Raytheon Company awarded $36.6M for MK-99 PBL Support, a sole-source contract for shipbuilding and repair

Contract Overview

Contract Amount: $36,613,088 ($36.6M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2023-11-28

End Date: 2024-11-27

Contract Duration: 365 days

Daily Burn Rate: $100.3K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: MK-99 PBL SUPPORT

Place of Performance

Location: MARLBOROUGH, MIDDLESEX County, MASSACHUSETTS, 01752

State: Massachusetts Government Spending

Plain-Language Summary

Department of Defense obligated $36.6 million to RAYTHEON COMPANY for work described as: MK-99 PBL SUPPORT Key points: 1. Contract focuses on Product Based Logistics (PBL) support, indicating a long-term strategy for sustainment. 2. The award is a delivery order against an existing contract, suggesting a continuation of established services. 3. Fixed-price contract type aims to control costs and provide predictability for the government. 4. The specific Product Service Code (PSC) is not detailed, making direct cost comparisons challenging. 5. Geographic location of the contractor is Massachusetts, potentially impacting local economic contributions. 6. The contract duration is one year, allowing for annual performance review and potential adjustments.

Value Assessment

Rating: fair

The contract value of $36.6 million for a one-year Product Based Logistics (PBL) support for the MK-99 system is substantial. Without specific details on the scope of PBL, it's difficult to benchmark against similar contracts. However, given it's a sole-source award, there's a potential risk of inflated pricing. The firm fixed-price structure offers some cost control, but the absence of competitive bidding limits the ability to assess true value for money.

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. This typically occurs when a specific contractor possesses unique capabilities, proprietary technology, or is the only source capable of meeting the requirement. The lack of competition means there was no opportunity for other vendors to bid, potentially leading to higher prices than if the contract had been open to a bidding process.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive pressure. Without a bidding process, the government cannot be assured it is receiving the best possible price for the services rendered.

Public Impact

The Department of the Navy benefits from continued support for the MK-99 system, crucial for its shipbuilding and repair operations. This contract ensures the availability and maintenance of critical systems, supporting naval readiness. The primary beneficiaries are the naval operations that rely on the MK-99 system for their functions. The contract supports jobs within Raytheon Company, likely in engineering, logistics, and technical support roles.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price discovery and potentially increases costs for taxpayers.
Lack of detailed scope of work for PBL makes it difficult to assess performance metrics and value.
Contract type is firm fixed price, which can lead to contractor cost-cutting that might impact quality if not closely monitored.

Positive Signals

Firm fixed-price contract provides cost certainty for the government.
Product Based Logistics (PBL) approach suggests a focus on long-term sustainment and performance outcomes.
Award is a delivery order against an existing contract, indicating a stable and ongoing relationship with a known provider.

Sector Analysis

The shipbuilding and repair sector is a critical component of national defense, involving complex systems and extensive maintenance. Product Based Logistics (PBL) is a common strategy in this sector to ensure long-term system availability and performance, often involving performance-based metrics. While the specific value of this contract is $36.6 million, the broader defense shipbuilding and repair market encompasses billions of dollars annually. This contract fits within the sustainment and logistics sub-sector of defense industrial base.

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, Raytheon Company, there is no direct indication of subcontracting opportunities for small businesses within this specific award. The overall impact on the small business ecosystem would depend on Raytheon's established subcontracting practices for this program, which are not detailed here.

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 against an existing contract, the terms and conditions are likely well-established. Transparency is limited due to the sole-source nature. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse, but specific oversight mechanisms for performance and value are not detailed in the provided data.

Related Government Programs

Naval Ship Systems
Defense Logistics Support
Product Based Logistics Contracts
Shipbuilding and Repair Services

Risk Flags

Sole-source award may lead to higher costs.
Lack of detailed scope limits performance assessment.
Potential for cost-plus elements within PBL if not strictly managed.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $36.6 million to RAYTHEON COMPANY. MK-99 PBL SUPPORT

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 $36.6 million.

What is the period of performance?

Start: 2023-11-28. End: 2024-11-27.

What is the specific nature of the MK-99 system and its role in naval operations?

The MK-99 system is a crucial component within the U.S. Navy's fleet, primarily associated with fire control systems for guided missile launching. It plays a vital role in the operational readiness and defensive capabilities of various naval vessels. The 'PBL Support' indicates that Raytheon Company is responsible for ensuring the system's availability, performance, and lifecycle sustainment, rather than just providing discrete parts or repair services. This often involves managing inventory, providing technical expertise, and ensuring the system meets predefined performance metrics over its operational life, contributing directly to the Navy's ability to conduct its missions effectively.

How does the firm fixed-price contract type mitigate risks for the government in a sole-source scenario?

In a sole-source scenario, the firm fixed-price (FFP) contract type offers a degree of cost certainty for the government by establishing a ceiling price that the contractor cannot exceed. This shifts the risk of cost overruns to the contractor. While it helps prevent unexpected increases in the contract's total value, it does not inherently guarantee the best possible price, as there was no competitive bidding to establish a market-based rate. The government still bears the risk of paying a potentially higher price than if the contract were competed, but the FFP structure provides predictability in budgeting and financial planning for the defined scope of work.

What are the potential implications of Product Based Logistics (PBL) for long-term system sustainment and cost?

Product Based Logistics (PBL) aims to improve system readiness and reduce total ownership costs by focusing on the performance and availability of the end product rather than individual parts or services. For the MK-99 system, this means Raytheon is incentivized to ensure the system is operational when needed. This approach can lead to better long-term cost management through optimized maintenance, reduced obsolescence, and improved supply chain efficiency. However, the success of PBL hinges on well-defined performance metrics and effective government oversight to ensure the contractor is meeting its obligations and that the pricing structure truly reflects value for money over the system's lifecycle.

Given the sole-source nature, what mechanisms can the Navy employ to ensure fair pricing and contractor performance?

Even in sole-source awards, the Navy can employ several mechanisms to ensure fair pricing and contractor performance. This includes conducting thorough should-cost analyses and price negotiations, leveraging historical pricing data from similar systems or previous contracts, and potentially using should-cost models to estimate a fair and reasonable price. For performance, the Navy must establish clear, measurable performance metrics (Key Performance Parameters - KPPs) tied to the PBL objectives. Robust contract surveillance, regular performance reviews, and the potential for incentive fees or penalties based on performance outcomes are crucial for holding the contractor accountable and ensuring value for taxpayer dollars.

What is the typical duration and value range for similar Product Based Logistics (PBL) support contracts in the defense sector?

Product Based Logistics (PBL) contracts in the defense sector can vary significantly in duration and value, often spanning multiple years to align with the lifecycle of the supported systems. Annual values can range from a few million dollars for less complex systems to tens or even hundreds of millions for major platforms or critical components. Multi-year PBL agreements, including options, can easily reach hundreds of millions or even billions of dollars over a decade or more. The $36.6 million for a one-year award for the MK-99 system appears to be a component of a larger sustainment strategy, possibly representing an annual funding increment or a specific phase of support within a broader, longer-term PBL arrangement.

How does the geographic location (Massachusetts) of the contractor potentially influence contract execution and oversight?

The contractor, Raytheon Company, being located in Massachusetts, means that a significant portion of the contract's value will likely be spent within that state, contributing to the local economy through employment and business activity. For contract execution and oversight, proximity can be an advantage, potentially allowing for easier site visits, inspections, and face-to-face meetings between government representatives and contractor personnel. However, with modern communication technologies, geographic distance is less of a barrier than it once was. The primary impact is economic, with potential benefits for the regional workforce and supply chain within Massachusetts.

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: $36,613,088

Exercised Options: $36,613,088

Current Obligation: $36,613,088

Subaward Activity

Number of Subawards: 11

Total Subaward Amount: $1,693,359

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