Raytheon Company awarded $47.4M contract for engineering and technical services by the Department of the Navy

Contract Overview

Contract Amount: $47,378,168 ($47.4M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2021-02-26

End Date: 2029-01-31

Contract Duration: 2,896 days

Daily Burn Rate: $16.4K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: ENGINEERING AND TECHNICAL SERVICES

Place of Performance

Location: SUDBURY, MIDDLESEX County, MASSACHUSETTS, 01776

State: Massachusetts Government Spending

Plain-Language Summary

Department of Defense obligated $47.4 million to RAYTHEON COMPANY for work described as: ENGINEERING AND TECHNICAL SERVICES Key points: 1. Contract awarded on a cost-plus-fixed-fee basis, which can lead to higher costs if not carefully managed. 2. The contract has a long duration of approximately 8 years, suggesting a need for sustained support. 3. Awarded as 'Not Competed', raising questions about potential missed opportunities for competitive pricing. 4. The specific Product Service Code (PSC) and North American Industry Classification System (NAICS) code indicate a focus on specialized engineering services. 5. The contract is a Definitive Contract, typically used for complex or long-term requirements. 6. The contract is not set aside for small businesses, indicating it was likely awarded to a large prime contractor.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without more detailed cost breakdowns and comparison to similar sole-source engineering services contracts. The cost-plus-fixed-fee structure introduces inherent risk for cost overruns, as the contractor is reimbursed for allowable costs plus a fixed fee. Without competitive bidding, it's difficult to ascertain if the pricing reflects fair market value. Further analysis would require comparing the labor rates and overhead applied to industry standards for similar engineering services.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded using a 'Not Competed' procedure, indicating that a full and open competition was not conducted. This typically occurs when only one source is capable of meeting the requirement, or in situations where urgency or specific technical expertise is paramount. The lack of competition means that the government did not benefit from a range of proposals and potentially lower prices that could have resulted from a competitive bidding process.

Taxpayer Impact: The absence of competition means taxpayers may not have received the most cost-effective solution. Without multiple bids, there is less downward pressure on pricing, potentially leading to higher overall expenditure for the government.

Public Impact

The Department of the Navy benefits from specialized engineering and technical services crucial for its operations. This contract supports the development, maintenance, or enhancement of naval systems and technologies. The services are likely concentrated in Massachusetts, where the contractor is located. The contract may indirectly support a specialized engineering workforce within the contractor's organization.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to higher costs for taxpayers.
Cost-plus-fixed-fee contract type carries inherent risk of cost escalation.
Long contract duration could indicate potential for vendor lock-in or reduced flexibility.

Positive Signals

Awarded to a large, established contractor (Raytheon Company) with significant experience.
Definitive contract type suggests a well-defined, long-term need.
Contract supports critical Department of Defense requirements.

Sector Analysis

This contract falls within the Engineering Services sector, a critical component of the broader aerospace and defense industry. The market for specialized engineering services is characterized by high barriers to entry due to technical expertise and security clearances required. Spending in this sector is often driven by government procurement for defense, research, and development. Comparable spending benchmarks would typically involve analyzing other large, sole-source engineering contracts awarded by the Department of Defense or other federal agencies for similar technical capabilities.

Small Business Impact

This contract was not set aside for small businesses, and the prime contractor, Raytheon Company, is a large business. There is no explicit indication of small business subcontracting requirements within the provided data. This suggests that the primary focus is on the prime contractor's capabilities, and the impact on the small business ecosystem is likely indirect, unless Raytheon engages in significant subcontracting with small businesses for specialized components or services.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. Accountability measures would be defined within the contract's terms and conditions, including performance metrics and reporting requirements. Transparency is facilitated through contract databases like FPDS, but detailed cost and performance data may be limited due to the sole-source nature and potential proprietary information. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Defense Engineering Services
Naval Systems Support
Aerospace and Defense Contracting
Cost-Plus-Fixed-Fee Contracts
Sole-Source Procurements

Risk Flags

Sole-source award
Cost-plus contract type
Long contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $47.4 million to RAYTHEON COMPANY. ENGINEERING AND TECHNICAL SERVICES

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 $47.4 million.

What is the period of performance?

Start: 2021-02-26. End: 2029-01-31.

What is the historical spending trend for engineering and technical services by the Department of the Navy?

