Raytheon Company awarded $25.9M contract for engineering technical services, a sole-source award with a 5-year duration

Contract Overview

Contract Amount: $25,890,559 ($25.9M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2006-09-27

End Date: 2011-09-30

Contract Duration: 1,829 days

Daily Burn Rate: $14.2K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: 200612!005925!2100!W31P4Q!USA AVIATION AND MISSILE COMMAND!W31P4Q06C0268 !A!N! !N! ! !20060927!20110930!196882310!001055235!001339159!N!RAYTHEON COMPANY !350 LOWELL ST !ANDOVER !MA!01810!01430!009!25!ANDOVER !ESSEX !MASS !+000003072758!N!N!000000000000!R425!ENGINEERING TECHNICAL SERVICES !S1 !SERVICES !180 !DDG 51 !336419!E! !3! ! ! ! ! !99990909!B! ! !A! !D!N!U!1!001!N!1G!C!Y!Z! ! !N!C!N! ! ! !A!A!A!A!000!A!C!Y! ! ! ! ! ! !0001! !

Place of Performance

Location: ANDOVER, ESSEX County, MASSACHUSETTS, 01810, UNITED STATES OF AMERICA

State: Massachusetts Government Spending

Plain-Language Summary

Department of Defense obligated $25.9 million to RAYTHEON COMPANY for work described as: 200612!005925!2100!W31P4Q!USA AVIATION AND MISSILE COMMAND!W31P4Q06C0268 !A!N! !N! ! !20060927!20110930!196882310!001055235!001339159!N!RAYTHEON COMPANY !350 LOWELL ST !ANDOVER !MA!01810!01430!009!25!ANDOVER !ESSE… Key points: 1. The contract's cost-plus-fixed-fee structure suggests potential for cost overruns if not closely managed. 2. A sole-source award limits price competition, potentially leading to higher costs for the government. 3. The extended 5-year performance period indicates a long-term need for these specialized engineering services. 4. This contract falls under the 'Other Guided Missile and Space Vehicle Parts and Auxiliary Equipment Manufacturing' NAICS code, highlighting its specialized nature. 5. The award to Raytheon Company, a major defense contractor, suggests a reliance on established industry players for critical services.

Value Assessment

Rating: fair

The total award amount of $25.9 million over five years averages to approximately $5.18 million per year. Benchmarking this against similar engineering technical services contracts is challenging without more specific service details. However, the cost-plus-fixed-fee (CPFF) contract type, while common for complex R&D or services where costs are uncertain, carries inherent risks of exceeding initial estimates if not rigorously managed. The absence of competitive bidding further complicates a direct value-for-money assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, Raytheon Company, was solicited. This approach is typically used when a unique capability or proprietary technology is required, or when only one responsible source is available. The lack of competition means the government did not benefit from a bidding process that could drive down prices through market forces.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive pricing. Without competing offers, it is difficult to ascertain if the price reflects the best possible value.

Public Impact

The primary beneficiary is the U.S. Army, which receives essential engineering technical services for its missile and aviation programs. Services delivered likely include design, development, testing, and sustainment support for complex defense systems. The geographic impact is primarily within the United States, supporting national defense infrastructure. This contract supports a highly skilled technical workforce within Raytheon Company, contributing to specialized engineering expertise.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially increasing costs.
Cost-plus-fixed-fee structure can lead to cost overruns if not managed effectively.
Long performance period requires sustained oversight to ensure continued value.
Lack of transparency in the sole-source justification could hide potential alternatives.

Positive Signals

Award to a known, established contractor like Raytheon suggests a level of confidence in their capabilities.
The specific nature of engineering technical services for missile systems often requires specialized expertise.
The contract duration indicates a stable, long-term requirement, allowing for focused service delivery.

Sector Analysis

This contract falls within the aerospace and defense sector, specifically supporting missile and aviation systems. The 'Other Guided Missile and Space Vehicle Parts and Auxiliary Equipment Manufacturing' NAICS code indicates a niche market. Spending in this area is driven by national security requirements and technological advancements in defense capabilities. Comparable spending benchmarks would typically involve other large, sole-source or competitively awarded contracts for similar engineering and technical support services to defense programs.

Small Business Impact

There is no indication of a small business set-aside for this contract. As a sole-source award to a large prime contractor, Raytheon Company, the potential for small business subcontracting opportunities exists but is not explicitly detailed in the provided data. The impact on the small business ecosystem would depend on Raytheon's subcontracting strategy, which is not specified here.

Oversight & Accountability

Oversight for this contract would primarily fall under the U.S. Army Contracting Command and the relevant program executive office. Accountability measures are typically embedded within the contract's terms and conditions, including performance metrics and reporting requirements. Transparency is limited due to the sole-source nature, but contract awards are generally reported in federal procurement databases. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Missile Defense Systems
Aviation Systems Support
Defense Engineering Services
Guided Missile Manufacturing Support

Risk Flags

Sole-source award
Cost-plus-fixed-fee contract type
Long performance period without clear competition
Lack of detailed service description

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $25.9 million to RAYTHEON COMPANY. 200612!005925!2100!W31P4Q!USA AVIATION AND MISSILE COMMAND!W31P4Q06C0268 !A!N! !N! ! !20060927!20110930!196882310!001055235!001339159!N!RAYTHEON COMPANY !350 LOWELL ST !ANDOVER !MA!01810!01430!009!25!ANDOVER !ESSEX !MASS !+000003072758!N!N!000000000000!R425!ENGINEERING TECHNICAL SERVICES !S1 !SERVICES !180 !DDG 51 !336419!E! !3! ! ! ! ! !999

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 Army).

What is the total obligated amount?

The obligated amount is $25.9 million.

What is the period of performance?

Start: 2006-09-27. End: 2011-09-30.

What is the specific nature of the 'engineering technical services' provided under this contract?

The provided data indicates the contract is for 'ENGINEERING TECHNICAL SERVICES' under NAICS code '336419' (Other Guided Missile and Space Vehicle Parts and Auxiliary Equipment Manufacturing). While the exact services are not detailed, this typically encompasses a range of activities such as systems engineering, design support, technical analysis, testing, integration, and sustainment engineering for complex defense platforms, likely related to guided missiles and potentially aviation systems. Given the contractor is Raytheon Company, a major defense manufacturer, these services are expected to be highly specialized and critical to the operational readiness and development of specific defense programs.

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

Cost-plus-fixed-fee (CPFF) contracts are often used when the scope of work is not precisely defined, or when there is significant uncertainty in the costs associated with performance, common in research and development or complex engineering services. Unlike fixed-price contracts, where the contractor bears more risk for cost overruns, CPFF allows the contractor to recover allowable costs plus a predetermined fixed fee. This structure can incentivize contractors to control costs to maximize their fee, but it also shifts much of the cost risk to the government. For services where requirements are well-defined, fixed-price contracts generally offer better value for the government by establishing a ceiling on costs upfront.

What are the potential risks associated with a sole-source award of this magnitude?

The primary risk of a sole-source award, especially for a contract valued at $25.9 million, is the lack of price competition. This can lead to the government paying a higher price than if multiple bidders had competed. It also reduces the incentive for the awarded contractor to innovate or become more efficient, as there is no direct competitive pressure. Furthermore, sole-source awards can sometimes indicate a lack of market research or an over-reliance on a single provider, potentially limiting future flexibility and access to alternative solutions. Robust oversight and negotiation are crucial to mitigate these risks.

What is Raytheon Company's track record with similar engineering technical services contracts?

Raytheon Company is a major defense contractor with extensive experience in providing engineering, technical, and manufacturing services for a wide array of defense systems, including missiles, radar, and command and control systems. They have a long history of performing complex, high-value contracts for the Department of Defense and other government agencies. While specific performance details for this particular contract are not available, Raytheon's general track record suggests they possess the technical expertise and infrastructure required for such services. However, like any large contractor, they have also faced scrutiny on specific contracts regarding cost, schedule, and performance in the past.

How does the $25.9 million award compare to historical spending on similar services by the Department of the Army?

The $25.9 million award represents a significant investment in engineering technical services over a five-year period. To contextualize this, one would need to analyze historical spending patterns by the Department of the Army for similar services, particularly those related to guided missile and aviation systems. This would involve examining contract databases for awards with comparable NAICS codes (like 336419) and service descriptions. Without such comparative data, it's difficult to definitively state whether this award is high or low relative to historical trends. However, given the specialized nature and the sole-source award to a major prime contractor, it is likely within the expected range for critical defense support services.

What are the implications of the 5-year performance period (2006-2011) for current defense needs?

The performance period of this contract, from September 27, 2006, to September 30, 2011, means the services were rendered over five years ago. While the data provides historical context, it may not reflect current technological needs or market conditions. Defense systems evolve rapidly, and the specific engineering support required in 2006-2011 might differ significantly from what is needed today. Analyzing this historical contract helps understand past procurement strategies and contractor relationships but should be interpreted cautiously when assessing current requirements or future spending.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Other Guided Missile and Space Vehicle Parts and Auxiliary Equipment Manufacturing

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

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 350 LOWELL ST, ANDOVER, MA, 01810

Business Categories: Category Business, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Contract Characteristics

Cost or Pricing Data: YES

Timeline