Raytheon Company awarded $9.98M for sustainment and engineering services by the Department of the Navy

Contract Overview

Contract Amount: $9,985,404 ($10.0M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2025-02-20

End Date: 2027-02-27

Contract Duration: 737 days

Daily Burn Rate: $13.5K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: SUSTAINMENT AND ENGINEERING SERVICES

Place of Performance

Location: MCKINNEY, COLLIN County, TEXAS, 75069

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $10.0 million to RAYTHEON COMPANY for work described as: SUSTAINMENT AND ENGINEERING SERVICES Key points: 1. Contract awarded on a cost-plus-fixed-fee basis, which can lead to cost overruns if not managed carefully. 2. The contract was not competed, raising questions about potential price efficiencies and market-driven value. 3. A single award for sustainment and engineering services suggests a specialized need or limited vendor pool. 4. The duration of 737 days indicates a medium-term commitment for ongoing support. 5. The contract is for Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing, a critical defense sector.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging without comparable sole-source awards for similar sustainment and engineering services. The cost-plus-fixed-fee structure necessitates close oversight to ensure costs remain reasonable and that the fixed fee adequately compensates the contractor for the defined scope. Without competitive pricing, it is difficult to ascertain if the government is receiving optimal value for the services rendered. Further analysis of historical pricing for similar services from Raytheon or other contractors would be beneficial.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not open to competition from other potential vendors. This approach is typically used when only one vendor possesses the necessary capabilities, technology, or security clearances required for the specific service. The lack of competition means that price discovery through market forces was bypassed, potentially leading to higher costs than if multiple bids had been solicited.

Taxpayer Impact: Taxpayers may not benefit from the most competitive pricing due to the absence of a bidding process. This could result in a higher overall expenditure for the government compared to a competed contract.

Public Impact

The Department of the Navy benefits from specialized sustainment and engineering services for critical defense systems. This contract supports the operational readiness and longevity of search, detection, navigation, guidance, aeronautical, and nautical systems. The services are being delivered in Texas, potentially impacting the local economy and workforce in that region. The contract supports highly skilled engineering and technical roles within the defense industry.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure on pricing.
Cost-plus-fixed-fee contract type requires robust government oversight to control costs.
Lack of transparency in the procurement process due to sole-sourcing.

Positive Signals

Award to a known contractor (Raytheon Company) suggests established capabilities and performance history.
Focus on sustainment and engineering indicates support for critical, long-term defense assets.
Contract duration suggests a stable, predictable support arrangement.

Sector Analysis

The defense sector, particularly the manufacturing of search, detection, navigation, guidance, aeronautical, and nautical systems, is characterized by high technological complexity and specialized expertise. Contracts in this area often involve significant research and development, as well as ongoing sustainment and upgrade services. Spending in this sub-sector is driven by national security requirements and technological advancements. Comparable spending benchmarks are difficult to establish precisely due to the unique nature of defense systems, but overall defense procurement represents a substantial portion of federal spending.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Furthermore, the 'ss' (small business subcontracting) is also false. This suggests that small businesses are unlikely to be directly involved as subcontractors on this specific award, potentially limiting opportunities for them within this particular contract's scope. The focus is likely on large prime contractors with specialized capabilities.

Oversight & Accountability

Oversight for this contract will primarily fall under the Department of the Navy's contracting and program management offices. Given the cost-plus-fixed-fee structure, rigorous financial and performance monitoring will be crucial to ensure adherence to the contract terms and prevent cost overruns. Transparency may be limited due to the sole-source nature of the award, but internal government audits and potentially Inspector General reviews would be applicable if performance or financial irregularities arise.

Related Government Programs

Naval Sea Systems Command (NAVSEA) Contracts
Defense Logistics Agency (DLA) Sustainment Services
Air Force Sustainment and Engineering Contracts
Army Aviation and Missile Command (AMCOM) Support Contracts

Risk Flags

Sole-source award
Cost-plus-fixed-fee contract type
Lack of small business subcontracting

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $10.0 million to RAYTHEON COMPANY. SUSTAINMENT AND 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 $10.0 million.

What is the period of performance?

Start: 2025-02-20. End: 2027-02-27.

What is Raytheon Company's track record with the Department of the Navy for similar sustainment and engineering services?

Raytheon Company has a long-standing relationship with the Department of the Navy, frequently securing contracts for a wide array of defense systems and services. Their track record typically includes providing complex engineering, sustainment, and upgrade solutions for naval platforms and systems. While specific performance metrics for this exact type of service are not detailed here, Raytheon is generally recognized as a major defense contractor with substantial experience in areas like radar, sonar, navigation, and guidance systems. Historical data from previous contracts would be needed to assess their performance consistency, on-time delivery rates, and cost control effectiveness for similar sole-source awards.

How does the $9.98 million value compare to similar sole-source sustainment contracts for defense systems?

The $9.98 million value for this sustainment and engineering services contract is moderate within the context of large defense procurements. However, comparing it directly to 'similar' sole-source contracts is challenging without more specific details on the systems being supported and the scope of work. Sole-source awards are inherently less transparent regarding pricing benchmarks. Generally, sole-source contracts can be more expensive than competed ones. To assess value, one would need to compare this contract's cost per unit of service or its total cost against the expected lifecycle cost of the supported systems, factoring in the contractor's unique capabilities and the absence of competition.

What are the primary risks associated with a sole-source, cost-plus-fixed-fee contract for defense sustainment?

The primary risks associated with this contract structure are twofold. Firstly, the sole-source nature eliminates competitive pressure, potentially leading to inflated pricing and reduced incentive for the contractor to optimize costs. The government relies heavily on the contractor's integrity and accurate cost reporting. Secondly, the cost-plus-fixed-fee (CPFF) structure, while providing flexibility, carries the risk of cost overruns if the contractor's actual costs exceed estimates. The fixed fee is predetermined, but the government bears the risk of increased direct and indirect costs. Robust government oversight, detailed cost accounting, and clear performance metrics are essential to mitigate these risks.

How effective is the Department of the Navy in overseeing cost-plus-fixed-fee contracts to ensure program effectiveness?

The effectiveness of the Department of the Navy in overseeing CPFF contracts can vary significantly depending on the specific program, the contracting team's expertise, and the resources allocated for oversight. Historically, the Navy has implemented various oversight mechanisms, including contract audit agencies, program management reviews, and performance metrics tracking. However, CPFF contracts inherently require diligent monitoring of contractor expenditures and progress to ensure that costs are reasonable and allocable to the contract. When oversight is strong, these contracts can be effective in acquiring complex services where cost estimation is difficult. Weak oversight can lead to cost growth and potential inefficiencies.

What are the historical spending patterns for sustainment and engineering services within the 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing'

Historical spending patterns within the 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' (NAICS 334511) sector by the Department of Defense, and specifically the Navy, are substantial and tend to be consistent due to the critical nature of these systems. This spending is driven by the need to maintain and upgrade advanced technological assets. Contracts often involve long-term sustainment, modernization, and integration services. While specific dollar amounts fluctuate annually based on defense priorities and budget allocations, this category consistently represents a significant investment area. Spending is often characterized by a mix of competed and sole-source awards, with sole-source contracts frequently used for highly specialized or proprietary systems.

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: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT

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: RTX Corp

Address: 2501 W UNIVERSITY DR, MCKINNEY, TX, 75071

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: $48,552,948

Exercised Options: $21,389,358

Current Obligation: $9,985,404

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0016425GJQ19

IDV Type: BOA

Timeline