Raytheon Company awarded $85.1M for IV&V SPT - PROG/CONF services, a sole-source contract

Contract Overview

Contract Amount: $85,111,739 ($85.1M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2010-03-01

End Date: 2015-12-31

Contract Duration: 2,131 days

Daily Burn Rate: $39.9K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: IV&V SPT - PROG/CONF

Place of Performance

Location: ANDOVER, ESSEX County, MASSACHUSETTS, 01810

State: Massachusetts Government Spending

Plain-Language Summary

Department of Defense obligated $85.1 million to RAYTHEON COMPANY for work described as: IV&V SPT - PROG/CONF Key points: 1. Contract awarded to a single vendor, raising questions about competitive pricing. 2. Significant duration of over 5 years suggests a long-term need for these services. 3. The contract type (Cost Plus Fixed Fee) can incentivize cost overruns. 4. Awarded by the Department of the Army, indicating a defense-related need. 5. The North American Industry Classification System (NAICS) code 334413 points to semiconductor manufacturing, which may be related to the services provided. 6. The contract was not competed, limiting opportunities for other vendors and potentially impacting value for money.

Value Assessment

Rating: questionable

Benchmarking the value for this contract is challenging due to its sole-source nature and the specific nature of 'IV&V SPT - PROG/CONF' services, which are not easily comparable to publicly available data. The Cost Plus Fixed Fee (CPFF) contract type, while allowing for flexibility, can sometimes lead to higher costs compared to fixed-price contracts if not managed rigorously. Without competitive bids, it's difficult to ascertain if the pricing reflects fair market value or if taxpayers received the best possible deal.

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 approach is typically used when only one vendor possesses the unique capabilities or technology required for the service, or in cases of urgent need. The lack of competition means that price discovery through market forces was bypassed, potentially leading to a higher price than if multiple bids had been solicited.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive pressure to offer the lowest possible price. The government did not benefit from the cost-saving innovations that often arise from a competitive bidding process.

Public Impact

The primary beneficiary is the Department of the Army, which receives critical program verification and validation support. Services likely ensure the proper functioning and security of complex defense systems or programs. The geographic impact is primarily within the United States, supporting defense operations. Workforce implications include specialized technical roles within Raytheon Company, contributing to the defense industrial base.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition.
Cost Plus Fixed Fee contract type can lead to cost escalation.
Lack of transparency in the justification for sole-sourcing.
Potential for vendor lock-in due to specialized services.

Positive Signals

Award to an established contractor (Raytheon Company) suggests a degree of reliability.
Contract duration indicates a sustained need and potential for stable support.
Specific services (IV&V) are crucial for program integrity in complex systems.

Sector Analysis

The Information Technology and Defense sectors are highly relevant here. The NAICS code 334413, 'Semiconductor and Related Device Manufacturing,' suggests a potential link to hardware or embedded systems within defense programs. Spending in these areas is substantial, with significant government investment in R&D, procurement, and support services to maintain technological superiority. Comparable spending benchmarks are difficult to establish for highly specialized IV&V services, but overall IT and defense contracting represent hundreds of billions annually.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb: false'. Furthermore, the sole-source nature of the award limits opportunities for small businesses to participate as prime contractors. Subcontracting opportunities for small businesses may exist, but these are not explicitly detailed in the provided data and would depend on Raytheon's subcontracting plan.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Army's contracting and program management offices. Accountability measures would be defined in the contract terms, including performance metrics and reporting requirements. Transparency is limited due to the sole-source nature of the award. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Defense Program Management Support
Independent Verification and Validation Services
Cost Plus Fixed Fee Contracts
Sole Source Defense Procurements
Semiconductor Technology Procurement

Risk Flags

Sole-source award
Cost-reimbursement contract type
Long contract duration
Lack of publicly available performance data

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $85.1 million to RAYTHEON COMPANY. IV&V SPT - PROG/CONF

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 $85.1 million.

What is the period of performance?

Start: 2010-03-01. End: 2015-12-31.

What is the specific nature of the 'IV&V SPT - PROG/CONF' services provided under this contract?

The acronym 'IV&V SPT - PROG/CONF' likely stands for Independent Verification and Validation Support for Programs and Configuration. Independent Verification and Validation (IV&V) is a process used to ensure that a system or software meets its specified requirements and functions correctly. It involves testing and analysis performed by an independent entity to provide an unbiased assessment. 'PROG/CONF' suggests that this support is related to managing and validating program configurations, which is critical for complex systems where changes need to be carefully controlled and verified to maintain system integrity and security. The specific technical details would be outlined in the contract's Statement of Work (SOW).

Why was this contract awarded on a sole-source basis instead of being competed?

Sole-source awards are typically justified under specific circumstances outlined in federal acquisition regulations, such as when only one responsible source can provide the required supplies or services, or when there is a compelling urgency. For this contract, the justification might stem from Raytheon Company possessing unique proprietary technology, specialized expertise, or existing system knowledge that makes them the only viable option. Alternatively, if the services were critical and time-sensitive, and a full and open competition would cause an unacceptable delay, a sole-source award might be deemed necessary. The specific justification would be documented in the contract file.

How does the Cost Plus Fixed Fee (CPFF) contract type potentially impact the final cost compared to other contract types?

A Cost Plus Fixed Fee (CPFF) contract reimburses the contractor for all allowable costs incurred, plus a predetermined fixed fee representing profit. This contract type is often used when the scope of work is not clearly defined or is subject to change. While the fee is fixed, the total cost is variable. This can incentivize contractors to incur costs, as their profit (the fixed fee) remains constant regardless of the total cost. This contrasts with fixed-price contracts, where the contractor bears more risk and has a stronger incentive to control costs to maximize profit. Therefore, CPFF contracts can potentially lead to higher overall costs if not managed with stringent oversight and cost controls.

What is the significance of the NAICS code 334413 in relation to this contract?

The North American Industry Classification System (NAICS) code 334413 designates 'Semiconductor and Related Device Manufacturing.' While the contract is for 'IV&V SPT - PROG/CONF' services, this NAICS code suggests a potential connection to the semiconductor industry. This could mean that the programs or configurations being verified and validated are related to semiconductor manufacturing processes, equipment, or the semiconductor components themselves. Raytheon Company, a major defense contractor, might be involved in developing or supporting defense systems that rely heavily on advanced semiconductor technology, necessitating specialized IV&V services within that domain.

What are the potential risks associated with a sole-source contract of this magnitude and duration?

The primary risk associated with a sole-source contract, especially one valued at $85.1 million and spanning over five years, is the lack of competitive pressure on pricing. This can lead to the government paying more than necessary. Another risk is vendor lock-in, where the government becomes dependent on a single provider, making it difficult and costly to switch vendors in the future. Furthermore, without the scrutiny of a competitive process, there's a potential for reduced innovation and less incentive for the contractor to proactively seek efficiencies. Robust oversight and performance management are crucial to mitigate these risks.

Industry Classification

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

Product/Service Code: RESEARCH AND DEVELOPMENT › General Science and Technology R&D Services

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: W31P4Q08R0306

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: RTX Corp

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: $85,111,739

Exercised Options: $85,111,739

Current Obligation: $85,111,739

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline