Raytheon Company awarded $19.16M for engineering services, a sole-source contract for navigation systems

Contract Overview

Contract Amount: $19,157,522 ($19.2M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2020-12-28

End Date: 2023-02-28

Contract Duration: 792 days

Daily Burn Rate: $24.2K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: ENGINEERING SERVICES FOR DBR

Place of Performance

Location: TEWKSBURY, MIDDLESEX County, MASSACHUSETTS, 01876

State: Massachusetts Government Spending

Plain-Language Summary

Department of Defense obligated $19.2 million to RAYTHEON COMPANY for work described as: ENGINEERING SERVICES FOR DBR Key points: 1. Contract awarded on a sole-source basis, limiting competitive pricing benefits. 2. The contract type is Cost Plus Fixed Fee, which can lead to cost overruns. 3. Performance period spans nearly two years, indicating a substantial project. 4. The North American Industry Classification System (NAICS) code suggests a focus on advanced navigation instruments. 5. This award represents a portion of broader Department of Defense spending on critical systems. 6. The contract was issued as a delivery order against an existing contract vehicle.

Value Assessment

Rating: fair

Benchmarking the value of this Cost Plus Fixed Fee contract is challenging without detailed cost breakdowns. The fixed fee component provides some cost control, but the cost-plus nature inherently carries risk. Comparing it to similar sole-source engineering services contracts for navigation systems would be necessary for a more precise value assessment. The awarded amount of $19.16 million over approximately two years suggests a significant investment in specialized engineering expertise.

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 used when only one vendor possesses the necessary specialized capabilities or when urgency dictates. The lack of competition means that taxpayers did not benefit from potential price reductions that could arise from a competitive bidding process.

Taxpayer Impact: Sole-source awards can result in higher costs for taxpayers as the government may not achieve the best possible price without competitive pressure.

Public Impact

The Department of Defense benefits from specialized engineering services for critical navigation systems. This contract supports the development and maintenance of advanced search, detection, and navigation instruments. The geographic impact is primarily within Massachusetts, where the contractor is located. Workforce implications include employment for engineers and technical staff at Raytheon Company.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus contract type introduces potential for cost overruns.
Sole-source award limits price competition and may result in higher costs.
Lack of transparency in detailed cost build-up for a CPFF contract.

Positive Signals

Award to a known contractor (Raytheon) with established expertise in defense systems.
Contract addresses critical defense needs for navigation and guidance systems.
Delivery order against an existing contract vehicle suggests a streamlined procurement process.

Sector Analysis

This contract falls within the Defense sector, specifically focusing on the manufacturing and engineering of navigation, guidance, and control systems. The market for such specialized defense electronics is characterized by high barriers to entry due to technological complexity and stringent security requirements. Spending in this area is driven by national security needs and the continuous evolution of military technology. Comparable spending benchmarks would involve analyzing other contracts for similar system development and engineering services within the Department of Defense.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by the 'ss' and 'sb' fields being false. There is no explicit information provided regarding subcontracting opportunities for small businesses. Without a set-aside, the primary contractor, Raytheon Company, will likely manage the majority of the work internally, potentially limiting direct opportunities for small businesses unless they are specifically sought out as subcontractors.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor performance and compliance. Accountability measures are embedded within the Cost Plus Fixed Fee contract structure, requiring detailed reporting and justification of costs. Transparency is limited due to the sole-source nature and the inherent complexities of CPFF contracts, though contract modifications and performance reports are generally available through federal procurement databases.

Related Government Programs

Defense Navigation Systems Procurement
Aeronautical and Nautical System Manufacturing
Raytheon Company Defense Contracts
Cost Plus Fixed Fee Engineering Services

Risk Flags

Sole-source award
Cost-plus contract type
Limited competition

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $19.2 million to RAYTHEON COMPANY. ENGINEERING SERVICES FOR DBR

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 $19.2 million.

What is the period of performance?

Start: 2020-12-28. End: 2023-02-28.

