Raytheon Company awarded $26.4M for TAS Engineering Services, a sole-source contract spanning over six years

Contract Overview

Contract Amount: $26,374,016 ($26.4M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2007-10-31

End Date: 2013-12-31

Contract Duration: 2,253 days

Daily Burn Rate: $11.7K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: TAS::11 8242::TAS ENGINEERING SERVICES CONTRACT

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $26.4 million to RAYTHEON COMPANY for work described as: TAS::11 8242::TAS ENGINEERING SERVICES CONTRACT Key points: 1. Contract value appears reasonable given the extended duration and specialized nature of engineering services. 2. Sole-source award limits opportunities for competitive pricing and potentially higher value for taxpayer funds. 3. Long contract duration (over six years) may indicate a need for sustained, specialized support. 4. Performance context is limited without specific task orders or deliverables. 5. Positioned within the Defense sector, specifically engineering services for complex systems. 6. No small business set-aside was utilized, suggesting a focus on large prime contractors.

Value Assessment

Rating: fair

The total award of $26.4 million over approximately six years suggests an average annual value of around $4.4 million. Benchmarking this requires understanding the specific engineering services provided. Without detailed task order data or comparison to similar sole-source engineering contracts within the Department of Defense, a precise value-for-money assessment is challenging. However, the lack of competition inherently raises concerns about achieving the best possible price.

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 among multiple vendors. This typically occurs when a specific contractor possesses unique capabilities, proprietary technology, or is the only source capable of meeting the requirement. The lack of competition means that price discovery through market forces was absent, potentially leading to higher costs than if multiple bids had been solicited.

Taxpayer Impact: Sole-source awards mean taxpayers may not benefit from the cost savings that can arise from a competitive bidding process. This can result in a less efficient use of public funds.

Public Impact

The primary beneficiaries are likely the Department of Defense, which receives specialized engineering support. Services delivered include engineering expertise crucial for defense systems. Geographic impact is centered in Arizona, where the contractor's facility is located. Workforce implications involve skilled engineers and technical personnel employed by Raytheon.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source nature limits competitive pressure on pricing.
Extended contract duration could lead to cost overruns if not managed effectively.
Lack of transparency in the justification for sole-source award.

Positive Signals

Award to a large, established defense contractor suggests a high likelihood of technical capability.
Long-term engagement indicates a critical need for the services provided.
Contract awarded to Raytheon, a known entity in defense engineering.

Sector Analysis

This contract falls within the Engineering Services sector, a critical component of the broader Defense industry. The market for specialized defense engineering is often characterized by high barriers to entry due to technical expertise, security clearances, and established relationships. Spending in this area is substantial, supporting the development, maintenance, and modernization of complex military systems. Comparable spending benchmarks would involve analyzing other sole-source or competed engineering contracts for similar defense platforms.

Small Business Impact

This contract was not set aside for small businesses, nor does it appear to have significant subcontracting requirements for small businesses based on the provided data. The award to a large prime contractor like Raytheon suggests that the focus was on leveraging established capabilities rather than promoting small business participation. This could limit opportunities for smaller firms to contribute to this specific defense engineering effort.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor performance and compliance. Accountability measures would be tied to the terms of the Cost Plus Fixed Fee contract, including progress reports and milestone achievements. Transparency is limited due to the sole-source nature and the proprietary aspects of defense engineering, but contract awards are generally reported in federal databases.

Related Government Programs

Defense Engineering Services
Raytheon Company Contracts
Department of Defense Procurement
Sole Source Defense Contracts

Risk Flags

Sole-source award
Lack of competition
Potential for cost overruns in CPFF contracts
Limited transparency on specific services

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $26.4 million to RAYTHEON COMPANY. TAS::11 8242::TAS ENGINEERING SERVICES CONTRACT

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 $26.4 million.

What is the period of performance?

Start: 2007-10-31. End: 2013-12-31.

What specific engineering services were provided under this contract?

The provided data indicates 'TAS ENGINEERING SERVICES CONTRACT' and a North American Industry Classification System (NAICS) code of 541330 for Engineering Services. However, the specific nature of these services, such as system design, integration, testing, or maintenance for particular defense platforms, is not detailed. Further investigation into contract line item numbers (CLINs) or task orders would be necessary to understand the precise technical contributions made by Raytheon under this award. This information is crucial for assessing the true value and impact of the contract.

What was the justification for awarding this contract on a sole-source basis?

Sole-source justifications typically cite reasons such as unique capabilities, proprietary technology, urgent and compelling needs where competition is not feasible, or when only one responsible source exists. For this Raytheon contract, the justification likely stemmed from Raytheon's specific expertise or existing role with the particular defense system requiring TAS engineering services. Without access to the official Justification and Approval (J&A) document, the precise rationale remains speculative. This lack of transparency in sole-source awards can be a concern for ensuring fair and competitive procurement practices.

How does the total contract value of $26.4 million compare to similar engineering services contracts within the Department of Defense?

Comparing the $26.4 million total award value requires context regarding the duration and scope of services. This contract spanned over six years (2007-2013), averaging approximately $4.4 million annually. To benchmark effectively, one would need to identify similar sole-source or competed engineering services contracts awarded by the DoD during that period for comparable defense systems or technologies. Factors like contract type (Cost Plus Fixed Fee), specific technical requirements, and contractor overhead rates would influence comparisons. Given the sole-source nature, it's plausible that the price may be higher than a competitively bid equivalent.

What is Raytheon Company's track record with the Department of Defense for engineering services?

Raytheon Company (now RTX) has a long and extensive history of contracting with the Department of Defense, providing a wide array of engineering, technology, and defense systems. They are a major defense contractor known for expertise in areas such as aerospace, defense, and security. Their track record with the DoD includes numerous large-scale contracts for complex weapon systems, intelligence, surveillance, and reconnaissance (ISR) platforms, and associated engineering support. While specific performance metrics for this particular TAS Engineering Services contract are not detailed here, Raytheon's overall standing as a prime defense contractor suggests a significant level of experience and capability in delivering such services.

What were the potential risks associated with a sole-source, Cost Plus Fixed Fee contract of this magnitude and duration?

Sole-source contracts inherently carry the risk of reduced price competition, potentially leading to higher costs for the government. A Cost Plus Fixed Fee (CPFF) structure, while providing flexibility for evolving requirements, can incentivize contractors to incur more costs if the fixed fee is substantial relative to the anticipated costs. The long duration (over six years) increases the risk of cost growth due to inflation, scope creep, or unforeseen technical challenges. Effective government oversight is critical to mitigate these risks by closely monitoring costs, ensuring efficient performance, and validating the necessity of all expenditures.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services

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

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: W31P4Q07R0091

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: RTX Corp (UEI: 001344142)

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

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $32,741,536

Exercised Options: $26,374,016

Current Obligation: $26,374,016

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline