Raytheon Company awarded $4.48M for engineering services, with limited competition and a long performance period

Contract Overview

Contract Amount: $4,477,070 ($4.5M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2019-03-12

End Date: 2025-12-31

Contract Duration: 2,486 days

Daily Burn Rate: $1.8K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: STINGER ENGINEERING SERVICES

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $4.5 million to RAYTHEON COMPANY for work described as: STINGER ENGINEERING SERVICES Key points: 1. Contract awarded to a single, large defense contractor, raising questions about competitive pricing. 2. The contract spans over 6 years, indicating a long-term need for these engineering services. 3. Performance is concentrated in Arizona, suggesting a localized impact on the workforce and economy. 4. The cost-plus-fixed-fee structure may incentivize cost overruns if not closely monitored. 5. Engineering services are critical for defense readiness, but the specific application here is unclear. 6. Lack of small business participation noted, potentially limiting broader economic benefits.

Value Assessment

Rating: fair

The contract's value of $4.48 million over nearly seven years suggests a moderate annual spend. Without comparable contracts for similar specialized engineering services, a precise value-for-money assessment is difficult. The cost-plus-fixed-fee (CPFF) pricing structure, while common for complex R&D or services where costs are uncertain, carries inherent risks of cost escalation. Benchmarking against industry standards for engineering services of this duration and scope would be necessary to determine if the fixed fee is appropriate and if the overall cost represents good value.

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 among multiple vendors. This approach is typically used when only one vendor possesses the unique capabilities or technology required for the service. The lack of competition means that taxpayers did not benefit from the price discovery that typically occurs in a competitive bidding process, potentially leading to higher costs than might have been achieved otherwise.

Taxpayer Impact: Sole-source awards limit opportunities for other businesses to compete for government contracts and can result in higher prices for taxpayers due to the absence of competitive pressure.

Public Impact

The primary beneficiary is the Department of the Army, which receives specialized engineering support. Services delivered likely include design, analysis, testing, and integration of engineering solutions. Geographic impact is concentrated in Arizona, where the contractor's operations are based. Workforce implications include employment for engineers and technical staff at Raytheon Company in Arizona.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potential cost savings for taxpayers.
Long contract duration (nearly 7 years) increases exposure to potential cost overruns under CPFF.
Lack of transparency regarding the specific engineering services provided hinders detailed performance evaluation.
No indication of small business participation or subcontracting opportunities.

Positive Signals

Award to a large, established defense contractor like Raytheon suggests access to significant technical expertise.
Engineering services are crucial for maintaining and advancing military capabilities.
The contract's long duration indicates a sustained need and potential for stable support.

Sector Analysis

This contract falls within the Engineering Services sector (NAICS 541330), a critical component of the broader defense industrial base. The market for defense engineering services is dominated by large, specialized contractors capable of handling complex, high-stakes projects. Spending in this sector is driven by the need for advanced technological development, system sustainment, and research and development for military applications. Comparable spending benchmarks would typically be found within the Department of Defense's overall R&D and professional services procurement data.

Small Business Impact

This contract was not set aside for small businesses, and there is no indication of subcontracting requirements. The award to a large prime contractor like Raytheon suggests that opportunities for small businesses may be limited unless they are part of Raytheon's supply chain. This lack of direct small business involvement means that the economic benefits of this contract may not be broadly distributed within the small business ecosystem.

Oversight & Accountability

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

Related Government Programs

Department of Defense Research and Development Contracts
Engineering and Technical Services Procurement
Raytheon Company Defense Contracts
Army Aviation and Missile Command Support Contracts

Risk Flags

Sole-source award
Cost-plus-fixed-fee contract type
Long contract duration
Lack of small business participation

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $4.5 million to RAYTHEON COMPANY. STINGER ENGINEERING SERVICES

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 $4.5 million.

What is the period of performance?

Start: 2019-03-12. End: 2025-12-31.

What specific engineering services are being provided under this contract?

The provided data indicates the contract is for 'Engineering Services' (NAICS 541330) awarded to Raytheon Company. However, the specific nature of these services is not detailed. Typically, engineering services in a defense context can encompass a wide range of activities, including research and development, system design, prototyping, testing, integration, technical analysis, and lifecycle support for military platforms or systems. Given the long duration and sole-source nature, these services are likely highly specialized and critical to a particular Army program, potentially involving proprietary technologies or unique expertise held by Raytheon.

How does the $4.48 million contract value compare to similar engineering services contracts awarded by the Department of the Army?

A direct comparison of the $4.48 million value is challenging without knowing the specific engineering services rendered. However, for specialized engineering support over a period of nearly seven years, this amount represents a moderate annual expenditure. Larger, more complex defense engineering contracts can easily reach hundreds of millions or even billions of dollars. Conversely, smaller, more focused engineering tasks might be valued in the hundreds of thousands. The value here suggests a significant, but not massive, scope of work, likely supporting a specific subsystem or technology development rather than an entire weapon system.

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

The primary risks associated with this contract structure are twofold. Firstly, the sole-source nature means there was no competitive bidding, which can lead to a lack of price transparency and potentially higher costs for the government compared to a competed contract. Taxpayers may not be receiving the best possible value. Secondly, the Cost-Plus-Fixed-Fee (CPFF) pricing model, while suitable for uncertain cost environments, can incentivize the contractor to incur higher costs, as their profit (the fixed fee) is a percentage of the total cost. This requires robust government oversight to manage costs effectively and prevent unnecessary expenditures.

What is the significance of the contract's duration (2019-2025)?

The contract's duration of nearly seven years (from March 2019 to December 2025) is significant as it indicates a long-term, sustained requirement for the engineering services being provided. This extended period suggests that the services are integral to a multi-year project, system development, or ongoing operational support. For the contractor, it offers a degree of revenue stability. For the government, it implies a critical need that cannot be fulfilled through short-term engagements, and it necessitates careful long-term planning and budget allocation for these essential engineering functions.

What does the concentration of performance in Arizona imply?

The contract's performance location being listed as Arizona (ST: AZ, SN: ARIZONA) implies that the primary work under this contract will be performed by Raytheon Company's facilities or personnel within that state. This has several implications: it directs federal spending towards the Arizona economy, potentially creating or sustaining jobs for engineers and technical staff in that region. It also means that oversight and program management might be more concentrated geographically. For other states or regions, there is no direct economic benefit from this specific contract award.

How does the absence of small business involvement affect the overall contract strategy?

The absence of small business set-asides or explicit subcontracting requirements for small businesses (indicated by `ss: false`, `sb: false`) means that this contract does not directly contribute to the government's small business contracting goals. While Raytheon, as a large prime contractor, may engage small businesses in its broader supply chain, this contract itself does not appear to be structured to foster direct small business participation. This can limit opportunities for innovative small firms to engage with the Department of the Army and potentially concentrate the economic benefits of the contract within larger corporations.

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

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: RTX Corp

Address: 1151 E HERMANS RD, TUCSON, AZ, 85756

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: $4,477,070

Exercised Options: $4,477,070

Current Obligation: $4,477,070

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: W31P4Q18D0010

IDV Type: IDC

Timeline