Raytheon Company awarded $173M contract for defense services, spanning over a decade

Contract Overview

Contract Amount: $173,045,697 ($173.0M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 1999-05-05

End Date: 2010-09-30

Contract Duration: 4,166 days

Daily Burn Rate: $41.5K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: COST PLUS INCENTIVE

Sector: Defense

Official Description: TO CORRECT THE VENDOR'S INFORMATION

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $173.0 million to RAYTHEON COMPANY for work described as: TO CORRECT THE VENDOR'S INFORMATION Key points: 1. Contract awarded through full and open competition, suggesting a competitive bidding process. 2. The contract type, Cost Plus Incentive, aims to incentivize cost control while allowing for flexibility. 3. A long duration of 4166 days (over 11 years) indicates a significant, long-term requirement. 4. The contract was awarded by the Department of Defense, a major federal spender. 5. The contract's value of $173M over its lifespan suggests substantial resource allocation. 6. The contract was managed by the Defense Contract Management Agency. 7. The contract was awarded in 1999 and completed in 2010, reflecting historical spending.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without specific deliverables or performance metrics. The Cost Plus Incentive Fee (CPIF) contract type can lead to higher costs than fixed-price contracts if not managed rigorously, as the government bears the cost plus an incentive fee. Comparing this to similar long-term defense service contracts would require detailed analysis of scope and performance. The total value of $173M over more than 11 years averages to approximately $15.7M annually, which is a significant but not exceptionally high figure for a major defense contractor.

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 bids. This suggests a robust bidding process where multiple companies likely vied for the contract. The presence of competition is generally expected to drive down prices and improve the quality of services offered. The number of bidders is not specified, but the designation implies a market where multiple capable vendors exist.

Taxpayer Impact: Taxpayers benefit from full and open competition as it typically leads to more competitive pricing and a wider selection of qualified contractors, ensuring better value for public funds.

Public Impact

The primary beneficiaries are likely components of the Department of Defense requiring specialized services. The services delivered are not specified but are critical for national defense operations. The contract was managed in Arizona, indicating a geographic focus for contract administration. The long duration suggests sustained employment opportunities within the defense sector, potentially for Raytheon employees and subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Incentive Fee contracts can sometimes lead to cost overruns if not closely monitored.
The long duration of the contract may reduce flexibility to adapt to changing technological needs or strategic priorities.
Lack of specific deliverable details makes it difficult to assess performance outcomes and value for money.

Positive Signals

Awarded through full and open competition, indicating a competitive process that should yield better value.
The contract's long duration suggests a stable, long-term need and a successful partnership.
The Cost Plus Incentive Fee structure aims to align contractor incentives with government objectives.

Sector Analysis

This contract falls within the broader Defense sector, a significant portion of federal spending. The market for defense services is characterized by large, established contractors like Raytheon, often competing for multi-year, high-value contracts. Spending in this sector is driven by national security requirements and geopolitical factors. Comparable spending benchmarks would involve analyzing other large-scale service contracts awarded by the Department of Defense to major defense industrial base companies.

Small Business Impact

The provided data does not indicate any small business set-aside provisions (ss: false, sb: false). This suggests the contract was not specifically targeted towards small businesses. Therefore, the primary contractor, Raytheon, would likely be responsible for managing any subcontracting opportunities. The impact on the small business ecosystem would depend on Raytheon's subcontracting strategy, which is not detailed here.

Oversight & Accountability

The contract was managed by the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractors meet their contractual obligations and for overseeing contract performance. Oversight mechanisms would typically include regular reporting, performance reviews, and audits. Transparency is generally maintained through contract databases and public reporting, though specific performance details may be sensitive. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Department of Defense Procurement
Defense Services Contracts
Long-Term Government Contracts
Cost-Plus Contracts
Raytheon Company Contracts

Risk Flags

Long contract duration may limit adaptability.
Cost Plus Incentive Fee contracts require diligent oversight to manage costs.
Specific performance metrics not provided for value assessment.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $173.0 million to RAYTHEON COMPANY. TO CORRECT THE VENDOR'S INFORMATION

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 $173.0 million.

What is the period of performance?

Start: 1999-05-05. End: 2010-09-30.

What specific services did Raytheon Company provide under this contract?

The provided data does not specify the exact services rendered by Raytheon Company under this contract. However, given the contractor's profile and the awarding agency (Department of Defense), the services likely pertained to defense-related operations, potentially including systems integration, maintenance, logistics, technical support, or research and development for military platforms or systems. The Cost Plus Incentive Fee structure suggests services where performance targets and cost efficiencies were key objectives, rather than a simple procurement of goods.

How does the $173M contract value compare to similar long-term defense service contracts?

The $173 million contract value spread over approximately 11 years equates to an average annual value of roughly $15.7 million. This figure is substantial but falls within the range of many large-scale service contracts awarded by the Department of Defense. For instance, major defense contractors often manage programs in the hundreds of millions or even billions of dollars over similar or longer durations. Without knowing the specific scope, complexity, and deliverables, a precise comparison is difficult, but it represents a significant, long-term commitment typical for major defense support.

What are the potential risks associated with a Cost Plus Incentive Fee (CPIF) contract of this duration?

CPIF contracts, while designed to incentivize efficiency, carry inherent risks. For a contract spanning over 11 years, the primary risk is that the 'incentive' aspect might not adequately control costs if the baseline targets are poorly set or if unforeseen circumstances drive up expenses significantly. The government bears the cost risk, and the contractor is rewarded for meeting or exceeding performance targets and staying within cost parameters. Over such a long period, market conditions, technological advancements, and geopolitical landscapes can change, potentially making the original targets less relevant or achievable, leading to disputes or cost escalations. Effective oversight is crucial to mitigate these risks.

What was Raytheon's performance track record on this specific contract?

The provided data does not include specific performance metrics or ratings for Raytheon Company on this particular contract. While the contract was awarded under full and open competition and completed its term, details regarding on-time delivery, quality of service, cost performance relative to targets, and overall customer satisfaction are not available in this dataset. Typically, such information would be found in contract performance reports or agency evaluations, which are not included here.

How has federal spending on defense services evolved since this contract was awarded and completed?

Since this contract was awarded in 1999 and completed in 2010, federal spending on defense services has generally seen fluctuations driven by global security events and budget priorities. The post-9/11 era saw significant increases in defense spending, including for services. While there have been periods of budget constraint and shifts towards different types of defense spending (e.g., cybersecurity, advanced technologies), the overall demand for contractor support services within the Department of Defense has remained substantial. This contract represents a snapshot of spending during a period of evolving defense needs.

What does the contract award date (1999) suggest about the technology or services involved?

An award date of 1999 suggests that the services or technology supported by this contract were relevant to the defense landscape at the turn of the millennium. This could include support for established military platforms (aircraft, ships, vehicles), communication systems, IT infrastructure, or early stages of advanced technologies that were being developed or integrated at the time. The long duration implies that the underlying need was persistent, possibly involving sustainment, modernization, or operational support for systems that remained in service for many years.

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Offers Received: 2

Pricing Type: COST PLUS INCENTIVE (V)

Contractor Details

Address: 1151 E HERMANS RD, TUCSON, AZ, 90

Business Categories: Category Business, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Contract Characteristics

Cost or Pricing Data: NO

Timeline