DoD awards Raytheon Company $32.8M for AMRAAM simulation system, a sole-source contract

Contract Overview

Contract Amount: $32,813,868 ($32.8M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2009-06-17

End Date: 2012-12-15

Contract Duration: 1,277 days

Daily Burn Rate: $25.7K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: AMRAAM AIM120 C-7 HWIL SIMULATION SYSTEM

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $32.8 million to RAYTHEON COMPANY for work described as: AMRAAM AIM120 C-7 HWIL SIMULATION SYSTEM Key points: 1. Contract awarded for computer systems design services related to a missile system. 2. Sole-source award indicates limited competition, potentially impacting price. 3. Contract duration of over three years suggests a significant project. 4. Awarded by the Department of Defense, highlighting defense sector spending. 5. The contract type is Cost Plus Fixed Fee, which can shift risk to the government. 6. No small business set-aside was applied to this contract.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging without comparable sole-source awards for similar simulation systems. The Cost Plus Fixed Fee (CPFF) contract type, while common for complex R&D, can lead to cost overruns as the contractor is reimbursed for all allowable costs plus a fixed fee. This structure may not incentivize the most efficient cost management compared to fixed-price contracts. Without competitive bidding, it's difficult to ascertain if the pricing reflects fair market value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning Raytheon Company was the only bidder. This typically occurs when a specific capability or technology is unique to a single provider, or in cases of urgent need where competition is not feasible. The lack of competition limits the government's ability to leverage market forces to achieve the lowest possible price and may indicate a reliance on a single supplier for this critical defense system component.

Taxpayer Impact: Sole-source awards mean taxpayers do not benefit from competitive pricing, potentially leading to higher overall costs for the defense system.

Public Impact

The primary beneficiary is the Department of Defense, which receives advanced simulation capabilities for the AMRAAM missile. Services delivered include computer systems design and simulation support. The contract has a geographic impact in Arizona, where Raytheon is located. Workforce implications include employment for specialized engineers and technicians at Raytheon.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition.
Cost Plus Fixed Fee contract type can incentivize higher costs.
Lack of transparency in sole-source justification.
Potential for cost overruns due to CPFF structure.

Positive Signals

Award to a known defense contractor with established expertise.
Contract supports a critical defense capability (AMRAAM missile).
Definitive contract provides a clear framework for the engagement.

Sector Analysis

This contract falls within the Defense sector, specifically in the area of simulation and training systems for advanced weaponry. The market for defense simulation systems is highly specialized, often dominated by a few large contractors with the necessary technical expertise and security clearances. Spending in this area is driven by the need for realistic training environments to prepare military personnel for complex combat scenarios, ensuring readiness and reducing risks associated with live-fire exercises. Comparable spending benchmarks are difficult to establish due to the proprietary nature of defense technologies and the unique specifications of each simulation system.

Small Business Impact

This contract was not set aside for small businesses, nor does it appear to have specific subcontracting requirements for small businesses mentioned in the provided data. As a sole-source award to a large prime contractor, the direct impact on the small business ecosystem is likely minimal, unless Raytheon Company voluntarily engages small businesses as subcontractors for specific components or services.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor compliance with contract terms and conditions. Accountability measures are inherent in the CPFF structure, requiring detailed reporting of costs and progress. Transparency is limited due to the sole-source nature of the award, but contract modifications and performance reports would be subject to internal DoD review and potentially Inspector General oversight if specific concerns arise.

Related Government Programs

AMRAAM Missile Program
Defense Simulation and Training Systems
Missile Defense Agency Contracts
Raytheon Company Defense Contracts

Risk Flags

Sole-source award
Cost-reimbursement contract type
Lack of competition

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $32.8 million to RAYTHEON COMPANY. AMRAAM AIM120 C-7 HWIL SIMULATION SYSTEM

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 $32.8 million.

What is the period of performance?

Start: 2009-06-17. End: 2012-12-15.

What is the historical spending pattern for AMRAAM AIM120 HWIL simulation systems with Raytheon Company?

Analyzing historical spending for this specific simulation system with Raytheon requires access to detailed contract databases beyond the provided snippet. However, the current award of $32.8 million for a definitive contract spanning from June 2009 to December 2012 suggests a significant, multi-year investment. Typically, spending on such specialized simulation systems is project-based and can fluctuate based on program needs, technological upgrades, and defense budget allocations. Without prior contract data, it's difficult to establish a trend, but the duration and value indicate a substantial commitment by the Department of Defense to this particular simulation capability.

How does the Cost Plus Fixed Fee (CPFF) structure compare to other contract types for simulation systems in terms of value for money?

The Cost Plus Fixed Fee (CPFF) contract type is often used for research and development or complex projects where the scope is not fully defined at the outset. While it allows for flexibility and reimbursement of incurred costs plus a predetermined profit (fee), it places more risk on the government regarding cost control. Compared to fixed-price contracts, CPFF can lead to higher overall costs if the contractor does not efficiently manage expenses, as the government bears the brunt of cost overruns. For simulation systems, if the requirements are well-defined, a firm-fixed-price contract might offer better value by incentivizing the contractor to minimize costs. However, for novel or evolving simulation technologies, CPFF can be appropriate to ensure the government obtains the necessary capabilities.

What are the specific risks associated with a sole-source award for defense simulation systems?

Sole-source awards for defense simulation systems carry several risks. Primarily, the lack of competition means the government cannot leverage market forces to secure the best possible price, potentially leading to inflated costs. There's also a risk of vendor lock-in, where the government becomes dependent on a single supplier for critical technology, limiting future options and negotiation leverage. Furthermore, without competitive pressure, the incentive for the sole-source provider to innovate or maintain high-quality service might be diminished. Transparency in the justification for the sole-source award is crucial to ensure it is truly warranted and not a result of convenience or inadequate market research.

What is Raytheon Company's track record with Department of Defense simulation contracts?

Raytheon Company, now part of RTX, has a long and extensive track record of delivering complex systems and services to the Department of Defense, including numerous simulation and training solutions. They are a major defense contractor involved in various platforms, including aircraft, missiles, and command and control systems, many of which require sophisticated simulation capabilities for development, testing, and training. Their history includes numerous large-scale contracts for simulation hardware, software, and integrated training environments. While specific performance metrics for every contract are not publicly available, their continued success in securing substantial DoD contracts suggests a generally positive track record in delivering required capabilities, though like any large contractor, they may have faced performance challenges on specific projects.

How does the geographic location of contract performance (Arizona) impact overall program costs or oversight?

The geographic location of contract performance, in this case, Arizona for Raytheon Company, can have several implications. For the government, having a contractor located in a specific state might influence the choice of oversight personnel from agencies like the Defense Contract Management Agency (DCMA) who have a presence or regional responsibility in that area. While the physical location itself doesn't inherently increase or decrease program costs significantly in the context of a large federal contract, it can affect travel expenses for government personnel if on-site inspections or meetings are required. However, modern communication and remote oversight capabilities can mitigate some of these factors. The primary impact is often related to the contractor's operational costs, such as labor rates and facility overhead, which are influenced by the local economic environment in Arizona.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Computer Systems Design and Related Services › Computer Systems Design Services

Product/Service Code: RESEARCH AND DEVELOPMENT › C – National Defense R&D Services

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N6893609R0021

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: RTX Corp (UEI: 001344142)

Address: 1151 E HERMANS RD, TUCSON, AZ, 85756

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $33,242,081

Exercised Options: $33,242,081

Current Obligation: $32,813,868

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline