Raytheon Company awarded $206.8M for Engineering Services, with contract duration exceeding 2,500 days

Contract Overview

Contract Amount: $20,680,794 ($20.7M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2001-11-01

End Date: 2008-09-30

Contract Duration: 2,525 days

Daily Burn Rate: $8.2K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Place of Performance

Location: INDIANAPOLIS, MARION County, INDIANA, 46240

State: Indiana Government Spending

Plain-Language Summary

Department of Defense obligated $20.7 million to RAYTHEON COMPANY for work described as: Key points: 1. Contract value of $206.8M over an extended period suggests significant, ongoing service requirements. 2. The 'NOT COMPETED' award raises questions about potential cost efficiencies and market engagement. 3. A Cost Plus Fixed Fee (CPFF) contract type can incentivize cost overruns if not closely managed. 4. The contract's long duration (2,525 days) indicates a deep integration of services into agency operations. 5. Engineering services are critical for defense operations, implying a high degree of technical specialization. 6. The award to a single, large contractor may limit opportunities for smaller, specialized firms.

Value Assessment

Rating: fair

The total award of $206.8 million for engineering services over a period of approximately seven years represents a substantial investment. Benchmarking this against similar long-term engineering support contracts within the Department of Defense is challenging without more specific service details. However, the CPFF structure, while common for complex R&D or services where costs are hard to predict, carries inherent risks of higher-than-expected expenditures if rigorous oversight and cost controls are not maintained. The lack of competition further complicates a direct value-for-money assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded using a sole-source justification, meaning it was not openly competed. This typically occurs when a specific contractor possesses unique capabilities, proprietary technology, or when urgent needs preclude a competitive process. The absence of multiple bidders means there was no direct price comparison or negotiation against market alternatives, potentially leading to a less favorable price for the government.

Taxpayer Impact: Taxpayers may not have received the benefit of competitive pricing, potentially paying more than if the contract had been awarded through an open bidding process.

Public Impact

The primary beneficiaries are the Department of Defense, receiving essential engineering services. Services delivered likely include design, development, testing, and sustainment of defense systems. The geographic impact is centered around the agency's operational needs, potentially nationwide or specific to defense installations. Workforce implications include direct employment by Raytheon Company and potential indirect support roles.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potential for cost savings.
CPFF contract type can lead to cost overruns if not managed effectively.
Extended contract duration may indicate a lack of readily available alternatives or a need for specialized, long-term support.
Lack of transparency in the justification for sole-source award.

Positive Signals

Award to a large, established defense contractor like Raytheon suggests access to significant technical expertise and resources.
Engineering services are critical for maintaining and advancing defense capabilities.
The contract's long duration implies a stable, ongoing need that the contractor is fulfilling.

Sector Analysis

This contract falls within the Engineering Services sector (NAICS 541330), a critical component of the broader defense industrial base. The market for defense engineering services is dominated by a few large, specialized contractors due to the high technical barriers to entry and security requirements. Spending in this area is directly tied to national defense priorities and the lifecycle management of complex military systems. Comparable spending benchmarks would typically involve analyzing other large, long-term engineering support contracts awarded by the DoD.

Small Business Impact

As a sole-source award to a large prime contractor, this contract does not appear to include specific small business set-aside provisions. There is no explicit information regarding subcontracting plans for small businesses. This could limit opportunities for small businesses to participate in delivering these critical engineering services, potentially concentrating the economic benefits with the prime contractor and its larger subcontractors.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Contract Management Agency (DCMA), responsible for ensuring contractor performance and compliance. Accountability measures would be embedded within the contract terms, including performance metrics and reporting requirements. Transparency is limited due to the sole-source nature of the award; however, contract modifications and performance reviews would be subject to internal DoD oversight and potentially Inspector General reviews if performance issues or fraud are suspected.

Related Government Programs

Defense Engineering Support Contracts
Raytheon Company Defense Contracts
Department of Defense Services Contracts
Cost Plus Fixed Fee Contracts
Sole Source Defense Acquisitions

Risk Flags

Sole-source award may indicate lack of market research or justification issues.
CPFF contract type carries inherent cost overrun risk.
Extended contract duration requires sustained oversight.
Lack of competition limits price discovery.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $20.7 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 $20.7 million.

What is the period of performance?

Start: 2001-11-01. End: 2008-09-30.

What specific engineering services were provided under this contract?

The provided data indicates the contract was for 'Engineering Services' under NAICS code 541330. While the specific nature of these services is not detailed, this category typically encompasses a wide range of activities such as research and development, design, prototyping, testing, evaluation, systems integration, and technical support for complex systems. Given the Department of Defense as the agency and Raytheon Company as the contractor, these services likely relate to military platforms, weapons systems, or related defense technologies. Further details would be required to ascertain if the services focused on conceptual design, detailed engineering, sustainment engineering, or specialized technical consulting.

How does the $206.8 million award compare to typical engineering service contracts for the DoD?

The $206.8 million award is a significant sum, indicative of a large-scale, long-term engineering support requirement. Without specific details on the scope of services, it's difficult to provide a precise benchmark. However, major defense contractors often receive multi-billion dollar contracts for comprehensive system development and sustainment over many years. This $206.8 million contract, spanning over 2,500 days (approximately 7 years), suggests a substantial, but perhaps not the largest, single engineering services engagement. It is likely comparable to other major support contracts for specific defense programs or platforms, but smaller than overarching R&D or system acquisition contracts.

What are the risks associated with a Cost Plus Fixed Fee (CPFF) contract type for this duration?

The primary risk with a CPFF contract, especially over a long duration like 2,525 days, is the potential for cost overruns. In a CPFF structure, the contractor is reimbursed for allowable costs plus a predetermined fixed fee representing profit. While the fee is fixed, the total cost to the government can escalate if the contractor's costs increase beyond initial estimates. This necessitates robust oversight from the contracting agency to scrutinize costs, ensure efficiency, and prevent unnecessary expenditures. Without stringent cost control and performance monitoring, the government risks paying significantly more than initially anticipated, diminishing the overall value for money.

What does the 'NOT COMPETED' status imply for the government and taxpayers?

The 'NOT COMPETED' status signifies that the contract was awarded on a sole-source basis, meaning it was not subjected to a competitive bidding process. This implies that the agency determined, for reasons such as unique capabilities, urgency, or lack of alternatives, that only one source could fulfill the requirement. For taxpayers, this generally means a reduced likelihood of achieving the lowest possible price. Competitive bidding typically drives down costs through market forces and allows for a broader range of innovative solutions. A sole-source award bypasses these benefits, potentially leading to higher costs and less transparency in pricing.

What is the significance of the contract start and end dates (2001-2008)?

The contract dates of November 1, 2001, to September 30, 2008, place this award firmly in the post-9/11 era, a period of heightened defense spending and significant military operations. The extended duration of nearly seven years suggests a long-term need for the engineering services provided. The fact that it concluded in 2008 means the performance and outcomes are historical. Analyzing this contract provides insight into procurement practices and spending patterns during a specific period of intense defense activity, rather than reflecting current market conditions or ongoing needs.

Industry Classification

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

Product/Service Code: SPACE VEHICLES

Competition & Pricing

Extent Competed: NOT COMPETED

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Contractor Details

Parent Company: RTX Corp

Address: 6125 E 21ST ST, INDIANAPOLIS, IN, 46219

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline