DoD awards $323M for Patriot engineering services to Raytheon Company, a sole-source contract

Contract Overview

Contract Amount: $323,401,929 ($323.4M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2022-01-31

End Date: 2024-03-31

Contract Duration: 790 days

Daily Burn Rate: $409.4K/day

Competition Type: NOT COMPETED

Pricing Type: FIXED PRICE LEVEL OF EFFORT

Sector: Defense

Official Description: PATRIOT FY22 ENGINEERING SERVICES

Place of Performance

Location: ANDOVER, ESSEX County, MASSACHUSETTS, 01810

State: Massachusetts Government Spending

Plain-Language Summary

Department of Defense obligated $323.4 million to RAYTHEON COMPANY for work described as: PATRIOT FY22 ENGINEERING SERVICES Key points: 1. Significant contract value of over $323 million for engineering services. 2. Sole-source award to Raytheon Company raises questions about competition. 3. Fixed Price Level of Effort contract type may limit cost control. 4. Long duration (790 days) suggests complex, ongoing requirements.

Value Assessment

Rating: questionable

The contract's fixed-price level of effort structure, combined with a sole-source award, makes a direct pricing comparison difficult. Without competitive bids, it's challenging to ascertain if the $323 million represents optimal value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning competition was not sought. This significantly limits price discovery and potentially leads to higher costs for taxpayers.

Taxpayer Impact: The lack of competition for a contract of this magnitude represents a missed opportunity for cost savings and potentially higher value for taxpayer funds.

Public Impact

Taxpayers may be overpaying due to the absence of competitive bidding. The long-term nature of the contract could lock in potentially inefficient practices. Dependence on a single contractor for critical engineering services poses a risk.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award
Lack of competition
Fixed Price Level of Effort
High contract value

Positive Signals

Essential engineering services for a critical defense system (Patriot).

Sector Analysis

Engineering services are crucial for defense systems like the Patriot missile. The $323 million award is substantial, but without competitive benchmarks, assessing its efficiency is difficult. Typical engineering service contracts vary widely based on scope and complexity.

Small Business Impact

There is no indication that small businesses were involved in this sole-source award. Opportunities for small business participation were likely bypassed due to the procurement method.

Oversight & Accountability

The sole-source nature of this award warrants scrutiny from oversight bodies to ensure the government received fair value and that competition was appropriately waived.

Related Government Programs

Engineering Services
Department of Defense Contracting
Department of the Army Programs

Risk Flags

Sole-source award limits competition and price discovery.
Potential for overpayment due to lack of competitive bidding.
Fixed Price Level of Effort may not incentivize efficiency.
Long contract duration could lead to cost overruns or scope creep.
Lack of small business participation.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $323.4 million to RAYTHEON COMPANY. PATRIOT FY22 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 $323.4 million.

What is the period of performance?

Start: 2022-01-31. End: 2024-03-31.

What justification was provided for the sole-source award, and were alternative competitive strategies considered?

The justification for a sole-source award typically involves unique capabilities, urgent needs, or lack of viable alternatives. Without specific documentation, it's impossible to confirm the rationale. However, for a contract of this size and duration, a thorough review of competitive alternatives should always be a priority to ensure the best use of taxpayer funds.

How does the fixed-price level of effort structure impact cost control and contractor performance?

A Fixed Price Level of Effort (FPLE) contract aims to provide a fair price for a defined scope of work. However, it can incentivize contractors to extend effort rather than increase efficiency, as payment is tied to hours worked, not necessarily outcomes. This structure may not be optimal for driving innovation or cost savings compared to performance-based contracts.

What are the long-term risks associated with awarding such a significant contract solely to Raytheon Company?

The primary long-term risk is the potential for complacency and reduced innovation from Raytheon, as there is no competitive pressure. It also creates a dependency on a single vendor, which can be problematic if the vendor faces financial difficulties, changes strategic direction, or if their technology becomes outdated. This can limit future options and potentially increase costs.

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: FIXED PRICE LEVEL OF EFFORT (B)

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: $323,401,929

Exercised Options: $323,401,929

Current Obligation: $323,401,929

Actual Outlays: $189,210

Subaward Activity

Number of Subawards: 21

Total Subaward Amount: $2,535,115

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: W15QKN18D0015

IDV Type: IDC

Timeline