DoD's $22.3M RSA Phase II Integration Contract with Raytheon Faces Scrutiny Over Value and Competition

Contract Overview

Contract Amount: $22,348,484 ($22.3M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2017-11-08

End Date: 2024-09-16

Contract Duration: 2,504 days

Daily Burn Rate: $8.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: FIXED PRICE INCENTIVE

Sector: Defense

Official Description: RSA PHASE II INTEGRATION

Place of Performance

Location: ALBUQUERQUE, BERNALILLO County, NEW MEXICO, 87123

State: New Mexico Government Spending

Plain-Language Summary

Department of Defense obligated $22.3 million to RAYTHEON COMPANY for work described as: RSA PHASE II INTEGRATION Key points: 1. The contract awarded to Raytheon Company for RSA Phase II Integration represents a significant investment in engineering services. 2. While awarded under full and open competition, the long duration and fixed-price incentive structure warrant a closer look at cost control. 3. Potential risks include cost overruns if performance incentives are not effectively managed, impacting overall value for taxpayers. 4. The engineering services sector is competitive, but the specific nature of this integration may limit viable alternatives.

Value Assessment

Rating: fair

The contract's value of $22.3 million over approximately 2504 days suggests a moderate per-diem rate. Benchmarking against similar large-scale integration projects is necessary to determine if this pricing is competitive, especially considering the fixed-price incentive structure which aims to control costs but can also lead to higher initial bids.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

Awarded via full and open competition, this method should theoretically drive competitive pricing. However, the long-term nature and specific technical requirements of the RSA Phase II Integration may have narrowed the field of qualified bidders, potentially impacting the extent of price discovery.

Taxpayer Impact: Taxpayer funds are being utilized for a critical defense integration project. The effectiveness of the competition and the incentive structure will determine the ultimate value for money and the efficiency of this spending.

Public Impact

Defense modernization efforts are directly supported by this contract, aiming to enhance operational capabilities. The long contract duration indicates a sustained need for these engineering services within the Department of the Navy. Raytheon's role highlights the significant involvement of major defense contractors in complex integration projects.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Long contract duration may increase risk of cost escalation.
Fixed-price incentive contracts require careful monitoring to ensure cost-effectiveness.
Potential for scope creep over the extended performance period.

Positive Signals

Awarded through full and open competition, promoting market fairness.
Addresses a critical defense integration need.
Incentive structure aims to align contractor performance with government objectives.

Sector Analysis

The engineering services sector, particularly within defense, involves highly specialized and often long-term projects. Spending benchmarks for similar integration efforts are difficult to establish without detailed project scope, but large contracts like this are common for major defense systems.

Small Business Impact

This contract was awarded to Raytheon Company, a large prime contractor. There is no explicit indication of small business subcontracting participation in the provided data, which is a common area for oversight in large defense contracts.

Oversight & Accountability

The long duration and fixed-price incentive nature of this contract necessitate robust oversight from the Department of the Navy to ensure performance milestones are met and costs remain controlled. Accountability will hinge on effective contract management and performance reviews.

Related Government Programs

Engineering Services
Department of Defense Contracting
Department of the Navy Programs

Risk Flags

Potential for cost overruns due to long duration.
Effectiveness of incentive structure in controlling costs.
Limited visibility into specific technical risks and mitigation.
Need for detailed post-award cost analysis for true value assessment.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $22.3 million to RAYTHEON COMPANY. RSA PHASE II INTEGRATION

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 $22.3 million.

What is the period of performance?

Start: 2017-11-08. End: 2024-09-16.

How does the final cost compare to the initial target price, considering the fixed-price incentive structure?

The fixed-price incentive (FPI) contract type aims to share cost savings or overruns between the government and the contractor. To assess value, a comparison of the final negotiated cost against the target cost, along with the contractor's share of any deviations, is crucial. Without this post-award data, it's difficult to definitively gauge cost efficiency beyond the initial award amount.

What specific technical risks were identified during the competition phase, and how are they being mitigated?

The provided data does not detail specific technical risks identified during the competition or the mitigation strategies employed. In complex integration projects like RSA Phase II, risks often include interoperability challenges, cybersecurity vulnerabilities, and integration with legacy systems. Effective oversight would involve tracking the contractor's progress against risk mitigation plans throughout the contract lifecycle.

To what extent did the competition truly drive down costs for this specialized engineering service?

While 'full and open competition' suggests a broad initial solicitation, the actual cost reduction achieved depends on the number and capability of bidders. For highly specialized services, the market may be limited, potentially reducing competitive pressure. Analyzing the number of bids received and the price spread among them would offer insight into the effectiveness of the competition in securing the best possible price.

Industry Classification

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

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: N6893616R0046

Offers Received: 1

Pricing Type: FIXED PRICE INCENTIVE (L)

Evaluated Preference: NONE

Contractor Details

Parent Company: Rockwell Collins Australia PTY Limited

Address: 1300 EUBANK BLVD SE, ALBUQUERQUE, NM, 87123

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: $22,348,484

Exercised Options: $22,348,484

Current Obligation: $22,348,484

Subaward Activity

Number of Subawards: 29

Total Subaward Amount: $16,898,789

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline