Raytheon Company awarded $16.8M for Engineering Services, a sole-source contract with a long performance period

Contract Overview

Contract Amount: $16,844,395 ($16.8M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2022-07-11

End Date: 2025-03-31

Contract Duration: 994 days

Daily Burn Rate: $16.9K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: TOW ENG SERVICES EVO MAX

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $16.8 million to RAYTHEON COMPANY for work described as: TOW ENG SERVICES EVO MAX Key points: 1. Contract awarded to a single vendor, raising questions about price competitiveness. 2. Long duration of nearly 1000 days suggests a sustained need for services. 3. Cost-plus fixed fee structure may incentivize higher costs without strict oversight. 4. Services are being delivered in Arizona, potentially impacting local technical workforce. 5. No small business set-aside indicates a focus on large prime contractors. 6. Engineering services are critical for defense readiness and technological advancement.

Value Assessment

Rating: questionable

The contract's value of $16.8 million for engineering services is difficult to benchmark without more specific details on the scope of work. However, the sole-source nature and cost-plus fixed fee pricing structure raise concerns about potential overspending. Comparing this to similar sole-source engineering contracts would be necessary to determine if the pricing is reasonable. The lack of competition inherently limits the government's ability to secure the best possible value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, Raytheon Company, was solicited. This approach bypasses the competitive bidding process, which typically leads to better pricing and a wider selection of qualified contractors. The justification for a sole-source award would need to be thoroughly reviewed to understand why full and open competition was not feasible.

Taxpayer Impact: Sole-source awards can result in higher costs for taxpayers as the government does not benefit from the price reductions typically achieved through competitive bidding.

Public Impact

The Department of Defense benefits from specialized engineering expertise. Services likely support critical defense systems and infrastructure. The contract's impact is concentrated in Arizona, where services are performed. Potential for highly skilled engineering jobs to be supported or created.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price discovery and potential savings.
Cost-plus fixed fee contract type can lead to cost overruns if not managed tightly.
Long contract duration requires sustained oversight to ensure performance and value.
Lack of small business participation may limit opportunities for smaller firms in the supply chain.

Positive Signals

Award to Raytheon Company, a known defense contractor, suggests access to established expertise.
Engineering services are essential for maintaining and advancing defense capabilities.
Delivery order structure implies flexibility in tasking within the contract's scope.
Performance period extending into 2025 indicates a long-term strategic need.

Sector Analysis

Engineering services are a critical component of the defense industrial base, encompassing design, development, and technical support for complex systems. The market for these services is highly specialized, with a few large prime contractors dominating significant portions of government contracts. This contract fits within the broader category of professional, scientific, and technical services, which represent a substantial segment of federal procurement. Benchmarking would involve comparing the scope and cost to other engineering support contracts within the Department of Defense.

Small Business Impact

This contract does not appear to include a small business set-aside, nor is there an indication of subcontracting goals for small businesses. This suggests that the primary focus is on the capabilities of the large prime contractor, Raytheon Company. Consequently, the direct impact on the small business ecosystem for this specific award may be limited, although Raytheon may engage small businesses as subcontractors independently.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Army's contracting and program management offices. The cost-plus fixed fee structure necessitates rigorous monitoring of costs incurred and the fixed fee earned. Transparency would depend on the level of detail made public regarding the contract's performance and expenditures. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected.

Related Government Programs

Defense Engineering Support
Professional, Scientific, and Technical Services
Department of the Army Contracts
Sole-Source Defense Procurements

Risk Flags

Sole-source award
Cost-plus contract type
Long performance period

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $16.8 million to RAYTHEON COMPANY. TOW ENG SERVICES EVO MAX

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 $16.8 million.

What is the period of performance?

Start: 2022-07-11. End: 2025-03-31.

What specific engineering services are being provided under this contract, and how do they align with current defense priorities?

The provided data indicates the contract is for 'TOW ENG SERVICES EVO MAX' with Raytheon Company. While the exact nature of 'TOW ENG SERVICES EVO MAX' is not fully detailed, the 'TOW' designation strongly suggests services related to the TOW anti-tank missile system, a key weapon in the U.S. Army's arsenal. This could encompass a range of activities such as system engineering, technical support, upgrades, testing, and lifecycle management for the TOW missile and its associated launchers and components. These services are critical for maintaining the operational readiness and effectiveness of a significant U.S. Army weapon system, directly aligning with defense priorities focused on maintaining and modernizing ground combat capabilities.

What is the justification for awarding this contract on a sole-source basis to Raytheon Company?

Sole-source awards are typically justified when only one responsible source is available or capable of meeting the government's needs. For a specialized system like the TOW missile, Raytheon (through its predecessor, Hughes Aircraft, and later Raytheon Missile Systems) has historically been the prime contractor and possesses unique technical knowledge, proprietary data, and manufacturing capabilities. The justification would likely cite the need for specialized expertise, existing infrastructure, or the requirement to maintain compatibility with existing systems, making competition impractical or detrimental to program continuity and national security. A formal Justification and Approval (J&A) document would detail these specific reasons.

How does the cost-plus fixed fee (CPFF) contract type compare to other pricing arrangements for similar engineering services, and what are the associated risks?

The Cost-Plus Fixed Fee (CPFF) contract type is common for research and development or complex services where the scope is not fully defined at the outset. Under CPFF, the contractor is reimbursed for allowable costs plus a predetermined fixed fee representing profit. This contrasts with fixed-price contracts, where the contractor bears more risk for cost overruns. The primary risk with CPFF for the government is the potential for costs to escalate beyond initial estimates, as the contractor is incentivized to incur costs to perform the work, while their profit (the fixed fee) remains constant. Effective oversight is crucial to control costs and ensure the fee remains fair for the work performed.

What is the historical spending trend for engineering services related to the TOW missile system or similar platforms by the Department of Defense?

Historical spending on engineering services for major defense platforms like the TOW missile system typically shows a consistent, long-term investment. Such spending often fluctuates based on the system's lifecycle stage, modernization efforts, and operational tempo. Early in a system's life, spending might focus on development and initial fielding. As the system matures, engineering services shift towards sustainment, upgrades, obsolescence management, and performance enhancements. Given the TOW's long service history, annual spending on its sustainment and evolution has likely been substantial, spread across various contracts for different aspects of engineering support, potentially totaling hundreds of millions or even billions over its operational life.

What are the potential implications of the long contract duration (994 days) on contractor performance and government oversight?

A contract duration of 994 days (approximately 2.7 years) for engineering services suggests a significant, ongoing requirement. For the contractor, this provides a stable revenue stream and allows for deeper integration into the program. However, it also necessitates sustained performance and adaptability to evolving needs. For the government, such a long duration demands robust, continuous oversight. Program managers and contracting officers must actively monitor performance, manage scope changes, ensure cost control, and verify that the services remain relevant and effective throughout the contract period. Without diligent oversight, the risk of cost creep, performance degradation, or misalignment with current needs increases over time.

Industry Classification

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

Product/Service Code: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT

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: $16,844,395

Exercised Options: $16,844,395

Current Obligation: $16,844,395

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: W31P4Q19D0032

IDV Type: IDC

Timeline