Raytheon Company awarded $27.8M for engineering services, with limited competition and a long performance period

Contract Overview

Contract Amount: $27,800,421 ($27.8M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2020-01-15

End Date: 2024-12-31

Contract Duration: 1,812 days

Daily Burn Rate: $15.3K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: THE PURPOSE OF THIS ACTION IS TO INCORPORATE TASK INSTRUCTION 02, IN SUPPORT OF SENTINEL ENGINEERING SERVICES.

Place of Performance

Location: FULLERTON, ORANGE County, CALIFORNIA, 92833

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $27.8 million to RAYTHEON COMPANY for work described as: THE PURPOSE OF THIS ACTION IS TO INCORPORATE TASK INSTRUCTION 02, IN SUPPORT OF SENTINEL ENGINEERING SERVICES. Key points: 1. Contract value of $27.8M over 1812 days suggests a significant, long-term need for engineering services. 2. The 'NOT COMPETED' award type indicates a lack of competitive bidding, potentially impacting price efficiency. 3. The contract is a Delivery Order under a larger contract, suggesting a phased approach to service delivery. 4. Performance is concentrated in California, indicating a specific geographic focus for these engineering services. 5. The Cost Plus Fixed Fee (CPFF) pricing structure may incentivize cost increases if not closely managed. 6. The absence of small business set-aside flags raises questions about opportunities for smaller firms in this procurement.

Value Assessment

Rating: fair

The contract value of $27.8 million over approximately five years for engineering services requires careful benchmarking. Without specific details on the scope of 'SENTINEL ENGINEERING SERVICES,' direct comparisons are difficult. However, the CPFF structure can lead to higher costs than fixed-price contracts if not managed diligently. The lack of competition further complicates a value assessment, as market pressures that drive down prices are absent. The total award amount is substantial, suggesting a significant investment in these services.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded as 'NOT COMPETED,' indicating a sole-source or limited competition procurement. This means that Raytheon Company was likely selected without a broad solicitation process. The specific justification for this approach (e.g., follow-on to a previous contract, unique capabilities) is not provided but is crucial for understanding the procurement strategy. The lack of open competition limits the government's ability to explore a wider range of potential providers and potentially secure more favorable pricing.

Taxpayer Impact: The absence of a competitive bidding process means taxpayers may not be receiving the most cost-effective solution available in the market. Without competing the requirement, the government loses the opportunity to leverage market forces to drive down costs.

Public Impact

The primary beneficiaries are likely the Department of Defense and potentially specific military operations supported by SENTINEL engineering services. The services delivered are engineering support, crucial for the maintenance, development, or operation of defense systems. Geographic impact is concentrated in California, where the contractor's performance is expected. Workforce implications include employment opportunities for engineers and technical staff within Raytheon Company and potentially its subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition raises concerns about potential overpayment and reduced innovation.
Cost Plus Fixed Fee (CPFF) contract type can lead to cost overruns if not rigorously managed.
Long contract duration (over 1800 days) increases the risk of scope creep and evolving requirements not being adequately addressed.
No indication of small business participation or subcontracting goals.

Positive Signals

Award to a known entity (Raytheon Company) may suggest a level of established capability and reliability.
Delivery Order structure implies a managed, phased approach to fulfilling the overall requirement.
Specific task instruction (02) indicates a defined scope of work within a larger framework.

Sector Analysis

Engineering services, particularly those supporting defense applications, represent a critical segment of the aerospace and defense industry. This sector is characterized by high barriers to entry, significant R&D investment, and long-term government contracts. Spending in this area is often driven by national security requirements and technological advancements. Comparable spending benchmarks would typically involve analyzing other large-scale engineering support contracts awarded by the Department of Defense to major defense contractors.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). There is no information provided regarding subcontracting plans or goals. This suggests that opportunities for small businesses to participate in this specific procurement may be limited, potentially excluding them from a significant contract. Further investigation into the parent contract and any associated subcontracting requirements would be necessary to fully assess the impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and program management offices. The specific task instruction (02) suggests a defined scope, which aids in oversight. However, the 'NOT COMPETED' nature and CPFF pricing structure necessitate robust monitoring to ensure costs are reasonable and performance meets requirements. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected. Transparency is limited by the lack of competitive bidding information.

Related Government Programs

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

Risk Flags

Sole-source award without clear justification.
Cost Plus Fixed Fee structure carries inherent cost risk.
Lack of defined performance metrics in summary data.
No indication of small business participation.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $27.8 million to RAYTHEON COMPANY. THE PURPOSE OF THIS ACTION IS TO INCORPORATE TASK INSTRUCTION 02, IN SUPPORT OF SENTINEL 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 $27.8 million.

What is the period of performance?

Start: 2020-01-15. End: 2024-12-31.

What is the specific nature and scope of 'SENTINEL ENGINEERING SERVICES' that necessitated a sole-source award?

The provided data indicates that 'SENTINEL ENGINEERING SERVICES' is the purpose of this action, associated with Task Instruction 02. However, the specific technical details, objectives, and deliverables of these services are not elaborated upon. A sole-source award, especially under a 'NOT COMPETED' designation, typically implies that the contractor (Raytheon Company) possesses unique capabilities, proprietary technology, or is the only source capable of fulfilling an urgent requirement. Without further documentation, such as a Justification for Other Than Full and Open Competition (JOFOC), it is impossible to definitively state the precise nature of the services or the rationale behind bypassing a competitive process. Understanding these services is critical for assessing the value and necessity of the $27.8 million expenditure.

How does the Cost Plus Fixed Fee (CPFF) pricing structure compare to market rates for similar engineering services?

The Cost Plus Fixed Fee (CPFF) structure means the contractor is reimbursed for allowable costs plus a predetermined fixed fee representing profit. While this structure can be useful for research and development or when cost uncertainties are high, it inherently shifts some cost risk to the government. Benchmarking CPFF rates for comparable engineering services is complex as it depends heavily on the specific technical expertise, labor categories, overhead rates, and the complexity of the project. Without detailed breakdowns of Raytheon's proposed costs and fees, and without knowing the specific engineering disciplines involved in SENTINEL services, a direct comparison to market rates is challenging. Generally, CPFF contracts can be more expensive than fixed-price contracts if costs are not meticulously controlled and audited, as the contractor has less incentive to minimize expenses.

What is the historical spending pattern for SENTINEL ENGINEERING SERVICES or similar contracts awarded to Raytheon Company by the Department of Defense?

Analyzing historical spending patterns for SENTINEL ENGINEERING SERVICES or similar contracts awarded to Raytheon Company by the Department of Defense is crucial for context. The current award of $27.8 million is a Delivery Order, implying it's part of a larger contract vehicle. To understand the historical trend, one would need to examine the total value and duration of the parent contract, as well as any previous Delivery Orders issued under it. Furthermore, researching Raytheon's overall contract portfolio with the DoD for engineering services can reveal patterns of spending, contract types utilized, and average award values. This historical data would help determine if this $27.8 million award represents a typical investment, an increase, or a decrease in spending for such services, and whether past performance justifies continued sole-source awards.

What are the specific performance metrics and key performance indicators (KPIs) associated with this contract?

The provided data does not specify the performance metrics or Key Performance Indicators (KPIs) for this contract. For a Cost Plus Fixed Fee (CPFF) contract, especially one awarded on a sole-source basis, clearly defined performance standards are essential for effective oversight and accountability. These metrics should outline the expected quality, timeliness, and efficiency of the engineering services to be delivered. Without explicit KPIs, it is difficult for the government to objectively assess whether Raytheon Company is meeting the contract's objectives and delivering value for the $27.8 million investment. The Task Instruction 02 might contain some of these details, but they are not present in the summary data.

What is the justification for the sole-source award, and were any alternative solutions considered?

The data explicitly states the contract was 'NOT COMPETED,' indicating a sole-source award. However, the specific justification for this determination is not provided. Typically, government agencies must document a rationale for not conducting full and open competition, often citing reasons such as unique capabilities, urgent needs, or follow-on work to a previous contract where competition was previously met. Without this justification, it's impossible to assess if Raytheon Company was indeed the only viable option or if alternative solutions were overlooked. This lack of transparency regarding the sole-source justification raises concerns about potential missed opportunities for better pricing and innovation from a wider pool of contractors.

Industry Classification

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

Product/Service Code: COMM/DETECT/COHERENT RADIATION

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: Rockwell Collins Australia PTY Limited

Address: 1801 HUGHES DR, FULLERTON, CA, 92834

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: $27,800,421

Exercised Options: $27,800,421

Current Obligation: $27,800,421

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: W31P4Q19D0030

IDV Type: IDC

Timeline