DoD's $82.8M DBR Design Agent contract awarded to Raytheon Company, raising questions about competition and value

Contract Overview

Contract Amount: $82,833,734 ($82.8M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2015-03-01

End Date: 2019-01-18

Contract Duration: 1,419 days

Daily Burn Rate: $58.4K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: IGF::OT::IGF FY 15-17 DUAL BAND RADAR (DBR)DESIGN AGENT

Place of Performance

Location: SUDBURY, MIDDLESEX County, MASSACHUSETTS, 01776

State: Massachusetts Government Spending

Plain-Language Summary

Department of Defense obligated $82.8 million to RAYTHEON COMPANY for work described as: IGF::OT::IGF FY 15-17 DUAL BAND RADAR (DBR)DESIGN AGENT Key points: 1. Contract awarded on a sole-source basis, limiting competitive pressure on pricing. 2. Significant duration of 1419 days suggests a long-term need for these engineering services. 3. The contract type (Cost Plus Fixed Fee) can incentivize cost overruns. 4. Lack of small business participation noted, with no set-aside or subcontracting requirements. 5. Performance context is critical given the specialized nature of radar design. 6. Sector positioning within Defense Engineering Services requires careful benchmarking.

Value Assessment

Rating: questionable

Benchmarking the value of this sole-source contract is challenging due to the lack of competitive bids. The Cost Plus Fixed Fee (CPFF) contract type, while common for complex R&D, carries inherent risks of cost escalation. Without comparable sole-source awards for similar radar design agent services, it's difficult to definitively assess if the $82.8 million price tag represents fair market value. Further analysis would require detailed cost breakdowns and comparison to industry standards for engineering services in the defense sector.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning the Department of the Navy did not solicit bids from multiple offerors. This approach is typically used when only one source is capable of meeting the requirement, or in cases of urgent need. The absence of competition means there was no opportunity for price discovery through a bidding process, potentially leading to higher costs for the government compared to a competed award.

Taxpayer Impact: Taxpayers may have paid a premium due to the lack of competitive bidding. Without a competitive process, there is less assurance that the negotiated price reflects the lowest possible cost for the required engineering services.

Public Impact

The primary beneficiary is the Department of Defense, specifically the Department of the Navy, receiving specialized engineering services for radar design. The services delivered are critical for the development and maintenance of advanced radar systems, contributing to national security. The geographic impact is primarily within Massachusetts, where Raytheon Company is headquartered, though the ultimate deployment of the radar systems would be global. Workforce implications include employment for highly skilled engineers and technical staff within Raytheon's facilities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially increasing costs.
Cost Plus Fixed Fee contract type can incentivize higher spending.
Lack of transparency in the sole-source justification.
No indication of small business participation or subcontracting goals.
Long contract duration may mask inefficiencies if not closely managed.

Positive Signals

Award to a known prime contractor with existing expertise in radar systems.
Contract addresses a specific, likely complex, engineering need for the Navy.
Fixed fee component provides some cost certainty for the contractor's profit.
Potential for innovation and technological advancement in radar design.

Sector Analysis

The defense engineering services sector is characterized by high barriers to entry, specialized technical expertise, and significant government investment. Contracts often involve complex research, development, and integration of advanced technologies. The market is dominated by a few large prime contractors capable of handling such sophisticated requirements. This contract for Dual Band Radar (DBR) design agent services fits within this specialized niche, where specific technical capabilities are paramount.

Small Business Impact

This contract did not include any small business set-aside provisions, nor is there any indication of subcontracting requirements aimed at small businesses. The sole-source nature of the award further limits opportunities for small businesses to participate in this specific contract. This suggests that the primary focus was on securing the specialized capabilities of the prime contractor, potentially at the expense of broader small business engagement.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and program management offices. The Inspector General's office may conduct audits or investigations into contract performance and costs, particularly given the CPFF structure. Transparency is limited due to the sole-source nature, but contract modifications, performance reports, and payment data would be subject to internal review and potentially public disclosure under FOIA, albeit with redactions.

