Raytheon Company awarded $23.6M for Hawk Engineering Services, a sole-source contract for missile parts

Contract Overview

Contract Amount: $23,663,002 ($23.7M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2007-09-21

End Date: 2011-09-30

Contract Duration: 1,470 days

Daily Burn Rate: $16.1K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: HAWK ENGINEERING SERVICES FAIR SHARE SUSTAINMENT PROGRAM

Place of Performance

Location: ANDOVER, ESSEX County, MASSACHUSETTS, 01810

State: Massachusetts Government Spending

Plain-Language Summary

Department of Defense obligated $23.7 million to RAYTHEON COMPANY for work described as: HAWK ENGINEERING SERVICES FAIR SHARE SUSTAINMENT PROGRAM Key points: 1. Contract awarded to a single vendor, raising questions about price competitiveness. 2. Long-term sustainment program indicates a need for specialized, ongoing support. 3. The contract type (Cost Plus Fixed Fee) can incentivize cost overruns. 4. Focus on missile parts suggests a critical defense capability. 5. The duration of the contract (1470 days) points to a significant, long-term requirement. 6. Awarded to Raytheon, a major defense contractor with extensive experience.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to its sole-source nature and the specific, specialized components involved. Without competitive bids, it's difficult to ascertain if the pricing reflects fair market value. The Cost Plus Fixed Fee (CPFF) contract type, while common for complex R&D or services where costs are uncertain, carries inherent risks of cost escalation if not closely managed. The total value of over $23 million over approximately four years suggests a substantial investment in sustainment for the Hawk system.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award. This typically occurs when only one vendor possesses the necessary technical expertise, intellectual property, or capability to fulfill the requirement. The lack of competition means that taxpayers did not benefit from a price discovery process driven by multiple bids, potentially leading to higher costs than if the contract had been open to a wider range of suppliers.

Taxpayer Impact: Sole-source awards limit the government's ability to leverage competition to secure the best possible pricing, potentially resulting in less efficient use of taxpayer funds.

Public Impact

The U.S. Army benefits from the continued operational readiness of the Hawk missile system. Services provided ensure the sustainment and maintenance of critical defense hardware. The geographic impact is primarily within the Department of Defense's operational theaters. Workforce implications include specialized engineering and technical roles within Raytheon and potentially supporting subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potential cost savings for taxpayers.
Cost Plus Fixed Fee contract type can lead to cost overruns if not managed stringently.
Lack of transparency in the procurement process due to sole-source nature.
Long contract duration may not adapt well to evolving technological needs.
Potential for vendor lock-in with specialized sustainment services.

Positive Signals

Ensures sustainment of a critical defense asset, maintaining national security capabilities.
Award to an experienced contractor (Raytheon) suggests a high likelihood of successful execution.
Definitive contract provides a clear framework for services over a defined period.
The specific nature of the requirement likely necessitates specialized expertise, which Raytheon possesses.

Sector Analysis

This contract falls within the defense manufacturing and services sector, specifically focusing on the sustainment of legacy weapon systems. The market for defense sustainment is often characterized by long-term relationships between the government and prime contractors, particularly for specialized equipment like missile systems. While the overall defense market is vast, contracts for specific legacy system support can be concentrated among a few key players with the requisite knowledge and security clearances. Benchmarks for such specialized sustainment are difficult to establish publicly due to proprietary information and the unique nature of each system.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Furthermore, the 'ss' (small business subcontracting) is also false, suggesting no specific requirement for subcontracting to small businesses was mandated for this particular award. This means that opportunities for small businesses to participate in this contract, either as prime contractors or subcontractors, are likely limited, potentially impacting the small business defense industrial base.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Army and the Department of Defense's contracting and program management offices. Given the sole-source nature and the specific technical requirements, oversight would focus on ensuring that Raytheon meets the defined performance standards and cost controls outlined in the Cost Plus Fixed Fee agreement. Transparency is limited due to the non-competitive award, but contract performance reviews and financial audits would be key accountability measures. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Hawk Missile System Sustainment
Defense Logistics Agency (DLA) Support Contracts
Army Aviation and Missile Command (AMCOM) Contracts
Guided Missile Parts Manufacturing
Defense Contractor Support Services

Risk Flags

Sole-source award
Cost-plus contract type
Lack of small business subcontracting

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $23.7 million to RAYTHEON COMPANY. HAWK ENGINEERING SERVICES FAIR SHARE SUSTAINMENT PROGRAM

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 $23.7 million.

What is the period of performance?

Start: 2007-09-21. End: 2011-09-30.

What is Raytheon Company's track record with the Department of Defense, particularly on sustainment contracts?

Raytheon Company, now part of RTX Corporation, has a long and extensive history of contracting with the Department of Defense across various platforms and services. They are a major defense contractor known for producing a wide range of defense systems, including missiles, radar, and command and control systems. Their track record on sustainment contracts is generally robust, reflecting their deep involvement in the lifecycle support of the systems they produce. However, like any large contractor, specific contract performance can vary, and detailed reviews of individual contract histories, including cost performance and delivery timeliness, would be necessary for a comprehensive assessment. Their significant presence in the defense sector implies a high level of experience and established processes for managing complex sustainment programs.

How does the Cost Plus Fixed Fee (CPFF) contract type compare to other contract types in terms of value for money for the government?

The Cost Plus Fixed Fee (CPFF) contract type is often used when the scope of work is well-defined but the costs are uncertain, such as in research and development or complex services. The government agrees to pay the contractor's actual costs plus a fixed fee, which represents the contractor's profit. While this can be advantageous for acquiring specialized services where upfront cost estimation is difficult, it carries a higher risk of cost overruns compared to fixed-price contracts. The government bears the risk of cost increases, and the contractor has less incentive to control costs once the contract is awarded, as their profit is fixed. For value for money, fixed-price contracts generally offer better cost certainty and incentivize contractor efficiency, provided the scope is clearly defined and stable. CPFF requires stringent government oversight to manage costs effectively.

What are the primary risks associated with sole-source defense contracts like this one?

Sole-source defense contracts present several significant risks. The most prominent is the lack of price competition, which can lead to inflated costs for the government and taxpayers, as there is no market pressure to drive down prices. This can result in a suboptimal allocation of resources. Another risk is potential complacency from the contractor, who may face less pressure to innovate or improve efficiency due to the absence of competitors. Furthermore, sole-source awards can create vendor lock-in, making it difficult and costly to switch providers in the future, even if better alternatives emerge. There's also a reduced transparency in the procurement process, making it harder for external stakeholders to assess the fairness and reasonableness of the award and pricing.

What is the historical spending pattern for the Hawk Engineering Services Fair Share Sustainment Program?

The provided data indicates this specific contract, 'HAWK ENGINEERING SERVICES FAIR SHARE SUSTAINMENT PROGRAM,' was awarded for $23,663,002.01 and ran from September 21, 2007, to September 30, 2011. This suggests a four-year period of sustainment activity. Without access to broader contract databases or historical procurement records specifically detailing all prior or subsequent sustainment efforts for the Hawk system under this program name, it's difficult to establish a comprehensive historical spending pattern. However, the existence of this contract implies a recurring need for sustainment services for the Hawk missile system, likely involving significant cumulative expenditure over the system's operational life. Further analysis would require querying historical contract awards related to the Hawk missile system's sustainment across different fiscal years and contracting vehicles.

How does the 'Other Guided Missile and Space Vehicle Parts and Auxiliary Equipment Manufacturing' (NAICS 336419) classification impact the contract's nature?

The NAICS code 336419, 'Other Guided Missile and Space Vehicle Parts and Auxiliary Equipment Manufacturing,' signifies that the core of this contract involves the production or provision of components, parts, or auxiliary equipment specifically for guided missiles and space vehicles. This classification highlights the highly specialized and technical nature of the goods or services being procured. Such components are critical for the functionality and readiness of defense systems. Contracts under this code often require adherence to stringent quality control, advanced manufacturing processes, and specific material certifications due to the high-stakes environment in which these products are used. It also suggests that the supply chain for these parts may be limited, potentially contributing to sole-source awards if only a few manufacturers possess the necessary capabilities and certifications.

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

Solicitation ID: W31P4Q07R0136

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, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $23,689,682

Exercised Options: $23,689,682

Current Obligation: $23,663,002

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline