Raytheon Company awarded $79.7M for Navy engineering support, a sole-source contract spanning over four years

Contract Overview

Contract Amount: $79,670,886 ($79.7M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2007-05-24

End Date: 2011-09-30

Contract Duration: 1,590 days

Daily Burn Rate: $50.1K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: FY 07 GMRP DESIGN AGENT ENGINEERING SUPPORT

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $79.7 million to RAYTHEON COMPANY for work described as: FY 07 GMRP DESIGN AGENT ENGINEERING SUPPORT Key points: 1. Contract awarded on a sole-source basis, limiting potential cost savings from competition. 2. The contract type, Cost Plus Fixed Fee, may incentivize cost overruns. 3. Performance period of nearly four years suggests a long-term need for these engineering services. 4. The significant dollar value indicates a critical role in supporting Navy operations. 5. Engineering services are essential for maintaining and upgrading complex defense systems. 6. The contract was awarded to a single vendor, raising questions about market fairness.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without comparable sole-source engineering support agreements. The Cost Plus Fixed Fee structure, while common for complex R&D or services where scope is uncertain, carries inherent risks of cost escalation. Without competitive bids, it's difficult to ascertain if the fixed fee adequately compensates the contractor for the effort or if it represents a premium. The total award value of $79.7 million over approximately four years suggests a substantial investment, but its true value-for-money is obscured by the lack of competitive pricing.

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 vendors. This approach is typically justified when only one vendor possesses the necessary specialized capabilities, proprietary technology, or when urgency precludes a full and open competition. The absence of competition means that the Navy did not benefit from the price discovery and potential cost reductions that typically arise from a bidding process. This can lead to higher prices than might be achieved in a competitive environment.

Taxpayer Impact: Taxpayers may have paid a premium for these services due to the lack of competitive pressure. Without multiple bids, there is less assurance that the government secured the best possible price for the engineering support required.

Public Impact

The primary beneficiaries are the Department of the Navy, which receives critical engineering support for its operations and systems. Services delivered likely include design, analysis, testing, and technical support for naval platforms and equipment. The geographic impact is primarily within the United States, supporting Navy facilities and potentially contractor sites in Arizona. Workforce implications include employment for engineers and technical staff at Raytheon Company, contributing to the defense industrial base.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potential cost savings.
Cost Plus Fixed Fee contract type can incentivize higher costs if not managed rigorously.
Lack of transparency in pricing due to non-competitive nature.
Long performance period could mask inefficiencies if not closely monitored.

Positive Signals

Award to a large, established defense contractor like Raytheon suggests access to significant expertise.
Engineering services are crucial for maintaining advanced naval capabilities.
Contract duration indicates a sustained need and potential for stable support.

Sector Analysis

The defense engineering services sector is characterized by high barriers to entry, specialized technical expertise, and significant government investment. Contracts in this space often involve complex systems integration, research and development, and lifecycle support for military platforms. Spending in this sector is driven by national security priorities and technological advancements. Comparable spending benchmarks are difficult to establish precisely due to the unique nature of each engineering support requirement, but large-scale contracts for specialized engineering are common within the Department of Defense.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. The prime contractor, Raytheon Company, is a large business. There is no explicit information provided regarding subcontracting plans for small businesses. Therefore, the direct impact on the small business ecosystem is likely minimal unless Raytheon actively engages small businesses as subcontractors, which is not detailed here.

Oversight & Accountability

Oversight for this contract would fall under the Department of the Navy's contracting and program management offices. Given the Cost Plus Fixed Fee structure, rigorous financial oversight and auditing would be crucial to ensure costs are reasonable and allocable. Transparency is limited due to the sole-source nature. Inspector General jurisdiction would apply to any allegations of fraud, waste, or abuse related to the contract.

Related Government Programs

Naval Sea Systems Command (NAVSEA) Engineering Services
Defense Engineering and Technical Services
Aerospace and Defense Contractor Support
Department of Defense Research and Development Support

Risk Flags

Sole-source award
Cost Plus Fixed Fee contract type
Lack of competitive bidding

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $79.7 million to RAYTHEON COMPANY. FY 07 GMRP DESIGN AGENT 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 (Department of the Navy).

What is the total obligated amount?

The obligated amount is $79.7 million.

What is the period of performance?

Start: 2007-05-24. End: 2011-09-30.

What specific engineering services were provided under this contract?

While the contract title 'GMRP DESIGN AGENT ENGINEERING SUPPORT' and the North American Industry Classification System (NAICS) code '541330' (Engineering Services) indicate the general nature of the work, the specific deliverables are not detailed in the provided data. Typically, such contracts would encompass a range of activities including system design, integration, testing, analysis, technical documentation, and lifecycle support for naval platforms or systems. The 'GMRP' acronym might refer to a specific program or system within the Navy, suggesting specialized engineering support tailored to that particular area. Further investigation into the contract's statement of work would be necessary to ascertain the precise services rendered.

How does the $79.7 million award compare to other engineering support contracts for the Navy?

Comparing this $79.7 million contract requires context regarding the specific type and duration of engineering services. For large-scale, long-term engineering support for major naval programs, this figure is substantial but not extraordinary. For instance, contracts for the design and development of new naval vessels or complex weapon systems can run into hundreds of millions or even billions of dollars. However, for more routine or specialized engineering support, $79.7 million over four years represents a significant investment. Without knowing the exact scope (e.g., platform type, complexity, duration of support), direct comparison is difficult, but it signifies a major commitment to engineering expertise for a specific Navy need.

What are the risks associated with a Cost Plus Fixed Fee (CPFF) contract type for engineering services?

The primary risk with a Cost Plus Fixed Fee (CPFF) contract is that the contractor is reimbursed for all allowable costs plus a predetermined fixed fee. This structure can incentivize the contractor to incur higher costs, as their profit (the fixed fee) remains constant regardless of the total cost. While the fixed fee itself is not subject to increase, the overall contract value can escalate significantly if costs are higher than anticipated. Effective oversight, stringent cost accounting standards, and clear definition of allowable costs are crucial to mitigate these risks and ensure the government does not overpay. For complex engineering services where scope may evolve, CPFF can be appropriate, but it demands diligent management.

What is the significance of Raytheon Company being the sole awardee?

Raytheon Company being the sole awardee signifies that the contract was awarded on a sole-source basis, meaning it was not competed. This implies that the Department of the Navy determined that Raytheon was the only responsible source capable of providing the required engineering services, possibly due to proprietary technology, unique expertise, or specific program requirements. While this ensures the Navy receives support from a known entity, it eliminates the potential benefits of competition, such as lower prices and a wider range of innovative solutions that might have emerged from a competitive bidding process. It also raises questions about market dynamics and whether competition was genuinely precluded or simply not pursued.

What does the contract duration of approximately four years suggest about the program's stability?

A contract duration of approximately four years (from May 24, 2007, to September 30, 2011) suggests a relatively stable and long-term requirement for the engineering services being procured. Such durations are common for complex projects or ongoing support needs where a consistent level of expertise is required over an extended period. It indicates that the program or system requiring this support is expected to be operational or in development for a significant timeframe, necessitating sustained engineering involvement. This stability can be beneficial for both the government, ensuring continuity of support, and the contractor, providing a predictable revenue stream.

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

Solicitation ID: N0002407R5443

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, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $83,665,372

Exercised Options: $83,665,372

Current Obligation: $79,670,886

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline