Raytheon Company awarded $231.8M for engineering and technical services, primarily for missile and space vehicle parts

Contract Overview

Contract Amount: $231,777,562 ($231.8M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2008-11-20

End Date: 2018-08-31

Contract Duration: 3,571 days

Daily Burn Rate: $64.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: FY09 ENGINEERING&TECHNICAL SERVICES

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $231.8 million to RAYTHEON COMPANY for work described as: FY09 ENGINEERING&TECHNICAL SERVICES Key points: 1. Contract value represents significant investment in defense-related engineering and technical support. 2. Sole awardee suggests potential for limited competition or specialized capabilities required. 3. Long contract duration (over 9 years) indicates a sustained need for these services. 4. Cost-plus-fixed-fee pricing structure allows for flexibility but requires careful oversight. 5. Geographic concentration in Arizona (AZ) may point to specific facility or workforce needs. 6. The contract falls under 'Other Guided Missile and Space Vehicle Parts' manufacturing, highlighting a niche but critical defense sector.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without specific service details. However, the $231.8 million award over nearly a decade suggests a substantial, ongoing requirement. The cost-plus-fixed-fee (CPFF) structure, while common for R&D or uncertain scope work, can lead to cost overruns if not managed diligently. Comparing this to similar long-term engineering support contracts within the DoD would be necessary for a more precise value-for-money assessment. The absence of a small business set-aside might indicate the scale or specialized nature of the services required.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under 'Full and Open Competition,' indicating that all responsible sources were permitted to submit offers. However, with only one awardee (Raytheon Company), it suggests that either Raytheon was the only bidder, or it was the only one that met all the stringent requirements of the solicitation. This level of competition, while technically open, may not have driven the most competitive pricing if other capable firms did not participate or were disqualified.

Taxpayer Impact: While the competition was technically open, a single awardee might mean taxpayers did not benefit from the full price discovery that multiple competitive bids could have provided.

Public Impact

The primary beneficiaries are likely the Department of Defense, specifically units relying on advanced missile and space vehicle technology. Services delivered include critical engineering and technical support essential for the development, maintenance, and operation of defense systems. The geographic impact is concentrated in Arizona (AZ), suggesting a significant presence of Raytheon facilities or related defense infrastructure in the state. Workforce implications include the potential for highly skilled engineering and technical jobs in Arizona, supporting the defense industrial base.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus-fixed-fee contracts can incentivize cost growth if not rigorously monitored.
Limited competition, despite being 'full and open,' raises questions about price competitiveness.
Long contract duration increases the risk of scope creep or evolving requirements not being adequately addressed in the initial award.

Positive Signals

Awarded under 'Full and Open Competition' signifies an attempt to maximize the pool of potential offerors.
Raytheon Company is a major defense contractor with a long history, suggesting established expertise.
The contract addresses a critical need within the defense sector for specialized engineering and technical services.

Sector Analysis

This contract operates within the aerospace and defense sector, specifically focusing on guided missile and space vehicle components and related technical services. This is a highly specialized and capital-intensive segment of the defense industry. Spending in this area is driven by national security priorities and technological advancements. Comparable spending benchmarks would typically involve other large-scale, long-term contracts awarded to major defense primes for similar engineering and manufacturing support.

Small Business Impact

The contract data indicates that this was not a small business set-aside, and there is no explicit mention of subcontracting goals for small businesses. Given the large dollar value and specialized nature of the work, it is possible that Raytheon Company may engage small businesses for specific components or services, but this is not a primary focus of the contract award itself. The impact on the small business ecosystem is likely indirect, depending on Raytheon's subcontracting practices.

Oversight & Accountability

Oversight for this contract would fall under the Department of Defense's contract management structures, potentially involving the Defense Contract Management Agency (DCMA) given the contract's nature and location. Accountability measures would be tied to the performance metrics outlined in the Cost Plus Fixed Fee agreement and adherence to delivery schedules. Transparency is generally limited for specific defense contracts, but reporting requirements would exist within the DoD's internal systems. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Guided Missile and Space Vehicle Manufacturing
Defense Engineering Services
Aerospace Technical Support
Department of Defense Procurement
Cost Plus Fixed Fee Contracts

Risk Flags

Potential for cost overruns due to CPFF structure.
Limited competition despite 'Full and Open' designation.
Long contract duration increases risk exposure.
Lack of explicit small business subcontracting requirements.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $231.8 million to RAYTHEON COMPANY. FY09 ENGINEERING&TECHNICAL SERVICES

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 $231.8 million.

What is the period of performance?

Start: 2008-11-20. End: 2018-08-31.

What is Raytheon Company's track record with similar large-scale engineering and technical services contracts within the Department of Defense?

Raytheon Company, now part of RTX Corporation, has a long and extensive history of performing large-scale engineering and technical services contracts for the Department of Defense. They are a prime contractor on numerous complex defense programs, including missile defense systems, radar technology, and aerospace components. Their track record generally includes successful delivery on major programs, though like any large defense contractor, they have also faced scrutiny over cost, schedule, and performance on specific projects. Analyzing their past performance on contracts with similar Cost Plus Fixed Fee structures and within the guided missile and space vehicle domain would provide further insight into their reliability and efficiency for this specific award.

How does the $231.8 million contract value compare to other engineering and technical services contracts awarded by the DoD in recent years?

The $231.8 million contract value for engineering and technical services over approximately 9.5 years is substantial but falls within the typical range for major defense procurements. The DoD awards billions of dollars annually in contracts for engineering, research, development, and technical support. To benchmark this specific contract, one would compare its total value and duration against other contracts for similar services, such as systems engineering, integration, testing, and sustainment, awarded to large defense contractors. Contracts for advanced missile systems or space-based platforms often reach into the hundreds of millions or even billions of dollars, making this award significant but not exceptionally outlier in the context of the overall defense budget.

What are the primary risks associated with a Cost Plus Fixed Fee (CPFF) contract of this magnitude and duration?

The primary risks associated with a CPFF contract of this magnitude and duration include potential cost overruns and contractor inefficiency. In a CPFF structure, the contractor is reimbursed for allowable costs plus a fixed fee representing profit. If costs escalate beyond initial estimates, the government bears the burden, although the contractor's fee remains fixed. For a long-duration contract, there's also a risk of scope creep, where requirements may evolve, leading to increased costs and potential disputes over what is covered by the fixed fee. Effective oversight, robust cost accounting standards, and clear definition of work are crucial to mitigate these risks and ensure value for the taxpayer.

What does the 'Other Guided Missile and Space Vehicle Parts and Auxiliary Equipment Manufacturing' classification imply about the services provided?

This classification suggests that the contract is focused on the production, modification, or support of components and ancillary equipment for guided missiles and space vehicles, rather than the complete end-item systems themselves. This could encompass a wide range of activities, including the manufacturing of specialized parts, development of auxiliary systems (like guidance components, propulsion elements, or communication modules), testing of these parts, and providing technical support related to their integration or operation. It indicates a role in the supply chain for critical defense platforms, focusing on specific, often highly technical, elements of these complex systems.

How has federal spending in the 'Engineering and Technical Services' category evolved over the past decade, and where does this contract fit?

Federal spending in 'Engineering and Technical Services' has generally remained robust, particularly within the Department of Defense, reflecting the ongoing need for advanced technological development and support for complex weapon systems. While specific figures fluctuate based on geopolitical events and budget priorities, the trend indicates consistent investment in maintaining technological superiority. This $231.8 million contract, awarded in 2008 for services extending to 2018, represents a significant, long-term commitment within this category during that period. It aligns with broader defense spending trends focused on modernization and sustainment of critical assets like missile and space vehicles.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Other Guided Missile and Space Vehicle Parts and Auxiliary Equipment Manufacturing

Product/Service Code: GUIDED MISSLES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: N0002407R5367

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: RTX Corp

Address: 1151 E HERMANS RD, TUCSON, AZ, 85756

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $335,116,234

Exercised Options: $235,827,441

Current Obligation: $231,777,562

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline