Raytheon Company awarded $62.7M contract for engineering services, with no competition

Contract Overview

Contract Amount: $62,739,676 ($62.7M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2017-03-30

End Date: 2024-02-21

Contract Duration: 2,519 days

Daily Burn Rate: $24.9K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: IGF::OT::IGF TO EXERCISE OPTION SLIN 0008AA.

Place of Performance

Location: ANDOVER, ESSEX County, MASSACHUSETTS, 01810

State: Massachusetts Government Spending

Plain-Language Summary

Department of Defense obligated $62.7 million to RAYTHEON COMPANY for work described as: IGF::OT::IGF TO EXERCISE OPTION SLIN 0008AA. Key points: 1. Contract awarded on a cost-plus-fixed-fee basis, which can lead to higher costs if not managed carefully. 2. The contract has been extended multiple times, indicating a long-term need for these services. 3. Lack of competition suggests potential for inflated pricing and reduced value for taxpayer dollars. 4. The contract duration is significant, spanning over 2500 days. 5. Services are provided by a large, established defense contractor, Raytheon Company. 6. The contract falls under engineering services, a critical but potentially high-cost sector.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to the lack of competitive bids and the cost-plus-fixed-fee structure. Without comparison to similar, competed contracts for engineering services, it's difficult to ascertain if the pricing is reasonable. The extended duration and multiple option exercises suggest a sustained need, but the absence of competition raises concerns about whether the government is achieving optimal value for its investment. Further analysis would require access to detailed cost breakdowns and performance metrics.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded using a sole-source justification, meaning it was not competed. This approach is typically used when only one vendor can provide the required services. However, the lack of competition limits the government's ability to leverage market forces to drive down prices and ensure the best possible value. It also raises questions about whether alternative solutions or providers were adequately explored.

Taxpayer Impact: Taxpayers may be paying a premium for these services due to the absence of competitive pressure. Without multiple bids, there's less incentive for the contractor to offer the most cost-effective solution.

Public Impact

The Department of Defense benefits from specialized engineering services essential for its operations. These services likely support critical defense systems and infrastructure. The geographic impact is primarily within the United States, supporting defense readiness. The contract supports a workforce within the engineering and defense sectors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to higher costs for taxpayers.
Cost-plus-fixed-fee contracts can incentivize cost overruns if not closely monitored.
Extended contract duration without re-competition raises concerns about ongoing value.
Sole-source awards limit transparency and potential for better pricing.

Positive Signals

Contract awarded to a reputable and experienced defense contractor.
Engineering services are crucial for national defense infrastructure.
The contract has a defined period of performance, allowing for periodic review.

Sector Analysis

This contract falls within the Engineering Services sector, which is a significant component of the broader professional, scientific, and technical services industry. The market for defense-related engineering services is substantial, often dominated by large, specialized contractors like Raytheon. Benchmarking spending in this area requires comparing the contract's scope and duration against similar sole-source or competed engineering contracts within the Department of Defense and other federal agencies.

Small Business Impact

This contract does not appear to have a small business set-aside component, nor is there information indicating subcontracting opportunities for small businesses. The award to a large prime contractor like Raytheon suggests that the primary focus is on specialized capabilities rather than fostering small business participation. This could limit the impact on the small business ecosystem for this specific contract.

Oversight & Accountability

Oversight for this contract is likely managed by the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor performance and compliance. The cost-plus-fixed-fee structure necessitates rigorous financial oversight to prevent cost overruns. Transparency regarding the specific engineering tasks and associated costs would be crucial for effective accountability, though this is often limited in sole-source defense contracts.

Related Government Programs

Department of Defense Engineering Services
Raytheon Company Contracts
Cost-Plus-Fixed-Fee Contracts
Sole-Source Defense Contracts

Risk Flags

Lack of Competition
Cost-Plus-Fixed-Fee Structure
Extended Contract Duration
Sole-Source Award

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $62.7 million to RAYTHEON COMPANY. IGF::OT::IGF TO EXERCISE OPTION SLIN 0008AA.

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 $62.7 million.

What is the period of performance?

Start: 2017-03-30. End: 2024-02-21.

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

Raytheon Company, now part of RTX, has a long and extensive history of providing engineering and technical services to the Department of Defense across various platforms and systems. Their track record includes work on major defense programs, often involving complex systems integration, research and development, and sustainment engineering. While specific performance metrics for individual contracts are often not publicly disclosed, their continued awards suggest a perceived capability and reliability by the DoD. However, like any large defense contractor, they have also faced scrutiny over contract costs and performance on specific projects. A comprehensive review would involve examining past performance evaluations and any documented issues or successes related to their service delivery to the DoD.

How does the value of this contract compare to similar engineering services contracts awarded by the DoD?

Direct comparison of this $62.7 million contract is difficult without knowing the precise scope of 'engineering services' and the specific systems or platforms supported. However, the Department of Defense awards numerous contracts for engineering services, ranging from millions to billions of dollars. Given this contract was sole-sourced and utilized a cost-plus-fixed-fee structure, it is inherently harder to benchmark against competitively bid contracts where price is a primary factor. Generally, sole-source awards, especially those with flexible fee structures, can be more expensive than competed ones. To provide a robust comparison, one would need to identify contracts with similar technical requirements, duration, and complexity, ideally those that underwent a competitive bidding process.

What are the primary risks associated with a sole-source, cost-plus-fixed-fee contract for engineering services?

The primary risks associated with a sole-source, cost-plus-fixed-fee (CPFF) contract for engineering services are twofold. Firstly, the sole-source nature eliminates competitive pressure, potentially leading to higher prices and less incentive for the contractor to innovate or optimize costs. The government may not be receiving the best possible value. Secondly, the CPFF structure, while providing flexibility for evolving requirements, can incentivize cost escalation. The contractor is reimbursed for allowable costs plus a fixed fee, meaning they have less financial risk if costs increase, potentially leading to less stringent cost control unless robust oversight is in place. This combination requires diligent government oversight to manage costs and ensure performance objectives are met effectively.

What is the historical spending pattern for engineering services by the Department of Defense?

The Department of Defense is consistently one of the largest federal spenders on engineering services, reflecting the complexity and scale of its operations and acquisition programs. Historical spending data shows a significant and sustained investment in this category, encompassing a wide array of services from basic design and analysis to advanced systems engineering and integration. This spending is driven by the need to develop, maintain, and modernize military equipment, infrastructure, and C4ISR systems. While specific annual figures fluctuate based on defense budgets and program priorities, engineering services represent a substantial and critical portion of the DoD's overall procurement budget, often awarded through both competitive and non-competitive contracts to a mix of large and small businesses.

How does the contract's duration (2519 days) impact its overall value and risk assessment?

A contract duration of 2519 days (approximately 7 years) is substantial and significantly impacts both value and risk. For value, a longer duration can provide stability and continuity for critical services, potentially leading to efficiencies through contractor familiarity with the systems. However, it also locks the government into a specific provider for an extended period, reducing flexibility and the opportunity to benefit from market changes or new technologies that might emerge. From a risk perspective, a longer duration increases the exposure to potential cost increases over time, especially with a CPFF structure. It also means that any performance issues or contractor deficiencies will have a prolonged impact. Robust oversight and clear performance metrics are essential to mitigate risks over such an extended period.

Industry Classification

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

Product/Service Code: MAINT, REPAIR, ALTER REAL PROPERTY › MAINT, ALTER, REPAIR BUILDINGS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: W31P4Q16R0011

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Rockwell Collins Australia PTY Limited

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: $62,739,676

Exercised Options: $62,739,676

Current Obligation: $62,739,676

Subaward Activity

Number of Subawards: 169

Total Subaward Amount: $16,438,769

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline