineering Support Services
Raytheon Company Contracts
Fixed Price Incentive Contracts

Risk Flags

Sole-source award raises concerns about competition and potential overpricing.
Lack of detailed performance metrics makes value assessment difficult.
Long contract duration may pose risks if requirements change significantly.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $46.7 million to RAYTHEON COMPANY. See the official description on USAspending.

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 $46.7 million.

What is the period of performance?

Start: 2004-12-29. End: 2009-12-31.

What specific engineering services were provided under this contract, and how do they align with DoD's strategic objectives?

The data indicates the contract falls under NAICS code 541330 (Engineering Services) and was awarded to Raytheon Company by the Department of Defense. Specific services are not detailed in the provided data. However, engineering services in the defense sector typically encompass a wide range of activities, including system design, development, integration, testing, and sustainment for military platforms and equipment. These services are crucial for maintaining technological superiority and operational readiness. Without more granular information on the contract's statement of work, it's impossible to definitively link the services to specific strategic objectives, but they likely support the modernization or maintenance of existing defense capabilities or the development of new ones.

How does the $46.6 million value compare to similar engineering services contracts awarded by the DoD in the same period?

Comparing the $46.6 million value requires access to a broader dataset of DoD engineering services contracts awarded between 2004 and 2009. However, for a major defense contractor like Raytheon, a contract of this magnitude for specialized engineering services is not unusual, especially if it supports a significant program or system. The sole-source nature of this award means direct price comparison with competitively bid contracts is difficult. Generally, sole-source contracts may be priced higher due to the lack of competitive pressure. To provide a precise benchmark, one would need to analyze contracts with similar scope, duration, and complexity awarded during the same timeframe, ideally those that were competitively procured.

What are the key performance indicators (KPIs) and risk mitigation strategies associated with this Fixed Price Incentive contract?

The provided data indicates a Fixed Price Incentive (FPI) contract type, which implies that both the final price and profit are adjusted based on performance relative to target costs and schedules. Key performance indicators (KPIs) would typically be defined in the contract's statement of work and could include metrics related to technical performance, delivery schedules, quality standards, and cost control. Risk mitigation strategies for an FPI contract involve establishing realistic target costs and sharing arrangements that incentivize the contractor to control costs while achieving performance goals. The government shares in cost savings if the final cost is below target, and the contractor shares in cost overruns above the target price up to a ceiling. Effective oversight by the contracting officer and technical monitors is crucial for managing these risks.

What is Raytheon Company's track record with the Department of Defense, particularly concerning engineering services contracts?

Raytheon Company (now RTX) is a major defense contractor with a long history of providing a wide array of products and services to the Department of Defense. Their track record encompasses complex systems integration, missile defense, aerospace, and advanced electronics. For engineering services specifically, Raytheon possesses extensive capabilities and has historically been awarded numerous contracts for research, development, design, and sustainment of military systems. While specific performance details for this particular $46.6 million contract are not provided, Raytheon's overall standing as a key defense industrial base supplier suggests a substantial capacity and experience in delivering such services. However, like any large contractor, they have also faced scrutiny and performance reviews on various contracts over the years.

How has federal spending on engineering services, particularly within the defense sector, evolved since this contract was awarded?

Federal spending on engineering services, especially within the defense sector, has generally seen fluctuations driven by geopolitical events, technological advancements, and budget priorities. Since the award of this contract (2004-2009), the defense budget has experienced periods of increase and decrease. There has been a continuous demand for advanced engineering services to support modernization efforts, cybersecurity, and the development of next-generation military capabilities. Trends include increased focus on areas like artificial intelligence, autonomous systems, and space-based technologies, all requiring significant engineering expertise. While specific figures for 'engineering services' can be broad, overall defense spending has remained substantial, indicating a persistent need for the types of services this contract represents.

Industry Classification

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

Product/Service Code: RESEARCH AND DEVELOPMENT › C – National Defense R&D Services

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIXED PRICE INCENTIVE (L)

Evaluated Preference: NONE

Contractor Details

Address: 8680 BALBOA AVE, SAN DIEGO, CA, 92123

Business Categories: Category Business, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline