DoD's $55M Patriot Repair Contract with Raytheon: Limited Competition Raises Cost Concerns

Contract Overview

Contract Amount: $54,916,066 ($54.9M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2007-03-30

End Date: 2013-12-31

Contract Duration: 2,468 days

Daily Burn Rate: $22.3K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: PATRIOT REPAIR AND RETURN FOR THE PERIOD MARCH 31,2007 THROUGH SEPTEMBER 30, 2010 OF ASSETS PROVIDED TO THE CONTRACTOR..

Place of Performance

Location: ANDOVER, ESSEX County, MASSACHUSETTS, 01810

State: Massachusetts Government Spending

Plain-Language Summary

Department of Defense obligated $54.9 million to RAYTHEON COMPANY for work described as: PATRIOT REPAIR AND RETURN FOR THE PERIOD MARCH 31,2007 THROUGH SEPTEMBER 30, 2010 OF ASSETS PROVIDED TO THE CONTRACTOR.. Key points: 1. Spending Analysis: $54.9M spent on Patriot missile system repair and return over 3 years. 2. Competition: Contract was not competed, raising questions about price discovery and potential overspending. 3. Risk: Reliance on a single contractor for specialized repairs may limit negotiation leverage. 4. Sector: Defense sector, specifically electronic component manufacturing, with significant taxpayer investment.

Value Assessment

Rating: questionable

The contract's cost-plus-fixed-fee structure for specialized defense equipment repair warrants scrutiny. Without competitive bidding, it's difficult to benchmark pricing against similar services, suggesting potential for inflated costs.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source or limited competition scenario. This lack of competition likely hindered effective price discovery and may have led to higher costs for the government.

Taxpayer Impact: The absence of competition for critical defense system repairs means taxpayers may have paid a premium for these services.

Public Impact

Taxpayers fund critical repairs for advanced defense systems like the Patriot missile. Limited competition in defense contracting can impact the efficiency and cost-effectiveness of military readiness. Oversight is crucial to ensure fair pricing and prevent potential waste in sole-source defense contracts.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

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

Positive Signals

Essential service for national defense
Contract awarded to a known entity

Sector Analysis

This contract falls within the defense sector, specifically related to the maintenance and repair of advanced electronic warfare systems. Spending benchmarks in this niche area are often difficult to establish due to proprietary technology and limited suppliers.

Small Business Impact

The data does not indicate any specific involvement or benefit to small businesses in this contract. The award went to a large defense contractor, Raytheon Company.

Oversight & Accountability

The 'NOT COMPETED' status suggests potential gaps in pre-award oversight or justification for sole-sourcing. Robust post-award monitoring is essential to ensure cost reasonableness and contractor performance.

Related Government Programs

Other Electronic Component Manufacturing
Department of Defense Contracting
Department of the Army Programs

Risk Flags

Lack of competitive bidding
Potential for cost overruns
Limited price transparency
Strategic dependency on a single vendor
Questionable value for taxpayer money

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $54.9 million to RAYTHEON COMPANY. PATRIOT REPAIR AND RETURN FOR THE PERIOD MARCH 31,2007 THROUGH SEPTEMBER 30, 2010 OF ASSETS PROVIDED TO THE CONTRACTOR..

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 $54.9 million.

What is the period of performance?

Start: 2007-03-30. End: 2013-12-31.

What was the justification for not competing this contract, and were alternative sources considered?

The provided data indicates the contract was 'NOT COMPETED.' A thorough review would require access to the contract file to understand the specific justification, such as a critical need, lack of qualified sources, or national security concerns. Without this, it's impossible to assess if alternative sources were adequately explored or if the sole-source decision was fully justified.

How does the cost-plus-fixed-fee structure impact the government's ability to control costs for specialized repairs?

Cost-plus-fixed-fee contracts can incentivize contractors to incur more costs, as their fee is a percentage of those costs. While a fixed fee provides some predictability, the government bears the risk of cost overruns. For specialized repairs like the Patriot system, this structure, combined with non-competition, limits the government's leverage in negotiating favorable pricing and controlling overall expenditure.

What is the long-term strategic risk of relying on a single contractor for critical defense system maintenance?

Long-term reliance on a single contractor for critical defense systems like the Patriot missile creates strategic vulnerabilities. It can lead to vendor lock-in, reduced bargaining power, and potential price escalations. Furthermore, it stifles innovation and competition within the supply chain, potentially impacting readiness and modernization efforts if the sole contractor faces performance issues or business challenges.

Industry Classification

NAICS: Manufacturing › Semiconductor and Other Electronic Component Manufacturing › Other Electronic Component Manufacturing

Product/Service Code: ELECTRICAL/ELECTRONIC EQPT COMPNTS

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

Parent Company: RTX Corp (UEI: 001344142)

Address: 350 LOWELL ST, ANDOVER, MA, 01810

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $125,413,496

Exercised Options: $54,916,066

Current Obligation: $54,916,066

Actual Outlays: $56,132

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline