DOD's $59M Patriot Repair Contract with Raytheon: Cost Plus Fixed Fee, Limited Competition
Contract Overview
Contract Amount: $59,267,934 ($59.3M)
Contractor: Raytheon Company
Awarding Agency: Department of Defense
Start Date: 2012-07-26
End Date: 2017-01-31
Contract Duration: 1,650 days
Daily Burn Rate: $35.9K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: COST PLUS FIXED FEE
Sector: Defense
Official Description: IGF::OT::IGF PATRIOT - MAJOR ITEM REPAIR
Place of Performance
Location: ANDOVER, ESSEX County, MASSACHUSETTS, 01810
Plain-Language Summary
Department of Defense obligated $59.3 million to RAYTHEON COMPANY for work described as: IGF::OT::IGF PATRIOT - MAJOR ITEM REPAIR Key points: 1. Contract awarded to Raytheon Company for major item repair of IGF PATRIOT. 2. Significant spending of $59.3M over a 5-year period. 3. Contract type is Cost Plus Fixed Fee, which can lead to cost overruns. 4. The sector is IT/Defense, specifically navigation and guidance systems. 5. No small business participation noted.
Value Assessment
Rating: questionable
The Cost Plus Fixed Fee (CPFF) contract type, while allowing flexibility for complex repairs, carries inherent risks of cost escalation. Without clear benchmarks or competitive pricing, assessing the value for money is difficult.
Cost Per Unit: N/A
Competition Analysis
Competition Level: limited
The contract was not competed, indicating a sole-source or limited competition scenario. This lack of competition likely resulted in higher prices and reduced price discovery for the government.
Taxpayer Impact: The absence of competitive bidding may have led to taxpayers paying more than necessary for these repair services.
Public Impact
Ensures continued operational readiness of critical defense assets. Supports advanced technology in navigation and guidance systems. Potential for increased costs due to non-competitive award.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Cost Plus Fixed Fee contract type
- Lack of competition
- No small business participation
Positive Signals
- Ensures critical repair services for defense systems
- Long contract duration suggests essential need
Sector Analysis
This contract falls within the Defense sector, specifically focusing on the manufacturing and repair of navigation and guidance systems. Spending benchmarks for similar complex repair contracts can vary widely based on system criticality and technological sophistication.
Small Business Impact
The contract data indicates no small business participation. This suggests that the prime contractor, Raytheon, is handling the entirety of the work, potentially missing opportunities to leverage specialized small business capabilities.
Oversight & Accountability
The Cost Plus Fixed Fee structure necessitates robust oversight to manage costs and ensure performance. The lack of competition raises questions about the effectiveness of existing oversight mechanisms in securing the best value.
Related Government Programs
- Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing
- Department of Defense Contracting
- Department of the Army Programs
Risk Flags
- Lack of competition may lead to inflated costs.
- Cost Plus Fixed Fee contract type increases risk of cost overruns.
- No small business participation noted.
- Limited transparency on justification for non-competition.
Tags
search-detection-navigation-guidance-aer, department-of-defense, ma, definitive-contract, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $59.3 million to RAYTHEON COMPANY. IGF::OT::IGF PATRIOT - MAJOR ITEM REPAIR
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 $59.3 million.
What is the period of performance?
Start: 2012-07-26. End: 2017-01-31.
What was the justification for not competing this contract, and what steps were taken to ensure a fair and reasonable price?
The justification for not competing this contract is not provided in the data. Typically, sole-source or limited competition awards require detailed justification, such as unique capabilities or urgent needs. Without this information, it's difficult to assess if fair and reasonable pricing was achieved through negotiation or if the government accepted a higher price due to the lack of competitive pressure.
What are the potential risks associated with a Cost Plus Fixed Fee contract for major item repair, and how were they mitigated?
CPFF contracts carry the risk of cost overruns as the contractor is reimbursed for actual costs plus a fixed fee. Mitigation strategies include stringent cost monitoring, detailed audits, performance incentives, and clear scope definition. The data does not specify the mitigation efforts employed, making it difficult to gauge the level of risk management.
How does the performance of this contract align with the operational needs of the Department of the Army, and what is the long-term cost-effectiveness?
The contract's duration and focus on major item repair suggest alignment with the Army's need for sustained operational readiness of the PATRIOT system. However, the long-term cost-effectiveness is questionable given the non-competitive award and CPFF structure, which may inflate total ownership costs over the system's lifecycle.
Industry Classification
NAICS: Manufacturing › Navigational, Measuring, Electromedical, and Control Instruments Manufacturing › Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing
Product/Service Code: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT
Competition & Pricing
Extent Competed: NOT COMPETED
Solicitation Procedures: ONLY ONE SOURCE
Solicitation ID: W31P4Q11R0150
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: $78,546,656
Exercised Options: $59,267,934
Current Obligation: $59,267,934
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2012-07-26
Current End Date: 2017-01-31
Potential End Date: 2017-01-31 12:01:00
Last Modified: 2021-03-17
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