DoD's $214.6M Raytheon Contract for Production Engineering Support Raises Concerns Over Competition and Value

Contract Overview

Contract Amount: $214,612,887 ($214.6M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2007-03-01

End Date: 2012-12-31

Contract Duration: 2,132 days

Daily Burn Rate: $100.7K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: IT

Official Description: FY 07 PRODUCTION ENGINEERING SUPPORT

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $214.6 million to RAYTHEON COMPANY for work described as: FY 07 PRODUCTION ENGINEERING SUPPORT Key points: 1. Significant spending on a single, long-term contract. 2. Lack of competition suggests potential for inflated costs. 3. Contract awarded to Raytheon, a major defense contractor. 4. IT services sector, with high potential for cost overruns. 5. Limited transparency on pricing and value for taxpayers.

Value Assessment

Rating: questionable

The contract's cost-plus-fixed-fee structure, combined with a lack of competitive bidding, makes it difficult to assess value for money. Without benchmarks or comparative pricing, it's hard to determine if $214.6 million is a fair price for the services rendered over five years.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was not available for competition, indicating a sole-source or limited-source award. This significantly restricts price discovery and negotiation leverage, potentially leading to higher costs for the government.

Taxpayer Impact: The absence of competition likely results in taxpayers paying a premium for these services, as there was no market pressure to drive down costs.

Public Impact

Taxpayers may be overpaying for IT support due to a lack of competitive bidding. Long-term contract duration (over 5 years) locks in costs without market adjustments. Limited public information on the specific deliverables and performance metrics. Potential for cost overruns inherent in cost-plus contracts.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of Competition
Cost-Plus Contract Type
Long Contract Duration
Limited Transparency

Positive Signals

Definitive Contract Awarded
Specific Service Provided

Sector Analysis

This contract falls within the Computer Systems Design Services sector, a critical area for defense operations. Benchmarking IT service contracts of this nature is challenging without more specific details on deliverables and performance, but the scale suggests a significant investment.

Small Business Impact

The contract was awarded to Raytheon Company, a large prime contractor. There is no indication that small businesses were involved as subcontractors or beneficiaries of this specific award, suggesting a missed opportunity for small business participation.

Oversight & Accountability

The contract's limited competition and cost-plus nature warrant closer oversight to ensure cost efficiency and prevent potential waste. Independent audits and performance reviews would be crucial for accountability.

Related Government Programs

Computer Systems Design Services
Department of Defense Contracting
Defense Contract Management Agency Programs

Risk Flags

Lack of competitive bidding.
Cost-Plus contract type increases cost risk.
Long contract duration (5+ years).
Limited transparency on specific services and pricing.
No indication of small business participation.
Awarded to a single, large incumbent contractor.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $214.6 million to RAYTHEON COMPANY. FY 07 PRODUCTION ENGINEERING SUPPORT

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 $214.6 million.

What is the period of performance?

Start: 2007-03-01. End: 2012-12-31.

What specific production engineering support tasks were performed under this contract, and how did they directly contribute to defense objectives?

The contract, NAICS code 541512, covered Computer Systems Design Services for production engineering support. While the exact tasks are not detailed, such services typically involve designing, developing, integrating, and maintaining complex IT systems essential for defense manufacturing and operations. The specific contribution would depend on the systems supported, ranging from logistics and supply chain management to weapons system development and testing infrastructure.

Given the 'NOT AVAILABLE FOR COMPETITION' status, what justification was provided for foregoing a competitive bidding process, and were alternative competition strategies considered?

The justification for a 'limited' or 'sole-source' award is critical. Typically, this requires demonstrating that only one source can meet the requirement due to unique capabilities, urgency, or specific program needs. Without this justification, the government risks paying inflated prices. Alternative strategies like phased competitions or market research to identify potential competitors should have been explored.

How was the 'fixed fee' component determined in this Cost Plus Fixed Fee (CPFF) contract, and what mechanisms were in place to control costs beyond the fee?

In a CPFF contract, the fixed fee represents the contractor's profit, negotiated at the outset. It's typically a percentage of the estimated cost. While the fee is fixed, the government bears the risk of cost overruns on the 'cost' portion. Mechanisms to control costs would include rigorous oversight, audits, and potentially incentive structures tied to cost savings or performance, though these are not explicitly detailed in the provided data.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Computer Systems Design and Related Services › Computer Systems Design Services

Product/Service Code: FIRE CONTROL EQPT.

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0002406R5430

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 1151 E HERMANS RD, TUCSON, AZ, 85706

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $264,487,807

Exercised Options: $264,487,807

Current Obligation: $214,612,887

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline