Raytheon Company awarded $52.5M contract for MK 20 MOD 1 CANISTER by the Department of Defense

Contract Overview

Contract Amount: $52,527,603 ($52.5M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2006-07-17

End Date: 2011-03-31

Contract Duration: 1,718 days

Daily Burn Rate: $30.6K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: MK 20 MOD 1 CANISTER

Place of Performance

Location: PORTSMOUTH, NEWPORT County, RHODE ISLAND, 02871

State: Rhode Island Government Spending

Plain-Language Summary

Department of Defense obligated $52.5 million to RAYTHEON COMPANY for work described as: MK 20 MOD 1 CANISTER Key points: 1. Contract awarded as a sole-source, indicating limited competition and potential for higher pricing. 2. The contract duration of 1718 days (approx. 4.7 years) suggests a long-term need for these engineering services. 3. Firm Fixed Price contract type aims to control costs, but the sole-source nature may limit savings. 4. The contract was managed by the Defense Contract Management Agency, a common oversight body for defense contracts. 5. The North American Industry Classification System (NAICS) code 541330 points to engineering services, a critical component of defense procurement. 6. The contract's value of $52.5M places it in the mid-range for major defense procurements.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without specific details on the MK 20 MOD 1 CANISTER's technical specifications and market alternatives. However, a $52.5 million contract over nearly five years for specialized engineering services is not unusual within the defense sector. The firm fixed-price structure is a positive indicator for cost control, but the lack of competition means there's no direct price comparison to ensure optimal value for taxpayers. Further analysis would require understanding the unit costs and the criticality of the delivered services.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one bidder, Raytheon Company, was considered. This typically occurs when a specific capability is unique to a single provider or when urgency precludes a competitive process. The lack of competition limits the government's ability to explore alternative solutions or negotiate based on multiple offers, potentially leading to less favorable pricing than a competed contract.

Taxpayer Impact: Sole-source awards mean taxpayers do not benefit from the price reductions and innovation that can arise from competitive bidding. This can result in higher overall spending for the same goods or services.

Public Impact

The Department of Defense is the primary beneficiary, receiving engineering services essential for defense capabilities. The contract supports the development, modification, or sustainment of the MK 20 MOD 1 CANISTER system. The geographic impact is likely concentrated around Raytheon's facilities and relevant military installations, with potential for Rhode Island (where the contract was managed) to see some economic activity. Workforce implications include employment for engineers and technical staff at Raytheon and potentially its subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price discovery and potential savings for taxpayers.
Lack of competition may reduce incentives for the contractor to offer the most cost-effective solutions.
Long contract duration (nearly 5 years) could lead to cost overruns if not managed tightly, despite the fixed-price structure.

Positive Signals

Firm Fixed Price contract type provides cost certainty for the government.
Award to a known entity (Raytheon) suggests a reliance on established capabilities and expertise.
Defense Contract Management Agency oversight provides a layer of accountability.

Sector Analysis

The defense engineering services sector is characterized by high barriers to entry, specialized knowledge, and significant government investment. Companies like Raytheon are major players, often securing contracts through sole-source negotiations due to proprietary technology or long-standing relationships. Spending in this area is critical for maintaining military readiness and technological superiority. Comparable spending benchmarks would typically involve other large-scale engineering support contracts for complex defense systems.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'ss: false' and 'sb: false'. Raytheon Company is a large defense contractor. There is no explicit information regarding subcontracting plans for small businesses within this data. The absence of set-asides means that opportunities for small businesses to directly participate in this specific contract are unlikely, though they may be involved further down the supply chain.

Oversight & Accountability

Oversight for this contract was likely managed by the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor performance and compliance. The firm fixed-price nature of the contract provides a degree of accountability by capping the government's financial liability. Transparency is generally limited for sole-source defense contracts, with details often classified or restricted. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Defense Engineering Services
Weapon System Development
Aerospace and Defense Manufacturing
Military Hardware Procurement

Risk Flags

Sole-source award
Potential for limited price competition
Long contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $52.5 million to RAYTHEON COMPANY. MK 20 MOD 1 CANISTER

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 $52.5 million.

What is the period of performance?

Start: 2006-07-17. End: 2011-03-31.

What is the specific function and criticality of the MK 20 MOD 1 CANISTER system?

The MK 20 MOD 1 CANISTER is a component likely related to munitions or delivery systems within the Department of Defense. Its specific function and criticality would determine the necessity of a sole-source award and the justification for the $52.5 million expenditure. Without detailed technical specifications or mission requirements, it's difficult to ascertain its precise role. However, defense contracts of this magnitude typically support systems vital for national security, operational readiness, or technological advancement. Further information would be needed from the DoD regarding the system's purpose, such as whether it's a new development, a sustainment effort for an existing platform, or a critical upgrade.

What is the historical spending pattern for the MK 20 MOD 1 CANISTER or similar systems by the Department of Defense?

Analyzing historical spending on the MK 20 MOD 1 CANISTER or comparable systems is crucial for context. This $52.5 million contract, spanning from 2006 to 2011, represents a significant investment over its duration. To assess if this spending is typical, one would need to examine prior contracts for this specific item or related components. If this is a new system, initial development and procurement costs can be high. If it's an established system, this contract might represent sustainment, upgrades, or replenishment. Comparing this award to previous awards for similar capabilities, considering inflation and technological evolution, would reveal trends in DoD's investment in this area and help determine if the current spending level is anomalous or standard.

What were the specific justifications provided for awarding this contract on a sole-source basis?

Sole-source contract awards require a strong justification from the procuring agency, typically citing reasons such as unique capabilities, lack of viable alternatives, or urgent and compelling needs that preclude full and open competition. For the MK 20 MOD 1 CANISTER contract awarded to Raytheon Company, the justification would likely stem from proprietary technology, specialized expertise held exclusively by Raytheon, or a critical operational requirement where delays associated with a competitive process would be detrimental to national security. The Federal Acquisition Regulation (FAR) outlines specific circumstances under which sole-source awards are permissible. A review of the contract's justification document, if publicly available, would provide precise details on why competition was deemed impractical or impossible.

How does the firm fixed-price (FFP) structure mitigate risks in a sole-source defense contract?

The Firm Fixed Price (FFP) contract structure is designed to provide cost certainty for the government by obligating the contractor, Raytheon Company, to complete the work for a predetermined price. This shifts the risk of cost overruns from the government to the contractor. In a sole-source scenario, where competition is absent, the FFP structure is particularly important as it sets a clear financial boundary. While it doesn't guarantee the lowest possible price (as competition might achieve), it prevents the government from being liable for escalating costs due to contractor inefficiencies or unforeseen expenses. This provides a predictable budget outcome for the $52.5 million award, although the initial price itself may not be optimized due to the lack of competitive pressure.

What is Raytheon Company's track record with similar sole-source defense contracts?

Raytheon Company has a long and extensive history of securing defense contracts, including those awarded on a sole-source basis. As a major defense contractor, they possess specialized technologies and manufacturing capabilities often deemed essential by the Department of Defense. Their track record with sole-source awards typically involves complex systems, proprietary technologies, or sustainment services for platforms where they are the original equipment manufacturer. Analyzing Raytheon's past performance on similar sole-source contracts would involve reviewing contract histories for on-time delivery, adherence to budget (within the FFP framework), quality of work, and any disputes or contract modifications. This provides insight into their reliability and capability in fulfilling sole-source requirements.

Industry Classification

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

Product/Service Code: GUIDED MISSLES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0002406R5435

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

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

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $69,407,007

Exercised Options: $67,696,408

Current Obligation: $52,527,603

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline