Raytheon Company awarded $6.8M for engineering services, with limited competition and a cost-plus-fixed-fee structure

Contract Overview

Contract Amount: $6,822,806 ($6.8M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2023-10-02

End Date: 2026-02-28

Contract Duration: 880 days

Daily Burn Rate: $7.8K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: ENGINEERING SERVICES

Place of Performance

Location: EL SEGUNDO, LOS ANGELES County, CALIFORNIA, 90245

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $6.8 million to RAYTHEON COMPANY for work described as: ENGINEERING SERVICES Key points: 1. The contract's cost-plus-fixed-fee (CPFF) structure may incentivize cost overruns, requiring close monitoring. 2. Limited competition raises concerns about potential overpayment and reduced innovation. 3. The contract duration of 880 days suggests a significant, ongoing need for these engineering services. 4. The specific North American Industry Classification System (NAICS) code 334220 points to a specialized area within wireless communications. 5. The award was a delivery order under a larger contract, indicating a phased approach to fulfilling requirements. 6. The absence of small business set-aside suggests larger prime contractors are expected to perform the work.

Value Assessment

Rating: fair

The contract's cost-plus-fixed-fee (CPFF) pricing structure, while offering flexibility, can lead to higher costs compared to fixed-price contracts if not managed diligently. Benchmarking the specific engineering services against similar contracts is challenging without more detailed scope information. However, the total award amount of $6.8 million over approximately 2.4 years suggests a moderate investment. The lack of competitive bidding inherently limits the ability to assess true value-for-money against market alternatives.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

This contract was awarded as a delivery order under an existing contract, and the data indicates it was 'NOT COMPETED' at the delivery order level. This suggests that the initial contract vehicle may have had some form of competition, but this specific order was likely placed with a pre-selected vendor. The limited competition means that the Navy did not solicit offers from multiple vendors for this particular task, potentially impacting price discovery and the ability to secure the most cost-effective solution.

Taxpayer Impact: The lack of open competition for this delivery order means taxpayers may not be benefiting from the most competitive pricing available in the market. This can lead to higher overall costs for the government.

Public Impact

The Department of the Navy benefits from specialized engineering services crucial for its operations. The services likely support the development, maintenance, or enhancement of wireless communication systems. The contract's geographic impact is centered in California, where the contractor is located. The contract supports a portion of Raytheon Company's engineering workforce.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus-fixed-fee structure may lead to cost overruns.
Limited competition restricts price negotiation and potential for better value.
Lack of transparency in the specific engineering tasks performed.
Potential for vendor lock-in if this is a sole-source follow-on.

Positive Signals

Award to a known entity (Raytheon Company) suggests established capabilities.
Delivery order structure implies a need that has been previously identified and potentially planned for.
The contract duration indicates a sustained requirement, suggesting importance to the agency's mission.

Sector Analysis

This contract falls within the broader Information Technology and Defense sectors, specifically related to wireless communications equipment manufacturing and related engineering services (NAICS 334220). The market for such specialized engineering services is often dominated by large defense contractors like Raytheon. Spending in this area is driven by the military's continuous need for advanced communication capabilities, secure networks, and technological superiority. Comparable spending benchmarks would typically be found within other Department of Defense contracts for similar engineering support.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). This suggests that the primary contractor, Raytheon Company, is expected to perform the majority of the work. There is no explicit information on subcontracting plans for small businesses within this specific delivery order. The absence of a small business set-aside means that opportunities for small businesses to participate in this particular contract are likely limited, potentially through subcontracting with the prime.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. As a delivery order under a larger contract, its execution is subject to the terms and conditions of the base contract. Transparency is limited by the 'NOT COMPETED' status for this order. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected.

Related Government Programs

Department of Defense Research and Development
Navy Command, Control, Communications, Computers, and Intelligence (C4I) Systems
Defense Communications Infrastructure
Wireless Technology Development Contracts

Risk Flags

Limited competition may result in higher costs.
Cost-plus-fixed-fee structure requires diligent oversight to control spending.
Lack of specific task details limits full value assessment.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $6.8 million to RAYTHEON COMPANY. ENGINEERING SERVICES

Who is the contractor on this award?

The obligated recipient is RAYTHEON COMPANY.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Navy).

What is the total obligated amount?

The obligated amount is $6.8 million.

What is the period of performance?

Start: 2023-10-02. End: 2026-02-28.

What specific engineering services are being procured under this contract?

The contract data identifies the service as 'ENGINEERING SERVICES' and assigns it the NAICS code 334220, which pertains to 'Radio and Television Broadcasting and Wireless Communications Equipment Manufacturing'. While the specific tasks are not detailed in the provided data, it can be inferred that these services are related to the design, development, testing, integration, or sustainment of wireless communication systems and equipment used by the Department of the Navy. This could encompass areas such as signal processing, network architecture, hardware design, software development for communication platforms, or technical support for existing systems.

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

Cost-plus-fixed-fee (CPFF) contracts are often used when the scope of work is not precisely defined or is expected to evolve, offering flexibility. However, they carry a higher risk of cost overruns compared to fixed-price contracts, as the contractor is reimbursed for actual costs plus a predetermined fixed fee. For well-defined engineering services, fixed-price contracts (like FFP or FP-EPA) are generally preferred for better cost control. CPFF contracts require robust oversight to manage costs effectively. Compared to other CPFF contracts, the fee structure and the total estimated cost are key comparison points, but without more data on the specific services and market rates, a precise benchmark is difficult.

What are the implications of 'NOT COMPETED' for this delivery order?

The 'NOT COMPETED' designation for this delivery order means that the Department of the Navy did not conduct a new competition among multiple vendors to select the contractor for this specific task. This typically occurs when the delivery order is placed under an existing contract vehicle that may have been competed previously, or if there are specific justifications for a sole-source award (though 'limited' competition suggests it might be from a pre-qualified list or existing contract). The primary implication for taxpayers is a reduced likelihood of achieving the lowest possible price, as the benefit of competitive bidding is bypassed for this particular order. It can also limit opportunities for innovative solutions from a wider range of potential providers.

What is the typical performance period for engineering services contracts of this value?

The performance period for this contract is 880 days, which is approximately 2.4 years (from October 2, 2023, to February 28, 2026). For engineering services contracts in the defense sector, a duration of this length for an award of $6.8 million is within a reasonable range, particularly for specialized technical support, system development, or integration tasks. Shorter durations (e.g., less than a year) might be typical for consulting or specific, short-term studies, while longer periods (3-5 years or more) are often associated with major system development programs or long-term sustainment contracts. This duration suggests a significant, ongoing need for the services.

How does Raytheon Company's track record influence the assessment of this contract?

Raytheon Company (now RTX) is a major defense contractor with extensive experience in aerospace, defense, and intelligence systems, including significant work in communications and electronics. Their established presence and history of performing complex engineering services for the government suggest a high likelihood of technical capability and program execution. However, their size and market position also mean they are often involved in large, complex contracts where cost management and competitive pressures can differ from smaller firms. Assessing this specific contract involves considering Raytheon's past performance on similar CPFF contracts, their ability to manage costs effectively, and their responsiveness to government requirements, rather than just their general reputation.

Industry Classification

NAICS: Manufacturing › Communications Equipment Manufacturing › Radio and Television Broadcasting and Wireless Communications Equipment Manufacturing

Product/Service Code: COMM/DETECT/COHERENT RADIATION

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0003916R0040

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: RTX Corp

Address: 2000 E EL SEGUNDO BLVD, EL SEGUNDO, CA, 90245

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: $6,822,806

Exercised Options: $6,822,806

Current Obligation: $6,822,806

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: N0003916D0075

IDV Type: IDC

Timeline