Raytheon Company awarded $21.2M for CEC Equipment Repairs, a sole-source contract with a duration of 472 days

Contract Overview

Contract Amount: $21,175,226 ($21.2M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2018-06-15

End Date: 2019-09-30

Contract Duration: 472 days

Daily Burn Rate: $44.9K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: CEC EQUIPMENT REPAIRS

Place of Performance

Location: SEMINOLE, PINELLAS County, FLORIDA, 33777

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $21.2 million to RAYTHEON COMPANY for work described as: CEC EQUIPMENT REPAIRS Key points: 1. Contract awarded on a cost-plus-fixed-fee basis, which can lead to cost overruns if not managed carefully. 2. Sole-source award indicates a lack of competitive bidding, potentially impacting price efficiency. 3. Contract duration of 472 days suggests a significant, ongoing need for these repair services. 4. The North American Industry Classification System (NAICS) code 334511 points to specialized manufacturing within the defense sector. 5. Performance is located in Florida, a state with a substantial defense industry presence.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to its sole-source nature and the specific nature of CEC equipment repairs. Without competitive bids, it's difficult to ascertain if the pricing reflects market rates or represents a fair value for the services rendered. The cost-plus-fixed-fee structure necessitates close oversight to ensure costs remain reasonable and do not escalate beyond initial projections. Further analysis would require access to detailed cost breakdowns and comparisons with similar specialized repair services, which are not readily available.

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 typically occurs when a specific contractor possesses unique capabilities, proprietary technology, or is the only source capable of meeting the requirement. The lack of competition means that price discovery through market forces was absent, potentially leading to higher costs for the government compared to a competitively awarded contract.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive pressure. Without multiple bids, there is less assurance that the government secured the most cost-effective solution available in the market.

Public Impact

The primary beneficiaries are the Department of Defense, ensuring the operational readiness of Command, Control, Communications, Computers, and Intelligence (C4I) systems. Services delivered include essential repairs and maintenance for critical Command Element Control (CEC) equipment. Geographic impact is concentrated in Florida, where the contractor's facility is located and likely where the equipment is serviced. Workforce implications include employment for specialized technicians and engineers 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 potentially increases costs for taxpayers.
Cost-plus-fixed-fee contract type requires diligent oversight to prevent cost escalation.
Lack of publicly available performance metrics makes it difficult to assess service quality and efficiency.
Specific details on the 'CEC equipment' are not provided, hindering a deeper understanding of the service's criticality and complexity.

Positive Signals

Contract awarded to Raytheon Company, a major defense contractor with established expertise in aerospace and defense systems.
The contract addresses a specific need for repairs, indicating a focus on maintaining existing critical infrastructure.
The contract duration suggests a sustained requirement, implying the importance of the services provided.

Sector Analysis

The defense sector, particularly within the realm of Command, Control, Communications, Computers, and Intelligence (C4I) systems, is characterized by high technological complexity and specialized maintenance requirements. Companies like Raytheon are key players in this market, often holding sole-source positions for proprietary systems or unique repair capabilities. Spending in this area is driven by the need to maintain operational readiness of advanced military assets. Comparable spending benchmarks are difficult to establish without more specific details on the equipment being repaired, but significant investments are typical for maintaining sophisticated defense electronics.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Furthermore, the contractor, Raytheon Company, is a large defense corporation. There is no explicit information regarding subcontracting plans for small businesses within this award. Consequently, the direct impact on the small business ecosystem from this specific contract is likely minimal, though large prime contractors often engage small businesses in their broader supply chains.

Oversight & Accountability

Oversight for this contract would primarily fall under the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor performance and compliance. Accountability measures are inherent in the cost-plus-fixed-fee structure, requiring detailed reporting and justification of costs. Transparency is limited due to the sole-source nature and the proprietary aspects of defense equipment repair. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Defense C4I Systems Maintenance
Aerospace and Defense Equipment Repair
Naval Systems Support Contracts
Military Electronics Sustainment

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 $21.2 million to RAYTHEON COMPANY. CEC EQUIPMENT REPAIRS

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 $21.2 million.

What is the period of performance?

Start: 2018-06-15. End: 2019-09-30.

What is the specific type of Command Element Control (CEC) equipment being repaired under this contract, and what is its operational significance?

The provided data does not specify the exact type of Command Element Control (CEC) equipment. However, CEC systems are generally integral to military operations, facilitating command and control functions, situational awareness, and communication across various platforms. Their operational significance lies in enabling effective decision-making and coordination during missions. Repairs to such critical systems are essential for maintaining military readiness and operational effectiveness. Without specific model or system details, a precise assessment of criticality is limited, but it can be inferred that these are vital components of the defense infrastructure.

How does the cost-plus-fixed-fee (CPFF) contract structure compare to other contract types for similar repair services in the defense sector?

The Cost-Plus-Fixed-Fee (CPFF) contract type is common in the defense sector, particularly for services where the scope of work or costs are difficult to estimate precisely upfront, such as research, development, or complex repairs. In a CPFF contract, the contractor is reimbursed for allowable costs plus a fixed fee representing profit. Compared to fixed-price contracts, CPFF offers flexibility but carries a higher risk of cost overruns if not managed diligently. For routine maintenance or well-defined repair tasks, fixed-price contracts might offer better cost certainty for the government. However, for specialized, potentially evolving repair needs like those for advanced defense systems, CPFF can be a pragmatic choice, provided robust oversight is in place to control costs and ensure value.

What is Raytheon Company's track record with similar sole-source repair contracts for Department of Defense equipment?

Raytheon Company, now part of RTX, has an extensive history of performing sole-source and competitively awarded contracts for the Department of Defense, spanning a wide array of defense systems, including radar, missile systems, and C4I equipment. Their track record with sole-source repair contracts is generally characterized by their established expertise and proprietary knowledge of the systems they produce or maintain. While specific performance metrics for individual contracts are not always public, Raytheon is a Tier 1 defense contractor with significant experience in sustainment and repair services. Government contract databases often show a pattern of awarded contracts for similar services, reflecting their long-standing role as a key supplier and maintainer of critical defense assets. Oversight agencies typically monitor these contracts for performance and cost control.

What are the potential risks associated with a sole-source award for specialized equipment repair, and how are they typically mitigated?

The primary risk of a sole-source award for specialized equipment repair is the potential for inflated pricing due to the lack of competitive pressure. Without competing bids, the government may not achieve the best possible price. Another risk is reduced incentive for the contractor to innovate or improve efficiency, as there is no direct competitor. Mitigation strategies typically involve stringent government oversight, including detailed cost analysis, audits, and negotiation of fair and reasonable pricing. The government may also require the contractor to provide extensive justification for their pricing and performance metrics. Furthermore, agencies often conduct market research to ensure that a sole-source award is truly necessary and that no viable alternatives exist. Periodic reviews and potential re-competition at a later stage can also help manage these risks.

How does historical spending on Command Element Control (CEC) equipment repairs compare to this specific contract award?

Analyzing historical spending on CEC equipment repairs requires access to detailed budget data and contract awards over time. The provided data for this specific contract shows an award of approximately $21.2 million over a period of 472 days (roughly 1.3 years). To compare this to historical spending, one would need to aggregate all previous contracts for CEC equipment repairs, ideally from the same agency or for similar equipment types. Without that broader dataset, it's impossible to determine if this $21.2 million award represents an increase, decrease, or stable level of spending. Factors influencing historical spending could include technological upgrades, changes in operational tempo, fleet size, and the aging of equipment. A comprehensive analysis would involve trend analysis of annual or multi-year spending patterns.

Industry Classification

NAICS: Manufacturing › Navigational, Measuring, Electromedical, and Control Instruments Manufacturing › Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing

Product/Service Code: FIRE CONTROL EQPT.

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0002417R5200

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: RTX Corp

Address: 7887 BRYAN DAIRY RD, LARGO, FL, 33777

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: $26,945,545

Exercised Options: $26,787,299

Current Obligation: $21,175,226

Actual Outlays: $2,366,288

Subaward Activity

Number of Subawards: 36

Total Subaward Amount: $8,040,489

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline