DoD's $27M PMO and Engineering Support Contract Awarded to Raytheon Company

Contract Overview

Contract Amount: $27,000,944 ($27.0M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2021-08-30

End Date: 2026-08-31

Contract Duration: 1,827 days

Daily Burn Rate: $14.8K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: PMO AND ENGINEERING TOP LEVEL SUPPORT

Place of Performance

Location: MARLBOROUGH, MIDDLESEX County, MASSACHUSETTS, 01752

State: Massachusetts Government Spending

Plain-Language Summary

Department of Defense obligated $27.0 million to RAYTHEON COMPANY for work described as: PMO AND ENGINEERING TOP LEVEL SUPPORT Key points: 1. Contract provides essential program management and engineering services for critical defense initiatives. 2. Awarded on a cost-plus-fixed-fee basis, indicating potential for cost overruns if not closely managed. 3. Long performance period (over 5 years) suggests a sustained need for these specialized services. 4. Sole-source award raises questions about competition and potential for better pricing. 5. Contractor's extensive experience in defense contracting positions them well for this role. 6. Focus on PMO and engineering support highlights the complexity and technical demands of the program.

Value Assessment

Rating: fair

The contract's cost-plus-fixed-fee structure necessitates rigorous oversight to ensure value for money. Without a competitive bidding process, it's challenging to benchmark pricing against market rates. The fixed fee component provides some cost control, but the variable cost component requires careful monitoring. Comparing this to similar large-scale engineering support contracts within the DoD would be crucial for a comprehensive value assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning there was no open competition. This approach is typically used when a specific contractor possesses unique capabilities or when urgency precludes a full and open competition. The lack of multiple bidders limits price discovery and may result in higher costs for the government compared to a competitive procurement.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive pressure to drive down costs. The government must rely on robust negotiation and oversight to ensure a fair price.

Public Impact

Benefits the Department of Defense by ensuring continuity and expertise in program management and engineering. Delivers critical support services that underpin the successful execution of defense acquisition programs. Geographic impact is primarily within the Department of Defense's operational and administrative structures. Workforce implications include the potential for highly skilled engineering and project management roles, likely concentrated within Raytheon's existing workforce.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and taxpayer value.
Cost-plus-fixed-fee structure requires diligent oversight to control costs.
Long contract duration increases exposure to potential cost escalations over time.

Positive Signals

Award to Raytheon Company, a well-established defense contractor with significant expertise.
Contract addresses critical PMO and engineering needs, indicating strategic importance.
Clear performance period and delivery order structure provide some predictability.

Sector Analysis

This contract falls within the broader aerospace and defense sector, specifically supporting government program management and engineering functions. The market for such specialized services is dominated by large, established defense contractors. Spending in this area is driven by the government's need for technical expertise to manage complex weapon systems and defense initiatives. Benchmarking would involve comparing the fee structure and total contract value to similar support services procured by the DoD and other federal agencies.

Small Business Impact

This contract does not appear to have a small business set-aside component, nor is there explicit information regarding subcontracting plans for small businesses. The award to a large prime contractor like Raytheon suggests that the primary focus is on direct service delivery rather than fostering small business participation through this specific vehicle. Further analysis of subcontracting reports would be needed to determine any indirect impact on the small business ecosystem.

Oversight & Accountability

Oversight will likely be managed by the contracting officer and program management office within the Department of the Navy. Accountability measures are tied to the cost-plus-fixed-fee structure, requiring detailed reporting and justification of costs. Transparency may be limited due to the sole-source nature of the award, but contract performance metrics should be available through standard government reporting channels. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected.

Related Government Programs

Defense PMO Support Services
Engineering and Technical Services Contracts
Department of Defense Acquisition Support
Raytheon Company Contracts
Cost-Plus-Fixed-Fee Contracts

Risk Flags

Sole-source award may limit competition and increase costs.
Cost-plus-fixed-fee structure requires diligent cost oversight.
Long performance period increases exposure to potential cost escalation.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $27.0 million to RAYTHEON COMPANY. PMO AND ENGINEERING TOP LEVEL 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 $27.0 million.

What is the period of performance?

Start: 2021-08-30. End: 2026-08-31.

What is Raytheon Company's track record with similar sole-source, cost-plus-fixed-fee contracts within the Department of Defense?

Raytheon Company, now part of RTX, has a long history of performing complex defense contracts, including those awarded on a sole-source basis and utilizing cost-plus-fixed-fee (CPFF) structures. CPFF contracts are common for research, development, and complex system integration where costs are difficult to predict precisely. Raytheon's extensive experience means they are accustomed to the reporting and oversight requirements associated with such contracts. However, the government's success with these contracts hinges on robust negotiation of the fixed fee and stringent oversight of the cost elements to ensure fair pricing and prevent cost overruns. Historical data on Raytheon's performance in similar CPFF contracts would reveal their ability to manage costs effectively and deliver within the defined scope, providing a basis for assessing the value proposition of this specific award.

How does the estimated total value of $27 million compare to similar PMO and engineering support contracts awarded by the Department of the Navy?

The $27 million total value for PMO and engineering top-level support over approximately five years (August 2021 - August 2026) represents a moderate investment for the Department of the Navy. Benchmarking this against similar contracts requires access to detailed contract databases and analysis of scope, duration, and complexity. Contracts for program management and engineering support can range from a few million to hundreds of millions of dollars, depending on the program's scale and criticality. Given this contract's sole-source nature and CPFF structure, a direct comparison of total value might be less informative than analyzing the proposed fee structure and the contractor's historical performance on comparable tasks. Without specific details on the services rendered and the associated labor mix, a precise value comparison is difficult, but $27M over 5 years suggests a focused, albeit important, support role.

What are the primary risks associated with a sole-source, cost-plus-fixed-fee contract for critical engineering support?

The primary risks associated with this contract type are twofold. Firstly, the sole-source nature eliminates competitive pressure, potentially leading to inflated costs and reduced incentive for the contractor to innovate or optimize performance beyond the minimum requirements. The government relies heavily on its negotiation and oversight capabilities to secure fair pricing. Secondly, the cost-plus-fixed-fee (CPFF) structure, while allowing flexibility for unpredictable costs, carries the risk of cost overruns. The 'cost-plus' element means the government reimburses the contractor for allowable costs, and the 'fixed-fee' is the contractor's profit. If cost controls are weak or scope creep occurs without proper modification, the total expenditure can significantly exceed initial estimates. Effective risk mitigation requires strong contract administration, detailed cost tracking, and clear performance metrics.

What is the expected impact of this contract on the effectiveness of the specific defense programs it supports?

This contract is intended to enhance the effectiveness of defense programs by providing essential Program Management Office (PMO) and engineering expertise. Effective PMO support ensures that programs are managed efficiently, adhere to schedules and budgets, and meet technical requirements. Strong engineering input is crucial for system design, development, integration, and sustainment. By securing these services, the Department of the Navy aims to ensure the successful execution and delivery of critical defense capabilities. The effectiveness of this contract is directly tied to the quality of the services provided by Raytheon and the government's ability to leverage that expertise to overcome technical challenges and achieve program milestones. A well-executed contract should lead to improved program outcomes and enhanced operational readiness.

How has historical spending on PMO and engineering support by the Department of the Navy trended, and how does this contract fit within that pattern?

Historical spending by the Department of the Navy (DoN) on Program Management Office (PMO) and engineering support services has generally been substantial, reflecting the complexity and scale of naval acquisition programs. The DoN consistently invests in specialized expertise to manage its diverse fleet of ships, aircraft, and weapon systems. Spending patterns often fluctuate based on major acquisition cycles, modernization efforts, and specific technological advancements. This $27 million contract, awarded on a sole-source basis, represents a specific, ongoing need for these critical services. While it may not be indicative of a broad spending trend, it highlights the DoN's continued reliance on external contractors for specialized technical and managerial support, particularly when unique capabilities or sustained effort are required. Analyzing broader spending trends would involve examining aggregate data across multiple contracts and fiscal years.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Other Aircraft Parts and Auxiliary Equipment Manufacturing

Product/Service Code: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Rockwell Collins Australia PTY Limited

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: $30,489,823

Exercised Options: $30,489,823

Current Obligation: $27,000,944

Subaward Activity

Number of Subawards: 15

Total Subaward Amount: $1,799,547

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0001920G0007

IDV Type: BOA

Timeline