DoD Awards Raytheon $28M for Ship Systems Engineering, Lacking Competition

Contract Overview

Contract Amount: $28,019,696 ($28.0M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2005-05-06

End Date: 2016-04-04

Contract Duration: 3,986 days

Daily Burn Rate: $7.0K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: 200510!048866!1700!N00024!NAVAL SEA SYSTEMS COMMAND !N0002405C6116 !A!N! !N! ! !20050506!20100531!001463090!001463090!001339159!N!RAYTHEON COMPANY !1847 W MAIN RD !PORTSMOUTH !RI!02871!57700!005!44!PORTSMOUTH !NEWPORT !RHODE ISLD!+000002857597!N!N!000000000000!AC34!RDTE/SHIPS-DEMO/VALID !A3 !SHIPS !000 !* !541330!E! !3!A!S! ! ! !20200930!B!C! !A! !D!U!U!1!001!N!1G!Z!Y!Z! ! !N!C!N! ! ! !A!A!A!A!000!A!C!N! ! ! !Y!1700!N00024!0001! !

Place of Performance

Location: PORTSMOUTH, NEWPORT County, RHODE ISLAND, 02871

State: Rhode Island Government Spending

Plain-Language Summary

Department of Defense obligated $28.0 million to RAYTHEON COMPANY for work described as: 200510!048866!1700!N00024!NAVAL SEA SYSTEMS COMMAND !N0002405C6116 !A!N! !N! ! !20050506!20100531!001463090!001463090!001339159!N!RAYTHEON COMPANY !1847 W MAIN RD !PORTSMOUTH !RI!02871!57700!005!44!PORTSMOUTH !NEWP… Key points: 1. The contract awarded to Raytheon Company for ship systems engineering services lacks competition, raising concerns about price discovery. 2. With a value of $28,019,696.16, the contract spans over 11 years, suggesting potential for cost overruns or inefficiencies. 3. The 'NOT COMPETED' status indicates a sole-source or limited competition award, which can lead to higher prices compared to open markets. 4. The primary sector is Defense, specifically related to ship systems and research, development, testing, and evaluation (RDTE).

Value Assessment

Rating: questionable

The contract's cost-plus-fixed-fee structure, combined with a lack of competition over an extended period, makes a direct pricing assessment difficult. Benchmarking against similar sole-source contracts is challenging due to the unique nature of specialized defense engineering services.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

The contract was awarded on a 'NOT COMPETED' basis, indicating a sole-source or limited competition procurement. This method bypasses the competitive bidding process, potentially limiting price discovery and leading to less favorable terms for the government.

Taxpayer Impact: The lack of competition may result in taxpayers paying a premium for these specialized engineering services, as there was no market pressure to drive down costs.

Public Impact

Taxpayers may be overpaying for critical defense engineering services due to the absence of competitive bidding. The extended duration of the contract raises questions about long-term cost management and the government's ability to adapt to evolving technological needs. The reliance on a single contractor for specialized ship systems engineering could pose a risk if the contractor faces performance issues or financial instability.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of Competition
Extended Contract Duration
Cost-Plus Contract Type
Potential for Overpricing

Positive Signals

Awarded to established contractor
Supports critical defense capabilities

Sector Analysis

This contract falls within the Defense sector, specifically focusing on engineering services for naval systems. The spending benchmark for engineering services (NAICS 541330) can vary widely, but the significant value and long duration of this contract warrant scrutiny, especially given the procurement method.

Small Business Impact

The data does not indicate any specific provisions or considerations for small business participation in this contract. The award to Raytheon Company, a large defense contractor, suggests that small businesses were likely not involved as prime contractors.

Oversight & Accountability

The 'NOT COMPETED' status suggests that standard competitive oversight processes may have been bypassed. Further investigation into the justification for sole-source procurement and any subsequent oversight of performance and costs would be necessary.

Related Government Programs

Engineering Services
Department of Defense Contracting
Defense Contract Management Agency Programs

Risk Flags

Lack of competition may lead to inflated prices.
Extended contract duration increases long-term cost risk.
Cost-plus contract type shifts cost overrun risk to the government.
Potential for vendor lock-in and reduced innovation.
Limited transparency into the justification for sole-source award.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $28.0 million to RAYTHEON COMPANY. 200510!048866!1700!N00024!NAVAL SEA SYSTEMS COMMAND !N0002405C6116 !A!N! !N! ! !20050506!20100531!001463090!001463090!001339159!N!RAYTHEON COMPANY !1847 W MAIN RD !PORTSMOUTH !RI!02871!57700!005!44!PORTSMOUTH !NEWPORT !RHODE ISLD!+000002857597!N!N!000000000000!AC34!RDTE/SHIPS-DEMO/VALID !A3 !SHIPS !000 !* !541330!E! !3!A!S! ! ! !202

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 $28.0 million.

What is the period of performance?

Start: 2005-05-06. End: 2016-04-04.

What was the specific justification for awarding this contract on a sole-source basis, and were alternative competitive strategies considered?

The justification for sole-source procurement is not detailed in the provided data. Typically, such awards require a compelling reason, such as unique capabilities, urgent needs, or lack of other responsible sources. Without this justification, it's difficult to assess if competitive alternatives were adequately explored or if this was the most cost-effective approach for the government.

How does the cost-plus-fixed-fee structure impact the government's ability to control costs over the contract's extended duration?

Cost-plus-fixed-fee contracts allow the contractor to recover all allowable costs plus a predetermined fixed fee. While the fee provides some incentive for efficiency, the government bears the risk of cost overruns. Over an 11-year period, this structure can lead to significant cost increases if not rigorously monitored and controlled through strong contract management and oversight.

What are the potential risks associated with relying on a single contractor for critical ship systems engineering over such a long period?

Sole-source reliance over an extended period creates several risks. It can lead to contractor complacency, reduced innovation, and a lack of incentive to improve efficiency. Furthermore, the government becomes highly dependent on the contractor's performance, financial stability, and continued availability of specialized expertise, potentially hindering flexibility and responsiveness to changing requirements.

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: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 1847 W MAIN RD, PORTSMOUTH, RI, 02871

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline