DoD's $98.9M Javelin Engineering Services contract awarded to Raytheon/Lockheed Martin JV, lacking competition

Contract Overview

Contract Amount: $98,860,963 ($98.9M)

Contractor: Raytheon/Lockheed Martin Javelin JV

Awarding Agency: Department of Defense

Start Date: 2010-07-16

End Date: 2017-06-30

Contract Duration: 2,541 days

Daily Burn Rate: $38.9K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: THE ACQUISITIONS IS FOR 12 MONTHS OF ENGINEERING SERVICES WITH THE OPTIONS FOR TWO ADDITIONAL YEARS IN SUPPORT OF THE JAVELIN WEAPON SYSTEM FOR FY10, FY11, FY12

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $98.9 million to RAYTHEON/LOCKHEED MARTIN JAVELIN JV for work described as: THE ACQUISITIONS IS FOR 12 MONTHS OF ENGINEERING SERVICES WITH THE OPTIONS FOR TWO ADDITIONAL YEARS IN SUPPORT OF THE JAVELIN WEAPON SYSTEM FOR FY10, FY11, FY12 Key points: 1. Contract awarded on a sole-source basis, limiting price discovery and potentially increasing costs. 2. Significant duration of over two years suggests a long-term need for specialized engineering support. 3. The contract type (Cost Plus Fixed Fee) can incentivize cost overruns. 4. Engineering services are critical for maintaining and evolving complex defense systems like the Javelin. 5. Awarded to a joint venture, indicating a concentrated market for this specific expertise. 6. Geographic location in Arizona may have implications for local economic impact and workforce.

Value Assessment

Rating: questionable

The contract's value of approximately $98.9 million over its potential duration raises questions about value for money, especially given the lack of competition. Without competitive bidding, it is difficult to benchmark the pricing against market rates or alternative providers. The Cost Plus Fixed Fee (CPFF) contract type, while allowing for flexibility, can also lead to higher costs if not managed rigorously, as the contractor is reimbursed for allowable costs plus a fixed fee. This structure may not provide the strongest incentive for cost efficiency compared to fixed-price contracts.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one contractor, the Raytheon/Lockheed Martin Javelin JV, was solicited. This approach bypasses the competitive bidding process, which typically leads to better price discovery and potentially lower costs for the government. The lack of competition suggests either a unique capability held by this specific joint venture or a potential oversight in market research to identify alternative sources. This significantly limits the government's ability to negotiate favorable terms based on market pressures.

Taxpayer Impact: The absence of competition means taxpayers may be paying a premium for these engineering services, as there was no market pressure to drive down the price. This could represent a less efficient use of public funds compared to a competitively awarded contract.

Public Impact

The primary beneficiaries are the Department of Defense, ensuring continued support for the Javelin weapon system. Services delivered include critical engineering support, likely encompassing design, sustainment, and potential upgrades for the Javelin. The geographic impact is concentrated in Arizona, where the contractor is located, potentially benefiting the local economy through employment and subcontracting. Workforce implications include the employment of specialized engineers and technical staff required for advanced defense systems.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially leading to higher costs for taxpayers.
Cost Plus Fixed Fee contract type may not sufficiently incentivize cost control by the contractor.
Lack of transparency in pricing due to non-competitive nature.
Long contract duration could mask inefficiencies over time.
Concentration of award to a specific joint venture might indicate limited market options or insufficient market research.

Positive Signals

Ensures continuity of essential engineering services for a critical defense system.
Award to a specialized joint venture likely provides deep expertise specific to the Javelin system.
Contract duration allows for stable planning and execution of engineering tasks.
Potential for knowledge retention and development within the contractor's team for this specific weapon system.

Sector Analysis

This contract falls within the Engineering Services sector, a critical component of the broader Defense Industrial Base. The market for specialized defense engineering is often characterized by high barriers to entry, proprietary knowledge, and consolidation among a few key players, particularly for legacy or complex weapon systems like the Javelin. Spending in this area is essential for maintaining technological superiority and operational readiness. Comparable spending benchmarks are difficult to establish precisely due to the specialized nature of the Javelin system and the sole-source award.

Small Business Impact

The data indicates that small business participation was not a stated priority for this contract, as the 'sb' field is false and the contract was not competed. There is no explicit small business set-aside mentioned. This suggests that opportunities for small businesses to subcontract on this specific award may be limited or dependent on the prime contractor's internal policies. Further investigation into subcontracting plans would be needed to assess the impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would typically fall under the Defense Contract Management Agency (DCMA), responsible for ensuring contractor performance and compliance. Accountability measures are inherent in the contract terms, particularly the Cost Plus Fixed Fee structure which requires detailed cost reporting and auditing. Transparency is limited due to the sole-source nature of the award; however, contract modifications and performance reports would be subject to internal DoD review and potentially Inspector General oversight if performance issues or fraud are suspected.

Related Government Programs

Javelin Weapon System Sustainment
Defense Engineering Services
Missile Defense Programs
Cost Plus Fixed Fee Contracts
Sole Source Defense Acquisitions

Risk Flags

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

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $98.9 million to RAYTHEON/LOCKHEED MARTIN JAVELIN JV. THE ACQUISITIONS IS FOR 12 MONTHS OF ENGINEERING SERVICES WITH THE OPTIONS FOR TWO ADDITIONAL YEARS IN SUPPORT OF THE JAVELIN WEAPON SYSTEM FOR FY10, FY11, FY12

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 (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $98.9 million.

What is the period of performance?

Start: 2010-07-16. End: 2017-06-30.

What is the track record of the Raytheon/Lockheed Martin Javelin JV in delivering engineering services for this weapon system?

The Raytheon/Lockheed Martin Javelin JV is a specialized entity formed by two major defense contractors specifically to manage and support the Javelin weapon system. Their track record is intrinsically linked to the Javelin's development, production, and sustainment lifecycle. Historically, the Javelin has been a highly successful anti-tank missile system, and its continued operational effectiveness relies heavily on the engineering support provided by this JV. While specific performance metrics for this particular contract are not detailed in the provided data, the longevity and continued deployment of the Javelin suggest a generally positive track record in delivering the necessary engineering expertise. However, the sole-source nature of this award means that performance comparisons with other potential providers are not available.

How does the pricing of this contract compare to similar engineering services contracts within the Department of Defense?

Direct comparison of pricing for this contract is challenging due to its sole-source nature and the highly specialized engineering services required for the Javelin weapon system. Typically, competitive bidding allows for benchmarking against market rates and other similar contracts. However, Cost Plus Fixed Fee (CPFF) contracts, like this one, are generally considered riskier for the government in terms of cost control compared to fixed-price contracts. Without access to detailed cost breakdowns and a competitive bidding process, it's difficult to definitively state if the pricing is optimal. The absence of competition means there was no market pressure to drive down costs, suggesting potential for higher-than-market pricing.

What are the primary risks associated with a sole-source award for critical defense engineering services?

The primary risks associated with a sole-source award for critical defense engineering services include a lack of price competition, which can lead to inflated costs for the government and taxpayers. It reduces the incentive for the contractor to innovate or become more efficient, as there are no competitors to outperform. Furthermore, it can create vendor lock-in, making it difficult and costly to switch providers in the future, even if performance or pricing becomes unsatisfactory. There's also a risk that the government may not be aware of all available capabilities or potential cost-saving alternatives that a competitive process might uncover. Finally, sole-source awards can sometimes be perceived as lacking transparency and fairness.

What is the expected effectiveness of the engineering services in ensuring the Javelin weapon system's continued operational readiness?

The engineering services provided under this contract are expected to be highly effective in ensuring the Javelin weapon system's continued operational readiness. The Javelin is a critical component of the U.S. military's anti-armor capabilities, and its effectiveness relies on ongoing technical support, maintenance, troubleshooting, and potential upgrades. The award to the Raytheon/Lockheed Martin Javelin JV, the original developers and manufacturers, ensures that the personnel performing these services possess intimate knowledge of the system's design, vulnerabilities, and operational requirements. This specialized expertise is crucial for addressing complex technical challenges, implementing necessary modifications, and ensuring the system remains reliable and effective in diverse operational environments.

How has historical spending on Javelin weapon system engineering services evolved over time?

Historical spending on Javelin weapon system engineering services has likely been substantial, reflecting the system's long service life and its importance as a frontline defense asset. While the provided data focuses on a specific contract period (FY10-FY12 with options extending to 2017), the Javelin has undergone continuous development and sustainment since its introduction in the late 1990s. Spending would have been higher during initial development and major upgrade phases and would shift towards sustainment and life-cycle support in later years. The contract's duration and value suggest a consistent, significant investment in maintaining and evolving the system's capabilities. Without access to historical contract databases covering the entire Javelin program, a precise evolution of spending cannot be detailed, but it is reasonable to assume consistent, substantial funding.

What are the implications of the Cost Plus Fixed Fee (CPFF) contract type on contractor performance and government cost control?

The Cost Plus Fixed Fee (CPFF) contract type has mixed implications for contractor performance and government cost control. On the positive side, it allows the government to procure services when the scope of work is not precisely defined or when there is significant uncertainty, as is often the case with complex engineering projects. It ensures that the contractor is reimbursed for all allowable costs incurred, plus a predetermined fixed fee representing their profit. This can encourage contractors to accept challenging projects they might otherwise avoid. However, CPFF contracts provide less incentive for the contractor to control costs aggressively, as their profit (the fixed fee) remains constant regardless of the actual costs incurred. This can lead to cost overruns and requires robust government oversight to monitor expenditures and ensure efficiency. The government bears the primary risk of cost overruns.

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: W31P4Q09R0290

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: RTX Corp

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

Business Categories: Category Business, Manufacturer of Goods, Not Designated a Small Business, Partnership or Limited Liability Partnership, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $98,860,963

Exercised Options: $98,860,963

Current Obligation: $98,860,963

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline