Department of the Army's $42.8M engineering services contract awarded to Javelin JV, a sole-source entity

Contract Overview

Contract Amount: $42,858,211 ($42.9M)

Contractor: Raytheon/Lockheed Martin Javelin JV

Awarding Agency: Department of Defense

Start Date: 2007-04-16

End Date: 2017-03-31

Contract Duration: 3,637 days

Daily Burn Rate: $11.8K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: CAR

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $42.9 million to RAYTHEON/LOCKHEED MARTIN JAVELIN JV for work described as: CAR Key points: 1. The contract's value of $42.8 million over nearly 10 years suggests a significant investment in specialized engineering services. 2. Awarded as a sole-source contract, it bypasses competitive bidding, raising questions about potential price efficiencies. 3. The long duration of the contract (3637 days) indicates a sustained need for these engineering services. 4. The 'Cost Plus Fixed Fee' pricing structure can incentivize cost overruns if not closely monitored. 5. The absence of small business participation raises concerns about equitable distribution of federal contracting opportunities. 6. The contract's focus on engineering services aligns with the Department of Defense's need for technical expertise.

Value Assessment

Rating: questionable

Benchmarking the value of this $42.8 million contract is challenging without specific service details and comparable market rates. However, the sole-source nature and 'Cost Plus Fixed Fee' structure inherently carry higher risk for value for money compared to competitively bid, fixed-price contracts. The extended duration suggests a consistent need, but the lack of competition means taxpayers may not be benefiting from the most cost-effective solutions available in the market. Further analysis would require understanding the specific engineering services provided and their criticality to the Army's mission.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed. This typically occurs when only one responsible source is available or authorized by statute. The lack of competition limits the government's ability to leverage market forces to achieve the best possible pricing and terms. While there may be justifications for sole-sourcing, it generally leads to less price discovery and potentially higher costs for the government.

Taxpayer Impact: Sole-source awards mean taxpayers do not benefit from the cost savings that can arise from competitive bidding processes, potentially leading to higher overall expenditure for the required services.

Public Impact

The primary beneficiaries are the Department of the Army, which receives essential engineering services for its operations. The contract supports specialized engineering expertise crucial for defense-related projects and technological advancements. The geographic impact is primarily within Arizona (ST: AZ, SN: ARIZONA), where the contractor is located, suggesting local economic benefits. The contract likely supports a specialized workforce in engineering and technical fields, contributing to the defense industrial base.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competition and potentially increases costs for taxpayers.
Cost Plus Fixed Fee contract type can incentivize higher spending if not managed rigorously.
Lack of small business participation may indicate missed opportunities for economic inclusion.
Long contract duration (nearly 10 years) requires sustained oversight to ensure continued value.
Absence of detailed service descriptions makes independent value assessment difficult.

Positive Signals

Award to a specialized joint venture (Raytheon/Lockheed Martin Javelin JV) suggests access to high-level expertise.
The sustained award over a long period indicates a consistent and critical need for these engineering services.
The contract supports the Department of the Army's mission-critical functions.
The fixed fee component, despite the cost-plus structure, provides some level of cost predictability.

Sector Analysis

This contract falls within the Engineering Services sector (NAICS 541330), which is a critical component of the broader defense industrial base. The market for defense engineering services is substantial, driven by the continuous need for technological development, modernization, and maintenance of military systems. Comparable spending benchmarks are difficult to establish without knowing the specific nature of the engineering services, but large sole-source contracts in this domain often involve highly specialized capabilities. The Javelin Joint Venture, comprising major defense contractors, indicates a focus on advanced and potentially proprietary engineering solutions.

Small Business Impact

This contract was not set aside for small businesses, and the contractor is not listed as a small business. The absence of small business participation, either as prime contractors or through subcontracting requirements (as indicated by 'sb': false), means that opportunities to engage smaller firms in this significant federal expenditure are not being realized. This could limit the growth and development of the small business defense contracting ecosystem and potentially concentrate federal dollars among larger entities.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Army's contracting and program management offices. Given the sole-source nature and 'Cost Plus Fixed Fee' structure, rigorous oversight is crucial to manage costs, ensure performance, and verify the necessity of expenditures. Transparency is limited due to the lack of competitive bidding documentation. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Department of Defense Engineering Services Contracts
Army Weapon Systems Development Contracts
Sole-Source Defense Contracts
Cost-Plus-Fixed-Fee Contracts
Javelin Missile System Support

Risk Flags

Sole-source award may limit competition and increase costs.
Cost-plus contract type requires rigorous oversight to control spending.
Long contract duration increases risk of obsolescence or cost escalation.
Lack of small business participation limits economic opportunities.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $42.9 million to RAYTHEON/LOCKHEED MARTIN JAVELIN JV. CAR

Who is the contractor on this award?

The obligated recipient is RAYTHEON/LOCKHEED MARTIN JAVELIN JV.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Army).

What is the total obligated amount?

The obligated amount is $42.9 million.

What is the period of performance?

Start: 2007-04-16. End: 2017-03-31.

What specific engineering services are being provided under this contract, and how do they align with the Army's strategic objectives?

The contract is for engineering services, categorized under NAICS code 541330. While the specific details of the services are not provided in the data, engineering services for the Department of the Army typically encompass a wide range of activities, including research and development, design, testing, and technical support for weapon systems, vehicles, and infrastructure. Given the contractor is the Javelin Joint Venture, it is highly probable that these services are directly related to the development, sustainment, or enhancement of the Javelin anti-tank missile system or related technologies. These services would align with strategic objectives focused on maintaining battlefield superiority, modernizing equipment, and ensuring the effectiveness of ground forces.

How does the 'Cost Plus Fixed Fee' (CPFF) pricing structure compare to other contract types used for similar engineering services, and what are the associated risks?

The 'Cost Plus Fixed Fee' (CPFF) structure is common for research and development or complex engineering projects where the scope is not fully defined at the outset. Under CPFF, the contractor is reimbursed for allowable costs plus a predetermined fixed fee representing profit. Compared to fixed-price contracts, CPFF offers flexibility but carries higher risk for the government, as costs can escalate. The fixed fee, however, provides some cost certainty regarding profit. Risks include potential contractor inefficiency driving up costs (as profit is fixed, not a percentage of costs) and the need for robust government oversight to control expenditures and ensure value. Other contract types like Firm-Fixed-Price (FFP) offer greater cost certainty but are less suitable for undefined scopes.

What is the justification for awarding this contract on a sole-source basis, and what alternatives were considered?

The provided data indicates the contract was 'NOT COMPETED' and is 'SOLE SOURCE'. Justifications for sole-source awards typically stem from unique capabilities, proprietary technology, urgent needs, or situations where only one responsible source can fulfill the requirement. Given the contractor is the Javelin Joint Venture (a partnership between Raytheon and Lockheed Martin, major defense manufacturers), the justification likely relates to specialized knowledge, intellectual property, or existing infrastructure directly tied to the Javelin system. Without access to the official justification documentation (e.g., a Justification and Approval document), the precise reasons and alternatives considered remain unknown. However, such awards are generally subject to strict regulatory requirements and require extensive documentation to ensure they are in the government's best interest.

What is the historical spending pattern for engineering services related to the Javelin program or similar defense systems?

Historical spending data for engineering services related to the Javelin program or similar defense systems would typically show significant and sustained investment over the lifecycle of the weapon system. This includes initial development, production support, upgrades, and sustainment engineering. Contracts like this one, awarded over extended periods (nearly 10 years in this case), reflect the ongoing need for technical expertise to maintain and improve complex military hardware. Spending patterns are often influenced by threat assessments, technological advancements, and defense budget allocations. Analyzing past contracts for the Javelin system or comparable missile programs would reveal trends in contract values, durations, and types, providing context for the $42.8 million award.

What are the potential risks associated with the long duration (3637 days) of this contract, and how are they mitigated?

The long duration of this contract (nearly 10 years) presents several risks. Firstly, the cost of services may increase over time due to inflation or evolving market rates, potentially exceeding initial estimates if not properly managed. Secondly, the technology or requirements may change significantly over such a long period, potentially rendering the contracted services less relevant or requiring costly modifications. Thirdly, maintaining consistent performance and oversight over a decade can be challenging. Mitigation strategies typically include incorporating economic price adjustment clauses, establishing clear performance metrics and review points throughout the contract, requiring regular reporting, and maintaining strong program management oversight to adapt to changing needs and ensure continued value for money.

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: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: W31P4Q06R0236

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Raytheon Company (UEI: 001339159)

Address: 1151 E HERMANS RD BLDG 80, TUCSON, AZ, 85706

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $42,858,211

Exercised Options: $42,858,211

Current Obligation: $42,858,211

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline