Raytheon Company awarded $30.8M for Engineering Services, with a significant portion allocated to cost-plus-fixed-fee contracts

Contract Overview

Contract Amount: $30,838,581 ($30.8M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2017-01-31

End Date: 2019-03-31

Contract Duration: 789 days

Daily Burn Rate: $39.1K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: DBR MATERIAL AND SERVICES (O&MN)

Place of Performance

Location: TEWKSBURY, MIDDLESEX County, MASSACHUSETTS, 01876

State: Massachusetts Government Spending

Plain-Language Summary

Department of Defense obligated $30.8 million to RAYTHEON COMPANY for work described as: DBR MATERIAL AND SERVICES (O&MN) Key points: 1. The contract's cost-plus-fixed-fee structure necessitates close monitoring to ensure cost control and prevent overruns. 2. Limited competition raises concerns about potential price inflation and reduced value for taxpayer dollars. 3. The duration of the contract (789 days) suggests a substantial and ongoing need for these engineering services. 4. Performance context is crucial, as the effectiveness of engineering services directly impacts defense capabilities. 5. This contract falls within the broader Defense sector, specifically supporting engineering and technical services. 6. The award to a single, large contractor like Raytheon Company may limit opportunities for smaller, specialized firms.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without specific details on the engineering services provided and their criticality. The cost-plus-fixed-fee (CPFF) pricing structure, while common for complex or uncertain scope work, can lead to higher costs compared to fixed-price contracts if not managed diligently. Comparing this to similar engineering services contracts within the Department of Defense would be necessary for a more precise value assessment. The reported award amount of $30.8M needs to be evaluated against the scope and deliverables to determine if it represents a reasonable investment.

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 typically occurs when a specific contractor possesses unique capabilities, proprietary technology, or is the only source capable of meeting the requirement. The lack of competition limits the government's ability to solicit multiple bids and negotiate the best possible price, potentially leading to higher costs for taxpayers.

Taxpayer Impact: Sole-source awards mean taxpayers may not be receiving the most competitive pricing available in the market, as the government did not leverage competitive pressures to drive down costs.

Public Impact

The primary beneficiaries are the Department of Defense, which receives essential engineering services to support its operations and programs. The services delivered are critical for the design, development, and sustainment of defense systems and technologies. The geographic impact is likely concentrated within areas where Raytheon Company has engineering facilities and where the defense projects are based, primarily Massachusetts. Workforce implications include the employment of engineers, technicians, and support staff at Raytheon Company, contributing to the skilled labor force in the defense industry.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus-fixed-fee contract type can incentivize higher spending if not closely monitored.
Sole-source award limits price discovery and potentially increases costs for taxpayers.
Lack of competition may reduce opportunities for innovative solutions from a wider range of vendors.
The substantial contract value warrants rigorous oversight to ensure efficient use of funds.

Positive Signals

Award to a reputable contractor like Raytheon Company suggests a level of trust in their capabilities.
Engineering services are vital for maintaining and advancing defense technology, indicating a critical need being met.
The contract duration suggests a stable, long-term requirement, allowing for focused development and execution.

Sector Analysis

The defense engineering services sector is a critical component of the broader aerospace and defense industry. It encompasses a wide range of activities, including research, design, development, testing, and technical support for military systems. Major contractors like Raytheon Company play a significant role in this market, often holding specialized expertise and proprietary technologies. Spending in this sector is driven by national security needs and technological advancements, with contracts often being complex and long-term. Comparable spending benchmarks would involve analyzing other large-scale engineering service contracts awarded by the Department of Defense to similar prime contractors.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb: false'. Furthermore, the prime contractor, Raytheon Company, is a large aerospace and defense firm. While large prime contractors are often required to subcontract a portion of their work to small businesses, the specific subcontracting plan for this contract is not detailed here. The absence of a direct set-aside means that small businesses did not have a dedicated opportunity to bid on the prime contract itself, though they may still participate as subcontractors.

Oversight & Accountability

Oversight for this contract would primarily fall under the purview of the Department of Defense's contract management agencies, such as the Defense Contract Management Agency (DCMA). Accountability measures would be tied to the terms and conditions of the cost-plus-fixed-fee contract, requiring detailed reporting on costs incurred and progress made. Transparency is generally maintained through contract award databases and reporting requirements, though specific project details may be sensitive. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Defense Engineering Services
Aerospace and Defense Contracting
Department of Defense Procurement
Cost-Plus-Fixed-Fee Contracts

Risk Flags

Sole-source award limits competition.
Cost-plus-fixed-fee contracts can lead to cost overruns if not managed properly.
Lack of detailed service description hinders full value assessment.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $30.8 million to RAYTHEON COMPANY. DBR MATERIAL AND SERVICES (O&MN)

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 $30.8 million.

What is the period of performance?

Start: 2017-01-31. End: 2019-03-31.

What specific engineering services are being provided under this contract, and what is their criticality to defense operations?

The provided data indicates the contract is for 'DBR MATERIAL AND SERVICES (O&MN)' and falls under the 'Engineering Services' NAICS code (541330). While the specific nature of 'DBR MATERIAL AND SERVICES' is not detailed, engineering services in the defense sector typically encompass a broad range of activities. This can include system design, integration, testing, analysis, research and development support, technical documentation, and lifecycle management for military platforms, weapons systems, or related infrastructure. The criticality of these services is inherently high, as they directly support the development, maintenance, and operational readiness of national defense capabilities. Without more granular information on 'DBR MATERIAL AND SERVICES', it's difficult to pinpoint the exact criticality, but any engineering support for defense systems is generally considered vital for national security.

How does the cost-plus-fixed-fee (CPFF) pricing structure compare to other contract types for similar engineering services, and what are the associated risks?

The Cost-Plus-Fixed-Fee (CPFF) contract type is often used when the scope of work is not clearly defined or involves a high degree of uncertainty, making it difficult to establish a firm fixed price upfront. In such cases, the contractor is reimbursed for allowable costs plus a predetermined fixed fee representing profit. Compared to fixed-price contracts, CPFF contracts generally carry higher risk for the government regarding cost overruns, as the contractor has less incentive to control expenses beyond what is necessary to complete the work. However, for complex R&D or services where innovation and flexibility are paramount, CPFF can be advantageous. The primary risk is that costs can escalate beyond initial estimates, and the fixed fee, while predetermined, is applied to potentially inflated costs. Robust oversight, detailed cost tracking, and clear performance metrics are essential to mitigate these risks and ensure value for money.

What is the historical spending pattern for engineering services with Raytheon Company by the Department of Defense?

Analyzing historical spending patterns with Raytheon Company for engineering services by the Department of Defense (DoD) requires access to comprehensive contract databases. Raytheon (now RTX) is a major defense contractor with a long history of providing a wide array of services and products to the DoD. Historical data would likely show significant and consistent spending across various engineering disciplines, including but not limited to aerospace engineering, systems engineering, software engineering, and electronic systems development. The total amount spent would fluctuate year-to-year based on program needs, defense budgets, and the specific solicitations awarded. Without specific historical data for this exact contract type or service description, it's reasonable to infer that Raytheon has been a significant recipient of DoD engineering contracts over many years, reflecting its position as a key industry player. A detailed analysis would involve aggregating contract awards over several fiscal years to identify trends, average award values, and the types of engineering services most frequently procured.

Given the sole-source nature of this award, what steps can the agency take to ensure fair pricing and contractor performance?

When a contract is awarded on a sole-source basis, the agency must implement enhanced oversight and negotiation strategies to ensure fair pricing and contractor performance. Firstly, the agency should conduct thorough market research to establish a robust understanding of fair and reasonable pricing, even without competitive bids. This might involve obtaining independent cost estimates, benchmarking against similar commercial or government contracts, and analyzing the contractor's cost proposals in detail. Secondly, the contract terms should include strong performance metrics, clear deliverables, and well-defined milestones. Regular performance reviews and audits are crucial to monitor progress and ensure the contractor is meeting expectations. Finally, the agency should maintain open communication with the contractor to address potential issues proactively and ensure alignment on objectives throughout the contract lifecycle. Negotiating specific incentives or penalties related to cost and performance can also help align contractor behavior with government interests.

What are the potential implications of this contract on small business participation in the defense engineering sector?

This specific contract, awarded as a sole-source delivery order to Raytheon Company, does not directly involve a small business set-aside. This means small businesses did not have the opportunity to compete for the prime contract itself. However, the implications for small businesses are not entirely negative. Large prime contractors like Raytheon are often mandated by the DoD to meet specific small business subcontracting goals. Therefore, Raytheon may be required to subcontract a portion of the work performed under this $30.8 million contract to qualified small businesses. This can provide opportunities for small firms with specialized capabilities to participate in the defense supply chain. The extent of this participation depends on the specific subcontracting plan negotiated for this contract and the availability of small businesses possessing the necessary skills and certifications. Without details on the subcontracting plan, it's difficult to quantify the exact impact, but it represents a potential avenue for small business involvement.

Industry Classification

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

Product/Service Code: COMM/DETECT/COHERENT RADIATION

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0002414R5333

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 50 APPLE HILL DR, TEWKSBURY, MA, 01876

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: $30,838,581

Exercised Options: $30,838,581

Current Obligation: $30,838,581

Subaward Activity

Number of Subawards: 4

Total Subaward Amount: $810,310

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: N0002414G5333

IDV Type: BOA

Timeline