Raytheon Company awarded $46.7M for MK-99 PBL, a sole-source contract with a 365-day duration

Contract Overview

Contract Amount: $46,711,717 ($46.7M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2019-11-28

End Date: 2020-11-27

Contract Duration: 365 days

Daily Burn Rate: $128.0K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: MK-99 PBL

Place of Performance

Location: MARLBOROUGH, MIDDLESEX County, MASSACHUSETTS, 01752

State: Massachusetts Government Spending

Plain-Language Summary

Department of Defense obligated $46.7 million to RAYTHEON COMPANY for work described as: MK-99 PBL Key points: 1. Contract awarded to a single vendor, raising questions about price competitiveness. 2. Fixed-price contract type suggests cost certainty for the government. 3. Performance period of one year limits long-term risk exposure. 4. Contract falls under shipbuilding and repair, a critical defense sector. 5. No small business set-aside noted, potentially limiting broader participation. 6. The contract's value is moderate within the context of defense procurement.

Value Assessment

Rating: fair

The contract value of $46.7 million for the MK-99 PBL is difficult to benchmark without specific details on the 'Product Based Logistics' provided. As a sole-source award, direct comparison to similar contracts is limited. The firm fixed-price structure provides some cost control, but the absence of competition means the government may not have secured the lowest possible price. Further analysis would require understanding the scope of PBL and market rates for comparable services.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, Raytheon Company, was solicited. This approach bypasses the competitive bidding process, which typically leads to better price discovery and potentially lower costs for the government. The rationale for a sole-source award would need to be justified by factors such as unique capabilities, proprietary technology, or urgent need.

Taxpayer Impact: Sole-source awards can result in higher costs for taxpayers as the benefits of competition, such as lower prices and innovative solutions, are forgone.

Public Impact

The primary beneficiary is the Department of the Navy, receiving critical support for its shipbuilding and repair operations. Services delivered likely involve maintenance, repair, and logistics support for the MK-99 system. Geographic impact is centered around naval operations, potentially worldwide. Workforce implications include specialized technical roles within Raytheon and potentially at naval facilities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated pricing.
Sole-source nature limits opportunities for new market entrants.
Dependence on a single contractor can create supply chain risks.

Positive Signals

Firm fixed-price contract provides budget certainty.
Defined performance period limits long-term commitment.
Award to an established contractor may indicate reliability.

Sector Analysis

The shipbuilding and repair sector is a vital component of the defense industrial base, characterized by high technical complexity and significant government investment. Contracts in this area often involve long lead times and specialized expertise. Raytheon Company is a major defense contractor with extensive experience in this domain. Benchmarking this contract's value would require comparison to other logistics support contracts for similar defense systems, which are often awarded through competitive processes.

Small Business Impact

This contract does not appear to have a small business set-aside. As a sole-source award to a large prime contractor, there are no immediate indications of subcontracting opportunities for small businesses directly mandated by this specific award. The overall impact on the small business ecosystem would depend on Raytheon's broader subcontracting practices.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. Accountability measures are inherent in the firm fixed-price contract type, requiring delivery of specified goods or services. Transparency is limited due to the sole-source nature, but contract award data is publicly available. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Naval Ship Systems
Defense Logistics Support
Weapon Systems Maintenance
Product Based Logistics Contracts

Risk Flags

Sole-source award
Lack of competition

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $46.7 million to RAYTHEON COMPANY. MK-99 PBL

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 $46.7 million.

What is the period of performance?

Start: 2019-11-28. End: 2020-11-27.

What specific services or products does 'MK-99 PBL' entail, and how does its scope compare to similar logistics support contracts?

The provided data identifies 'MK-99 PBL' as 'Product Based Logistics' awarded to Raytheon Company by the Department of the Navy. PBL typically refers to a contracting strategy where the government purchases outcomes or performance rather than specific parts or services. This could encompass a range of activities such as maintenance, repair, overhaul, spare parts management, and technical support for the MK-99 system, likely a component of naval weaponry or equipment. Without further details on the specific system and the defined performance metrics, a direct comparison to similar contracts is challenging. However, PBL contracts are generally aimed at improving system readiness and reducing total ownership costs by incentivizing the contractor to manage the entire support chain effectively. The $46.7 million value for a one-year duration suggests a significant scope of support, but its relative cost-effectiveness hinges on the achieved performance outcomes and the absence of competitive pricing.

What is Raytheon Company's track record with sole-source contracts, particularly within the Department of Defense?

Raytheon Company, now part of RTX Corporation, has a long history of contracting with the Department of Defense, and like many large defense contractors, has been awarded numerous sole-source contracts. These awards are often justified by the proprietary nature of the technology, the need for specialized expertise, or the lack of alternative qualified sources. Publicly available contract databases show a consistent pattern of sole-source awards to Raytheon for various defense systems and components. While sole-source awards can raise concerns about price competition, they are a recognized contracting mechanism when competition is not feasible or practical. Raytheon's extensive experience and established relationships within the DoD often position it as a primary or sole provider for certain critical defense capabilities, leading to sole-source justifications.

How does the firm fixed-price (FFP) contract type mitigate risks for the government in this sole-source scenario?

The firm fixed-price (FFP) contract type is generally considered advantageous for the government as it shifts the risk of cost overruns to the contractor, Raytheon Company. Under an FFP agreement, the total price is fixed and not subject to adjustment based on the contractor's actual costs. This provides the government with significant budget certainty for the $46.7 million award. In a sole-source situation, where competitive pressure on price is absent, the FFP structure is particularly important for controlling costs. It incentivizes the contractor to manage its resources efficiently to maximize profit, as any savings achieved below the fixed price benefit the contractor. However, it's crucial that the initial fixed price is set at a fair and reasonable level, which can be challenging without competitive benchmarking.

What are the potential implications of awarding a $46.7M contract without competition for the shipbuilding and repair sector?

Awarding a $46.7 million contract for shipbuilding and repair services on a sole-source basis can have several implications for the sector. Firstly, it bypasses the opportunity for other capable companies, including small businesses, to compete for this work, potentially limiting market access and innovation. Secondly, without competitive pressure, the government may pay a higher price than if multiple bids were considered. This can impact the overall efficiency of defense spending. Thirdly, it reinforces the market position of the incumbent contractor, Raytheon Company, potentially creating barriers to entry for new competitors in the long run. While sole-source awards are sometimes necessary due to unique requirements, a pattern of such awards can stifle competition and reduce the dynamism within the defense industrial base.

Can historical spending data for 'MK-99 PBL' or similar systems indicate a trend towards sole-source awards or price escalation?

Analyzing historical spending data for 'MK-99 PBL' or comparable systems is crucial for understanding trends. If previous awards for this or similar systems were also sole-source, it might indicate a persistent lack of competition or a reliance on a specific contractor's unique capabilities. Examining the price trends of these historical contracts, even if sole-source, could reveal whether costs have escalated over time. A consistent increase in price for similar scopes of work, especially without clear justification through enhanced capabilities or inflation, could signal potential inefficiencies or a lack of cost control. Conversely, stable or decreasing costs might suggest effective management despite the absence of competition. Without access to detailed historical contract data for the MK-99 system, it is difficult to definitively establish such trends.

Industry Classification

NAICS: Manufacturing › Ship and Boat Building › Ship Building and Repairing

Product/Service Code: AEROSPACE CRAFT COMPONENTS AND ACCESSORIES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: RTX Corp (UEI: 001344142)

Address: 1001 BOSTON POST RD E, MARLBOROUGH, MA, 01752

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: $46,711,717

Exercised Options: $46,711,717

Current Obligation: $46,711,717

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: N0038320DW801

IDV Type: IDC

Timeline