Related Government Programs

Department of Defense Research and Development Contracts
Naval Systems Engineering Services
Advanced Radar Technology Development
Sole-Source Defense Procurements

Risk Flags

Sole-source award
Cost Plus Fixed Fee contract type
Lack of competition
No small business participation

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $82.8 million to RAYTHEON COMPANY. IGF::OT::IGF FY 15-17 DUAL BAND RADAR (DBR)DESIGN AGENT

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 $82.8 million.

What is the period of performance?

Start: 2015-03-01. End: 2019-01-18.

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

Raytheon Company, now part of RTX, has a long history of securing sole-source contracts with the Department of Defense, particularly for advanced defense systems and technologies. Their track record often involves complex, high-value programs where they possess unique capabilities or are the incumbent provider. While sole-source awards can raise concerns about competition, they are often justified by the specialized nature of the work, proprietary technology, or urgent national security needs. Analyzing Raytheon's performance on past sole-source contracts would involve reviewing contract close-out data, any reported cost overruns or underruns, and program success metrics to gauge their efficiency and reliability in delivering complex engineering solutions under such arrangements.

How does the $82.8 million contract value compare to similar radar design agent services?

Directly comparing the $82.8 million contract value for Dual Band Radar (DBR) design agent services is difficult without access to specific, comparable contract data. Sole-source awards inherently lack a competitive benchmark. However, general industry benchmarks for engineering services, particularly those involving advanced defense systems, suggest that costs can be substantial due to the high level of expertise, research, and development required. The Cost Plus Fixed Fee (CPFF) structure means the final cost could deviate from the initial estimate. To assess value, one would need to compare the scope of work, duration, and complexity against other large-scale engineering contracts within the defense sector, looking for similar technical challenges and deliverables.

What are the primary risks associated with a sole-source, Cost Plus Fixed Fee contract for radar design?

The primary risks associated with a sole-source, Cost Plus Fixed Fee (CPFF) contract for radar design are twofold. Firstly, the sole-source nature eliminates competitive pressure, potentially leading to inflated pricing and reduced incentive for the contractor to optimize costs. The government relies heavily on the contractor's good faith in reporting costs. Secondly, the CPFF structure, while providing a fixed profit margin, can incentivize the contractor to incur higher costs, as their fee is a percentage of the total costs. This can lead to cost overruns if not rigorously monitored. For complex R&D like radar design, unforeseen technical challenges can further exacerbate these risks, making robust government oversight and stringent cost controls essential.

What is the historical spending pattern for DBR design agent services by the Department of the Navy?

Historical spending patterns for Dual Band Radar (DBR) design agent services by the Department of the Navy are not readily available in the provided data snippet. This specific contract represents a significant investment of $82.8 million over its duration. To understand historical spending, one would need to access broader contract databases and search for previous contracts related to DBR design, maintenance, or upgrades awarded to Raytheon or other potential contractors. Analyzing trends in award values, contract types, and durations over several fiscal years would reveal whether this $82.8 million award is an anomaly, a continuation of previous spending levels, or an increase driven by new program requirements or technological advancements.

How does the contract's duration (1419 days) impact its risk profile?

The contract's duration of 1419 days (approximately 3.9 years) significantly impacts its risk profile. A longer duration increases the potential for cost escalation due to inflation, changes in labor rates, and unforeseen technical challenges that may arise over an extended period. It also heightens the risk associated with the Cost Plus Fixed Fee (CPFF) structure, as there are more opportunities for costs to increase. Furthermore, a long-term sole-source contract can lead to contractor complacency or a reduced sense of urgency if not managed proactively. Effective program management, regular performance reviews, and stringent oversight are crucial to mitigate these risks over the contract's lifespan.

Industry Classification

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

Product/Service Code: RESEARCH AND DEVELOPMENT › C – National Defense R&D Services

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0002414R5335

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: RTX Corp

Address: 50 APPLE HILL DR, TEWKSBURY, MA, 01876

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: $85,304,030

Exercised Options: $83,149,189

Current Obligation: $82,833,734

Subaward Activity

Number of Subawards: 56

Total Subaward Amount: $14,355,311

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline