Raytheon Company awarded $15.6M for core system and engineering support by the Department of Defense

Contract Overview

Contract Amount: $15,658,792 ($15.7M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2021-02-05

End Date: 2024-10-05

Contract Duration: 1,338 days

Daily Burn Rate: $11.7K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: CORE SYSTEM & ENGINEERING SUP.

Place of Performance

Location: POULSBO, KITSAP County, WASHINGTON, 98370

State: Washington Government Spending

Plain-Language Summary

Department of Defense obligated $15.7 million to RAYTHEON COMPANY for work described as: CORE SYSTEM & ENGINEERING SUP. 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 discovery and value for money. 3. A long performance period of 1338 days suggests a need for sustained support, but also limits flexibility. 4. The North American Industry Classification System (NAICS) code 334511 indicates a focus on specialized system manufacturing. 5. The contract is managed by the Defense Contract Management Agency, suggesting a focus on defense-related systems. 6. The contract is not a small business set-aside, indicating it was likely awarded to a large prime contractor.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging without more specific details on the services rendered. However, the 'cost-plus-fixed-fee' pricing structure, combined with a lack of competition, raises concerns about whether the government is achieving optimal value. The total award amount of $15.6 million over approximately 3.6 years suggests a significant investment, and the absence of competitive bids means there's no market-driven validation of the pricing.

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 is typically used when only one vendor possesses the necessary capabilities, technology, or security clearances. The lack of competition limits the government's ability to leverage market forces to secure the best possible price and terms, potentially leading to higher costs for taxpayers.

Taxpayer Impact: Sole-source awards mean taxpayers may not benefit from the cost savings that typically arise from a competitive bidding process.

Public Impact

The Department of Defense is the primary beneficiary, receiving essential engineering and system support. This contract supports the development, maintenance, or enhancement of critical defense systems. The geographic impact is likely concentrated around the contractor's facilities and relevant military installations. The contract supports a specialized workforce within the defense industry, likely involving engineers and technical experts.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to higher costs for taxpayers.
Cost-plus-fixed-fee contracts can incentivize cost overruns if not rigorously monitored.
Long contract duration without competition reduces flexibility to adapt to changing needs or technologies.

Positive Signals

Awarded to a major defense contractor (Raytheon Company) with established expertise.
Contract duration suggests a stable, long-term need for these services.
Managed by the Defense Contract Management Agency, indicating oversight within a specialized defense procurement framework.

Sector Analysis

This contract falls within the defense sector, specifically focusing on system and instrument manufacturing and related engineering support. The market for such specialized defense systems is characterized by high barriers to entry, significant R&D investment, and close relationships with government agencies. Comparable spending benchmarks would typically involve other large-scale engineering and system integration contracts within the Department of Defense, often in the tens to hundreds of millions of dollars.

Small Business Impact

The contract was not set aside for small businesses and was awarded to Raytheon Company, a large prime contractor. This suggests that the scope of work likely requires the resources and capabilities of a major defense firm. There is no explicit information on subcontracting plans for small businesses, but large prime contractors often engage small businesses for specific components or services, though the extent of this is not detailed here.

Oversight & Accountability

Oversight is provided by the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor performance and compliance with contract terms. The 'cost-plus-fixed-fee' structure necessitates close financial oversight to manage allowable costs and the fixed fee. Transparency is generally maintained through contract reporting mechanisms, but specific details on ongoing performance reviews or Inspector General involvement are not provided in this summary.

Related Government Programs

Defense System Modernization Programs
Naval Systems Engineering Support
Aerospace and Defense Manufacturing
Guidance and Navigation System Development

Risk Flags

Sole-source award
Cost-plus-fixed-fee pricing
Long contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $15.7 million to RAYTHEON COMPANY. CORE SYSTEM & ENGINEERING SUP.

Who is the contractor on this award?

The obligated recipient is RAYTHEON COMPANY.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $15.7 million.

What is the period of performance?

Start: 2021-02-05. End: 2024-10-05.

What specific core systems and engineering support are being provided under this contract?

The provided data indicates the contract is for 'CORE SYSTEM & ENGINEERING SUP.' under NAICS code 334511, which covers 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing.' While specific system names are not detailed, this suggests the work likely involves the design, development, integration, testing, and sustainment of complex defense hardware and software systems. This could range from radar and sonar systems to navigation equipment and guidance systems for aircraft, missiles, or vessels. The 'engineering support' aspect implies technical expertise, analysis, and problem-solving related to these systems throughout their lifecycle.

How does the $15.6 million award compare to similar contracts for core system and engineering support within the DoD?

Comparing this $15.6 million award requires context on the specific systems and duration. For large-scale, long-term core system development and engineering support, this amount might represent a specific phase or a component of a larger program. However, without knowing the exact nature of the 'core system,' it's difficult to benchmark precisely. Contracts for major defense system development can range from tens of millions to billions of dollars. This particular award, spanning over three years, suggests a significant but potentially focused scope of work, possibly for a specialized subsystem or a specific engineering support function rather than an entire platform's development.

What are the primary risks associated with a sole-source, cost-plus-fixed-fee contract of this duration?

The primary risks associated with this contract structure are multifaceted. Firstly, the sole-source nature eliminates competitive pressure, potentially leading to inflated costs and reduced incentive for the contractor to innovate or optimize performance efficiently. Secondly, the cost-plus-fixed-fee (CPFF) structure, while providing flexibility, can incentivize cost growth, as the contractor is reimbursed for allowable costs plus a predetermined fixed fee. If cost controls are weak, the total cost can escalate significantly beyond initial projections. The long duration (1338 days) exacerbates these risks by extending the period during which cost overruns can occur and limiting the government's ability to pivot to newer technologies or different solutions if needs change.

What is Raytheon Company's track record with the Department of Defense for similar services?

Raytheon Company (now RTX) is a major defense contractor with an extensive history of providing a wide array of systems and services to the Department of Defense. They are known for expertise in areas such as radar, missiles, command and control systems, and intelligence, surveillance, and reconnaissance (ISR). Their track record includes numerous large-scale development, production, and sustainment contracts across all branches of the military. While specific performance metrics for this particular contract are not detailed, Raytheon's general standing suggests a capacity to handle complex defense engineering requirements, though like any large contractor, they have experienced both successes and challenges in past programs.

What are the implications of the 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' classification for this contract?

This classification (NAICS 334511) signifies that the contract is directly related to the manufacturing and development of sophisticated systems used for sensing, locating, and directing assets in air, sea, or space. This includes technologies like radar, sonar, GPS, inertial navigation systems, and related control instruments. For this contract, it implies that the work performed by Raytheon is likely focused on the hardware and software components of these critical defense systems, potentially involving advanced sensor technology, signal processing, and integration into larger platforms. This sector demands high levels of technical expertise, stringent quality control, and adherence to defense specifications.

How does the contract's performance period (1338 days) influence its overall value and risk profile?

A performance period of 1338 days, approximately 3.6 years, indicates a substantial and ongoing requirement for the services or systems being procured. From a value perspective, a longer duration can sometimes lead to economies of scale or more stable program execution if managed well. However, it also increases the risk exposure. For a sole-source, cost-plus-fixed-fee contract, a long duration amplifies the potential for cost growth over time and reduces the government's agility to adapt to technological advancements or shifting strategic priorities. It necessitates robust long-term oversight and contract management to ensure continued value and alignment with evolving defense needs.

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: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Rockwell Collins Australia PTY Limited

Address: 610 DOWELL ST BLDG 894, KEYPORT, WA, 98345

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: $18,395,468

Exercised Options: $18,395,468

Current Obligation: $15,658,792

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N6133117D0001

IDV Type: IDC

Timeline