DoD Awards Raytheon $73.9M for MIR/CEMT Repair Services, Lacking Competition

Contract Overview

Contract Amount: $73,934,331 ($73.9M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2020-02-01

End Date: 2025-07-31

Contract Duration: 2,007 days

Daily Burn Rate: $36.8K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: REPAIR SERVICES FOR MIR/CEMT ON PARTIOT

Place of Performance

Location: ANDOVER, ESSEX County, MASSACHUSETTS, 01810

State: Massachusetts Government Spending

Plain-Language Summary

Department of Defense obligated $73.9 million to RAYTHEON COMPANY for work described as: REPAIR SERVICES FOR MIR/CEMT ON PARTIOT Key points: 1. Significant contract value awarded to a single large defense contractor. 2. Lack of competition raises concerns about potential overpricing and reduced innovation. 3. Long contract duration (5 years) may not align with evolving technological needs. 4. The sector is critical for national defense, but procurement practices warrant scrutiny.

Value Assessment

Rating: questionable

The contract is Cost Plus Fixed Fee, which can incentivize higher costs. Without competitive benchmarks, it's difficult to assess if $73.9M for repair services over five years is reasonable. The lack of competition is a primary driver of this assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award. This limits price discovery and negotiation leverage for the government, potentially leading to higher costs than a competitive process would yield.

Taxpayer Impact: The absence of competition means taxpayers may be paying a premium for these repair services, as the government did not explore potentially more cost-effective options.

Public Impact

Taxpayers may be overpaying due to the lack of competitive bidding. Essential defense systems rely on these repair services, making the contract critical. The long-term nature of the contract could lock the DoD into a potentially suboptimal pricing arrangement.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of Competition
Cost-Plus Contract Type
Long Contract Duration

Positive Signals

Critical Defense Service
Established Contractor

Sector Analysis

This contract falls within the Defense sector, specifically for repair services of critical navigation and guidance systems. Spending in this area is substantial, and competitive procurement is crucial for ensuring value for money.

Small Business Impact

The contract was awarded to Raytheon Company, a large defense contractor. There is no indication that small businesses were involved in this specific award, which is common for large sole-source contracts.

Oversight & Accountability

The contract type (Cost Plus Fixed Fee) and lack of competition suggest that robust oversight is necessary to ensure costs are reasonable and performance meets requirements. The awarding agency is the Department of Defense.

Related Government Programs

Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing
Department of Defense Contracting
Defense Contract Management Agency Programs

Risk Flags

Lack of competitive bidding
Cost-Plus contract type may inflate costs
Long contract duration limits flexibility
Potential for vendor lock-in
Limited transparency on pricing justification

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $73.9 million to RAYTHEON COMPANY. REPAIR SERVICES FOR MIR/CEMT ON PARTIOT

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 $73.9 million.

What is the period of performance?

Start: 2020-02-01. End: 2025-07-31.

What is the historical cost performance for similar MIR/CEMT repair services, and how does this contract's pricing compare?

Without competitive bidding, establishing a precise benchmark is challenging. However, historical data on similar complex system repairs, especially those involving sole-source awards, often reveals higher costs compared to competed contracts. Further analysis would require access to internal DoD cost data or industry cost models for comparable systems to determine if this $73.9M award represents fair and reasonable pricing.

What are the specific risks associated with relying on a single contractor for critical repair services over a five-year period?

The primary risks include potential price escalation without competitive pressure, reduced incentive for the contractor to innovate or improve efficiency, and vulnerability if the contractor faces financial instability or operational issues. A sole-source, long-term contract can also limit the government's flexibility to adopt newer technologies or alternative solutions that may emerge during the contract period.

How effective is the Cost Plus Fixed Fee structure in ensuring value for money for these specific repair services, given the lack of competition?

The Cost Plus Fixed Fee structure, while covering costs and providing a fixed profit, can be less effective in driving value when competition is absent. The contractor has less incentive to control costs rigorously, as the government ultimately bears them. This structure, combined with a sole-source award, increases the importance of stringent government oversight to scrutinize costs and ensure the fixed fee remains appropriate.

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: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT

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: 350 LOWELL ST, ANDOVER, MA, 01810

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: $73,934,331

Exercised Options: $73,934,331

Current Obligation: $73,934,331

Actual Outlays: $2,707,868

Subaward Activity

Number of Subawards: 4

Total Subaward Amount: $373,441

Contract Characteristics

Consolidated Contract: Yes

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: SPRBL115D0017

IDV Type: IDC

Timeline