Raytheon Company awarded $115.6M in engineering services for defense design agent work

Contract Overview

Contract Amount: $115,636,482 ($115.6M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2010-06-21

End Date: 2015-09-30

Contract Duration: 1,927 days

Daily Burn Rate: $60.0K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: FY10-14 DESIGN AGENT/ENGINEERING SERVICES CONTRACT

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $115.6 million to RAYTHEON COMPANY for work described as: FY10-14 DESIGN AGENT/ENGINEERING SERVICES CONTRACT Key points: 1. Contract awarded on a cost-plus-fixed-fee basis, which can lead to cost overruns. 2. The contract was not competed, raising questions about potential price inefficiencies. 3. Long duration of 1927 days suggests a significant, ongoing need for these services. 4. The contract was awarded to a single vendor, limiting market price discovery. 5. Services were delivered in Arizona, potentially impacting local economic development. 6. The contract falls under engineering services, a critical component of defense procurement.

Value Assessment

Rating: fair

This contract's value is difficult to benchmark without comparable cost-plus-fixed-fee engineering services contracts. The lack of competition suggests that taxpayers may not have received the most competitive pricing. The fixed-fee component provides some cost control, but the cost-plus nature inherently carries risk for the government.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award. Without a competitive bidding process, it is challenging to assess the level of competition or the number of potential bidders. This approach may be justified if only one entity possesses the required specialized capabilities, but it limits the government's ability to secure the best possible price.

Taxpayer Impact: Sole-source awards can result in higher costs for taxpayers as there is no competitive pressure to drive down prices. This limits the government's leverage in price negotiations.

Public Impact

The Department of Defense benefits from specialized engineering and design agent services. These services are crucial for the development and maintenance of defense systems. The contract's geographic impact is concentrated in Arizona. The contract likely supports a specialized engineering workforce within Raytheon Company.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to higher costs for taxpayers.
Cost-plus-fixed-fee contract type carries inherent risk of cost overruns.
Long contract duration could indicate potential for scope creep or evolving requirements.

Positive Signals

Award to a single, established contractor suggests specialized capabilities were met.
Fixed fee component provides some level of cost predictability.
Engineering services are vital for national defense infrastructure.

Sector Analysis

This contract falls within the Engineering Services sector (NAICS code 541330). This sector is characterized by firms providing specialized engineering expertise for various industries, including defense. The total market for engineering services is substantial, with defense contracts representing a significant portion. Benchmarking this contract's value against other large-scale defense engineering contracts would provide further context on its relative cost-effectiveness.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb: false'. There is no explicit information regarding subcontracting plans for small businesses. Without specific set-aside goals or subcontracting requirements, the direct impact on the small business ecosystem for this particular contract is likely minimal, though the prime contractor may engage small businesses in their supply chain.

Oversight & Accountability

Oversight for this contract would typically fall under the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor performance and compliance. The specific oversight mechanisms would depend on the contract's terms and conditions, including reporting requirements and performance metrics. Transparency is generally facilitated through contract databases, but detailed operational oversight specifics are often internal.

Related Government Programs

Defense Engineering Services
Design Agent Contracts
Cost-Plus-Fixed-Fee Contracts
Sole-Source Defense Contracts

Risk Flags

Sole-source award
Cost-plus contract type
Long contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $115.6 million to RAYTHEON COMPANY. FY10-14 DESIGN AGENT/ENGINEERING SERVICES CONTRACT

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 $115.6 million.

What is the period of performance?

Start: 2010-06-21. End: 2015-09-30.

What is the track record of Raytheon Company in delivering similar engineering services for the Department of Defense?

Raytheon Company, now part of RTX, has a long and extensive history of providing a wide array of engineering, technical, and support services to the Department of Defense and other government agencies. Their expertise spans complex systems integration, research and development, manufacturing, and lifecycle support for various defense platforms, including aircraft, missiles, and command and control systems. Historically, Raytheon has been a major prime contractor on numerous large-scale defense programs. While specific performance metrics for individual contracts are not always publicly available, their continued success in securing significant defense contracts suggests a generally positive track record in delivering complex technical solutions and meeting program requirements, albeit with the inherent complexities and challenges common to large defense procurements.

How does the $115.6 million total award value compare to other engineering services contracts awarded by the Department of Defense during the FY10-FY14 period?

The $115.6 million total award value for this Raytheon Company contract is a substantial sum, placing it among significant engineering services procurements. During the FY10-FY14 period, the Department of Defense awarded billions of dollars annually in engineering and technical services contracts. While this specific contract represents a considerable investment, it is not exceptionally large when compared to the scale of some major defense acquisition programs or broad architectural and engineering support contracts that can reach hundreds of millions or even billions over their lifecycle. To provide a precise comparison, one would need to analyze the distribution of contract values within the engineering services category for that specific timeframe, looking at average contract sizes and the prevalence of contracts in this approximate value range.

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

The primary risks associated with a Cost Plus Fixed Fee (CPFF) contract type, like the one awarded to Raytheon Company, center on cost control and potential overruns. In a CPFF arrangement, the contractor is reimbursed for all allowable costs incurred, plus a predetermined fixed fee representing profit. The risk for the government lies in the 'cost plus' aspect; if the contractor's costs exceed initial estimates, the government bears that additional expense. While the fixed fee provides some incentive for the contractor to manage costs efficiently to protect their profit margin, it doesn't eliminate the risk of escalating expenses. This contrasts with fixed-price contracts where the contractor assumes more cost risk. For complex engineering services, where requirements can evolve or unforeseen technical challenges arise, CPFF contracts can be susceptible to cost growth.

Given this was a sole-source award, what mechanisms might have been in place to ensure fair pricing and value for the government?

Even in sole-source procurements, the government employs several mechanisms to ensure fair pricing and value. For a Cost Plus Fixed Fee contract, the government would have likely conducted a thorough cost and price analysis. This involves scrutinizing the contractor's proposed costs (labor, materials, overhead) against historical data, industry benchmarks, and other available information. Negotiation plays a crucial role; the contracting officer would negotiate the fixed fee and potentially specific cost ceilings or targets. Additionally, contract clauses related to 'allowable costs' and 'cost principles' help define what expenses are reimbursable, preventing the government from paying for unreasonable or unallowable costs. Robust oversight by the Defense Contract Management Agency (DCMA) during contract performance is also critical to monitor expenditures and ensure compliance.

What is the typical duration for engineering services contracts of this nature, and how does the 1927-day duration compare?

Engineering services contracts, particularly those supporting complex defense systems or long-term research and development efforts, can have substantial durations. A duration of 1927 days, which is approximately 5.3 years, is not uncommon for significant, multi-year engagements. Many large-scale engineering support contracts, especially those involving system design, integration, sustainment planning, or ongoing technical support, are often structured with base periods and multiple option periods to provide continuity and flexibility. Compared to shorter-term, project-specific engineering tasks, this duration suggests a strategic, long-term partnership or a requirement for sustained, specialized expertise that extends beyond a few years. The length implies a deep integration of the contractor's services into the government's operational or developmental lifecycle.

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: N0002409R5405

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: RTX Corp (UEI: 001344142)

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, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $166,850,944

Exercised Options: $166,850,944

Current Obligation: $115,636,482

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline