Raytheon Company awarded $40.8M for MK-99 PBL (POP 4) by the Department of the Navy

Contract Overview

Contract Amount: $40,788,619 ($40.8M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2022-11-28

End Date: 2023-11-27

Contract Duration: 364 days

Daily Burn Rate: $112.1K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: MK-99 PBL (POP 4)

Place of Performance

Location: MARLBOROUGH, MIDDLESEX County, MASSACHUSETTS, 01752

State: Massachusetts Government Spending

Plain-Language Summary

Department of Defense obligated $40.8 million to RAYTHEON COMPANY for work described as: MK-99 PBL (POP 4) Key points: 1. Contract awarded as a sole-source delivery order, raising questions about potential price efficiencies. 2. The contract is a firm-fixed-price type, which shifts cost risk to the contractor. 3. Performance period is 364 days, indicating a short-term need or a single phase of a larger effort. 4. The North American Industry Classification System (NAICS) code 336611 suggests a focus on shipbuilding and repairing. 5. This award represents a portion of a larger program, indicated by 'POP 4'. 6. The contract was not competed, suggesting a lack of market research or a specific justification for sole-sourcing.

Value Assessment

Rating: questionable

Without a competitive process, it is difficult to benchmark the value for money on this $40.8 million award. The firm-fixed-price contract type is generally favorable for the government in managing cost overruns. However, the lack of competition means there's no direct comparison to assess if Raytheon Company's pricing is aligned with market rates or if alternative solutions could have been procured at a lower cost. Further analysis would require understanding the specific deliverables and historical pricing for this 'MK-99 PBL (POP 4)'.

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 limits the opportunity for price discovery through market competition. While sole-sourcing can be justified in certain circumstances, such as when only one vendor possesses the necessary capabilities or intellectual property, it typically leads to higher prices compared to a fully competed contract. The absence of bidders means taxpayers did not benefit from potential cost savings that could arise from a competitive bidding process.

Taxpayer Impact: The sole-source nature of this award means taxpayers may have paid a premium. Without competition, there is less pressure on the contractor to offer the most cost-effective solution.

Public Impact

The Department of the Navy is the primary beneficiary, receiving goods or services related to shipbuilding and repairing. This contract likely supports naval readiness and operational capabilities. The geographic impact is centered around the contractor's operations in Massachusetts, where the award was made. Workforce implications may include employment opportunities within Raytheon Company and its supply chain in Massachusetts.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated pricing.
Sole-source awards can reduce transparency in government spending.
Dependence on a single contractor can create long-term risks.
The specific nature of 'MK-99 PBL (POP 4)' is not detailed, hindering full value assessment.

Positive Signals

Firm-fixed-price contract shifts cost risk to the contractor.
Award is to a known entity, Raytheon Company, suggesting established capabilities.
The contract is for a defined period, limiting long-term commitment.
Awarded by the Department of the Navy, indicating alignment with defense needs.

Sector Analysis

The shipbuilding and repairing sector (NAICS 336611) is a critical component of national defense and maritime infrastructure. This contract, valued at approximately $40.8 million, falls within this specialized industry. The market for naval shipbuilding and repair is often characterized by high barriers to entry due to technical expertise, capital investment, and security clearances required. Large defense contractors like Raytheon Company are significant players in this sector. Benchmarking this contract's value is challenging without competitive data, but it represents a substantial investment in maintaining and potentially upgrading naval assets.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Furthermore, the awardee, Raytheon Company, is a large defense contractor, suggesting that subcontracting opportunities for small businesses may be limited or dependent on Raytheon's internal subcontracting plans. The absence of a specific small business set-aside means that the direct economic benefit to the small business ecosystem from this particular award is likely minimal, though indirect benefits through supply chains are possible.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. As a sole-source award, it may receive heightened scrutiny from oversight bodies like the Government Accountability Office (GAO) or the Department of Defense's Inspector General, particularly if concerns about pricing or justification arise. Transparency is limited by the lack of a competitive bidding process, but contract award details are publicly available. Accountability rests with the Navy to ensure the contractor meets the terms of the firm-fixed-price agreement.

Related Government Programs

Naval Shipbuilding Programs
Defense Logistics Agency Contracts
Ship Repair and Maintenance Services
Raytheon Company Defense Contracts

Risk Flags

Sole-source award lacks competitive justification.
Potential for unbenchmarked pricing due to lack of competition.
Limited public information on the specific nature of 'MK-99 PBL (POP 4)'.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $40.8 million to RAYTHEON COMPANY. MK-99 PBL (POP 4)

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 $40.8 million.

What is the period of performance?

Start: 2022-11-28. End: 2023-11-27.

What is the specific nature of the 'MK-99 PBL (POP 4)' and its importance to the Department of the Navy?

The provided data abbreviates the contract as 'MK-99 PBL (POP 4)'. 'PBL' often stands for 'Performance-Based Logistics', a strategy focused on achieving weapon system readiness outcomes. 'POP 4' likely indicates the fourth Performance Period of a larger contract. Without more specific details, it's challenging to ascertain the exact nature of the goods or services. However, given the NAICS code 336611 (Ship Building and Repairing) and the awardee (Raytheon Company), it is highly probable that this contract relates to the sustainment, maintenance, repair, or upgrade of a specific naval platform or system, potentially involving complex electronic or combat systems integrated into ships. The importance to the Department of the Navy would stem from ensuring the operational readiness and effectiveness of its fleet.

How does the sole-source nature of this award impact potential cost savings for taxpayers?

Sole-source awards inherently limit cost savings for taxpayers because they bypass the competitive bidding process. When multiple companies compete for a contract, they are incentivized to offer their best prices to win the award. This competition drives down costs and ensures the government receives value for its money. In a sole-source scenario, the government negotiates directly with a single provider. While a firm-fixed-price contract type helps mitigate cost overrun risks, the initial price offered by the sole source may not be as competitive as it would be in a multi-bidder environment. Therefore, taxpayers may end up paying a premium compared to what could have been achieved through open competition.

What are the potential risks associated with a firm-fixed-price contract for shipbuilding and repair services?

A firm-fixed-price (FFP) contract shifts the majority of cost risk to the contractor, which is generally favorable for the government. However, in complex sectors like shipbuilding and repair, there can still be risks. If the scope of work is not precisely defined or if unforeseen technical challenges arise during the performance period, the contractor might incur higher costs than anticipated. While they are obligated to deliver at the fixed price, this could lead to quality compromises if the contractor seeks to reduce their own expenses. Additionally, if the initial fixed price was set too high due to a lack of competitive benchmarking (as in this sole-source case), the government might overpay for the services rendered, even if the contractor meets the contract terms.

What is Raytheon Company's track record with the Department of the Navy, particularly in shipbuilding and repair?

Raytheon Company is a major defense contractor with a long-standing relationship with the Department of the Navy, involved in a wide array of programs. While Raytheon is more broadly known for its advanced defense electronics, sensors, and weapons systems, its subsidiaries and divisions may also be involved in shipbuilding and repair services or the integration of its systems into naval platforms. Given the 'MK-99 PBL (POP 4)' designation and the NAICS code, it's plausible that Raytheon is providing specialized support, maintenance, or upgrades for systems it manufactured or integrated onto naval vessels. Their extensive history with the Navy suggests a deep understanding of naval requirements and operational environments.

How does this contract compare to other spending within the shipbuilding and repairing sector by the Department of the Navy?

The $40.8 million award for 'MK-99 PBL (POP 4)' represents a moderate-sized contract within the broader context of naval shipbuilding and repair. The Department of the Navy's annual spending on shipbuilding and repair can run into billions of dollars, encompassing the construction of new vessels, major overhauls, and ongoing maintenance. This specific contract, being a delivery order for a defined period, likely addresses a particular sustainment need rather than a new construction project. Compared to the cost of building a new aircraft carrier or a fleet of submarines, this contract is relatively small. However, for specialized systems support or a specific class of ships, it could be a significant allocation of resources.

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: Rockwell Collins Australia PTY Limited

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: $40,788,619

Exercised Options: $40,788,619

Current Obligation: $40,788,619

Subaward Activity

Number of Subawards: 34

Total Subaward Amount: $5,305,509

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: N0038320DW801

IDV Type: IDC

Timeline