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

Raytheon Company, now part of RTX, has a long and extensive history of developing and supplying complex defense systems, including navigation and guidance technologies. They are a prime contractor on numerous sole-source and competed contracts across various branches of the U.S. military. Their track record with similar sole-source engineering contracts for navigation systems is generally strong, characterized by the delivery of advanced technological solutions. However, the specifics of past performance, including any cost overruns or schedule delays on comparable sole-source awards, would require a deeper dive into historical contract data and performance reviews. The company's size and established position in the defense industry often lead to sole-source awards for highly specialized or integrated systems where they possess unique capabilities or are the incumbent provider.

How does the Cost Plus Fixed Fee (CPFF) structure compare to other contract types for this type of engineering service?

The Cost Plus Fixed Fee (CPFF) contract type is often used for research and development or complex engineering services where the scope of work is not precisely defined at the outset, making firm-fixed-price contracts impractical. In a CPFF contract, the contractor is reimbursed for all allowable costs plus a predetermined fixed fee representing profit. This contrasts with Firm-Fixed-Price (FFP) contracts, where the price is set regardless of the actual costs incurred, incentivizing the contractor to control expenses. Cost-reimbursement contracts, like CPFF, shift some cost risk to the government but provide flexibility for evolving project requirements. For specialized engineering services like those for navigation systems, CPFF can be advantageous if innovation and adaptation are key, but it requires robust government oversight to manage costs effectively and prevent overruns beyond the anticipated scope.

What are the primary risks associated with sole-source awards for advanced technology systems?

Sole-source awards for advanced technology systems, such as navigation and guidance instruments, carry several primary risks. The most significant is the lack of price competition, which can lead to the government paying a premium compared to what might be achieved in a competitive bidding environment. This can result in less value for taxpayer money. Another risk is potential complacency from the contractor, as there is no immediate threat of losing future business to competitors. This could potentially impact innovation or efficiency. Furthermore, sole-source awards may limit opportunities for emerging technologies or smaller, innovative companies that could offer alternative solutions. Ensuring fair and reasonable pricing, along with rigorous performance oversight, becomes even more critical in sole-source situations to mitigate these risks.

What is the typical duration and value range for similar engineering services contracts within the Department of Defense?

The typical duration and value range for similar engineering services contracts within the Department of Defense can vary significantly based on the complexity, scope, and criticality of the systems involved. Contracts for specialized engineering services related to navigation, guidance, and control systems, especially those involving R&D or sustainment of advanced platforms, often span multiple years. Durations of 1-5 years are common, with potential for extensions. Values can range from a few million dollars for specific task orders or component development to hundreds of millions or even billions for large-scale system integration or sustainment programs. The $19.16 million awarded to Raytheon for approximately two years of engineering services for navigation systems appears to be within a moderate range for specialized, non-production-focused engineering support, reflecting the niche and high-skill nature of the work.

How does the NAICS code 334511 inform our understanding of the services provided under this contract?

The North American Industry Classification System (NAICS) code 334511, 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing,' provides crucial context for the services procured under this contract. It indicates that the engineering services are directly related to the design, development, manufacturing, and integration of sophisticated systems used for locating, tracking, and directing vehicles and equipment, particularly in aerospace and maritime applications. This includes components like radar, sonar, GPS receivers, inertial navigation systems, and flight control instruments. Understanding this NAICS code helps confirm that the contract's purpose aligns with acquiring specialized technical expertise for high-tech defense hardware, rather than general engineering or support services. It suggests the work involves intricate technical challenges and requires contractors with deep domain knowledge in sensor technology, signal processing, and system integration.

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: COMM/DETECT/COHERENT RADIATION

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Rockwell Collins Australia PTY Limited

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: $21,618,995

Exercised Options: $21,618,995

Current Obligation: $19,157,522

Subaward Activity

Number of Subawards: 10

Total Subaward Amount: $1,940,428

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0002418G5501

IDV Type: BOA

Timeline