Analyzing historical spending trends for engineering and technical services by the Department of the Navy requires access to comprehensive historical procurement data. Typically, such analysis would involve examining contract awards over several fiscal years, looking at the total dollar value obligated, the number of contracts awarded, and the distribution across different types of services and contractors. Trends might indicate an increasing reliance on specialized engineering support, shifts in technology focus, or changes in procurement strategies. For instance, a rising trend could signal growing complexity in naval systems or a strategic decision to outsource more technical functions. Conversely, a declining trend might suggest efforts towards in-house capabilities or budget constraints. Without specific historical data for this contract's category, a precise trend cannot be determined, but generally, defense engineering services represent a significant and often growing portion of the DoD budget due to the continuous need for modernization and maintenance of complex weapon systems.

How does the cost-plus-fixed-fee (CPFF) structure compare to other contract types for similar engineering services?

The Cost-Plus-Fixed-Fee (CPFF) contract type is often used when the scope of work is not precisely defined, or when there is significant uncertainty in the cost of performance, such as in research and development or complex engineering projects. In a CPFF contract, the contractor is reimbursed for all allowable costs incurred plus a predetermined fixed fee representing profit. Compared to Fixed-Price contracts, CPFF offers less cost certainty for the government, as the final price can exceed initial estimates if costs rise. However, it provides greater flexibility and can incentivize contractors to perform work that might otherwise be too risky under a fixed-price arrangement. Other contract types like Cost-Plus-Incentive-Fee (CPIF) or Cost-Plus-Award-Fee (CPAF) also involve cost reimbursement but include mechanisms to adjust the fee based on performance or cost targets, potentially offering better value for money than pure CPFF. Firm-Fixed-Price (FFP) contracts offer the most cost certainty but are suitable only when the scope is well-defined and risks are low.

What are the potential risks associated with a sole-source award for engineering services?

Sole-source awards for engineering services carry several potential risks for the government and taxpayers. The most significant risk is the lack of price competition, which can lead to inflated costs as the contractor faces no pressure to offer the lowest possible price. This can result in a poor value for money. Another risk is reduced innovation; without the stimulus of competition, a sole-source provider may have less incentive to develop novel or more efficient solutions. There's also a risk of complacency or reduced service quality, as the contractor may feel less urgency to perform at a high level when there are no alternative providers. Furthermore, sole-source contracts can create vendor lock-in, making it difficult and costly to switch providers in the future, even if performance or pricing becomes unsatisfactory. Finally, the justification for a sole-source award must be robust to ensure that it is truly necessary and not a result of poor planning or an unwillingness to explore competitive options.

What is Raytheon Company's track record with similar Department of the Navy contracts?

Raytheon Company, now part of RTX, has a long and extensive history of contracting with the Department of the Navy, as well as other branches of the U.S. military and federal agencies. Their track record typically involves providing a wide array of complex systems, including radar, missiles, command and control systems, and related engineering and technical support services. For the Department of the Navy specifically, Raytheon has been a key supplier for various naval platforms and programs. Performance on these contracts can vary, with many being successful in delivering critical capabilities. However, like any large defense contractor, Raytheon has also faced scrutiny and challenges on certain contracts related to cost, schedule, and performance. A detailed review of their specific performance on prior, similar engineering and technical services contracts with the Navy would be necessary to fully assess their track record in this particular domain, looking at metrics such as on-time delivery, budget adherence, and technical success rates.

How does the duration of this contract (approx. 8 years) impact its overall value and risk?

The approximately 8-year duration of this contract significantly impacts its overall value and risk profile. On the value side, a long-term contract can provide stability and predictability for both the government and the contractor, allowing for long-range planning and investment in specialized resources. It can also lead to economies of scale and potentially lower per-unit costs over the contract's life if efficiencies are realized. However, the extended duration also increases risk. The government is committed to a specific provider for an extended period, which could lead to vendor lock-in, making it difficult or costly to switch if performance degrades or better alternatives emerge. Furthermore, the longer the contract, the greater the potential for cost escalation, especially with a cost-plus contract type, as unforeseen issues or changes in market conditions can arise over many years. It also means that the government's needs might evolve, and a contract structured today may not perfectly align with requirements years down the line, necessitating costly modifications or change orders.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N6339420R0004

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: RTX Corp

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: $89,236,241

Exercised Options: $57,088,414

Current Obligation: $47,378,168

Actual Outlays: $642,690

Subaward Activity

Number of Subawards: 3

Total Subaward Amount: $323,700

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline