Raytheon Company awarded $134.6M contract for defense services, highlighting long-term engagement

Contract Overview

Contract Amount: $134,653,426 ($134.7M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 1999-11-26

End Date: 2007-12-31

Contract Duration: 2,957 days

Daily Burn Rate: $45.5K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS AWARD FEE

Sector: Defense

Place of Performance

Location: SAN DIEGO, SAN DIEGO County, CALIFORNIA, 92123

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $134.7 million to RAYTHEON COMPANY for work described as: Key points: 1. Contract value suggests significant, ongoing defense support requirements. 2. Sole-source award indicates potential limitations in competitive bidding. 3. Long contract duration (1999-2007) points to a stable, established relationship. 4. Cost Plus Award Fee structure incentivizes performance but requires careful oversight. 5. Awarded by the Department of Defense, aligning with national security priorities. 6. Contractor's extensive tenure suggests a strong track record in defense contracting.

Value Assessment

Rating: fair

The total award of $134.6 million over nearly 8 years represents a substantial investment. Without specific performance metrics or comparable contract data, a precise value-for-money assessment is challenging. The Cost Plus Award Fee (CPAF) structure allows for contractor reimbursement of costs plus a fee that is adjusted based on performance, which can lead to higher costs if not managed tightly. Benchmarking against similar long-term defense support contracts would be necessary for a more definitive value assessment.

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 a specific contractor possesses unique capabilities, proprietary technology, or when urgency precludes a full and open competition. The lack of competition means that pricing and service levels were not tested against market alternatives, potentially leading to less favorable terms for the government.

Taxpayer Impact: Sole-source awards can limit opportunities for taxpayers to benefit from competitive pricing, potentially resulting in higher overall expenditures compared to a competed contract.

Public Impact

The Department of Defense benefits from sustained and specialized defense services. The contract supports critical national security functions and readiness. Raytheon Company, a major defense contractor, is the primary beneficiary. The contract likely supports a workforce involved in defense system maintenance, development, or support. Geographic impact is likely concentrated around defense installations or operational areas.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price discovery and potentially increases costs for taxpayers.
Cost Plus Award Fee structure requires robust government oversight to ensure cost control and prevent overruns.
Long contract duration may reduce flexibility to adapt to changing technological needs or market conditions.

Positive Signals

Contractor's long tenure suggests a reliable and established relationship with the agency.
Cost Plus Award Fee structure, if managed effectively, can incentivize high performance and quality.
Awarded by a major federal agency (DoD) indicates alignment with significant government missions.

Sector Analysis

This contract falls within the broader Defense sector, a significant area of federal spending. The market for defense contracting is characterized by high barriers to entry, specialized technical requirements, and long-term relationships between government agencies and prime contractors. Raytheon is a major player in this sector, providing a wide range of defense systems and services. Spending in this category is often driven by national security imperatives and technological advancements.

Small Business Impact

This contract does not appear to have a small business set-aside component (ss: false, sb: false). As a sole-source award to a large prime contractor, it is unlikely to have direct subcontracting opportunities specifically mandated for small businesses within the set-aside framework. However, the prime contractor may still engage small businesses as subcontractors, but this is not explicitly detailed in the provided data.

Oversight & Accountability

The Cost Plus Award Fee (CPAF) contract type necessitates strong government oversight. The Defense Contract Management Agency (DCMA) is responsible for administering this contract, which includes monitoring performance, costs, and ensuring compliance with award fee criteria. Transparency would depend on the agency's reporting practices and the public availability of contract performance reviews, which are not detailed here.

Related Government Programs

Defense Procurement
Weapons Systems Support
Aerospace and Defense Services
Cost-Plus Contracts
Long-Term Government Contracts

Risk Flags

Sole-source award may limit competition and potentially increase costs.
Cost-plus contract types require diligent government oversight to manage costs effectively.
Long contract duration could lead to misalignment with evolving requirements.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $134.7 million to RAYTHEON COMPANY. See the official description on USAspending.

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 $134.7 million.

What is the period of performance?

Start: 1999-11-26. End: 2007-12-31.

What specific defense services did Raytheon Company provide under this contract?

The provided data does not specify the exact nature of the defense services rendered by Raytheon Company under this $134.6 million contract. However, given Raytheon's profile as a major defense contractor, these services likely encompassed areas such as weapons systems development, integration, maintenance, logistics support, or related technical services for Department of Defense assets. The 'Cost Plus Award Fee' structure suggests services where performance quality and efficiency are critical and measurable, often involving complex technical or operational support.

How does the $134.6 million award compare to Raytheon's typical contract values with the DoD?

The $134.6 million award is a significant sum, but without a broader dataset of Raytheon's contract history with the DoD, it's difficult to definitively categorize it as typical, high, or low. Raytheon is one of the largest defense contractors globally, frequently securing multi-billion dollar contracts for major programs. This $134.6 million contract, spanning nearly eight years, represents a substantial, long-term engagement, but it may be one of many contracts Raytheon holds, some potentially much larger in annual value or total ceiling.

What are the primary risks associated with a sole-source Cost Plus Award Fee contract of this duration?

The primary risks associated with this contract structure include potential cost overruns due to the 'cost-plus' nature, where the government reimburses the contractor's allowable costs plus a fee. The 'award fee' component introduces subjectivity and requires robust government oversight to ensure the fee accurately reflects performance, preventing inflated fees for mediocre work. The 'sole-source' aspect eliminates competitive pressure, potentially leading to higher prices and reduced innovation. The long duration (nearly 8 years) increases the risk of the contracted services becoming outdated or misaligned with evolving defense needs, while also locking the government into a single provider.

What does the contract's end date of 2007 suggest about its relevance today?

The contract's end date of December 31, 2007, indicates that it is historical and no longer active. Its relevance today lies in understanding past spending patterns, contractor relationships, and the types of defense services procured during that period. Analyzing such historical contracts can inform current procurement strategies, provide benchmarks for similar services, and offer insights into the evolution of defense contracting practices and the performance of contractors like Raytheon over time.

How effective was the Defense Contract Management Agency (DCMA) in overseeing this specific contract?

The provided data does not contain information to assess the effectiveness of the Defense Contract Management Agency (DCMA) in overseeing this specific contract. Effectiveness would typically be measured through performance reviews, audit findings, cost variance reports, and the achievement of contract milestones and award fee criteria. Without access to these oversight records or Inspector General reports related to this contract, any assessment of DCMA's effectiveness would be speculative.

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS AWARD FEE (R)

Evaluated Preference: NONE

Contractor Details

Address: 3980 SHERMAN ST 200, SAN DIEGO, CA, 92110

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

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline