DoD awards Raytheon $8.16M for Smart-T technical services, a sole-source contract with a 4-year duration

Contract Overview

Contract Amount: $8,159,637 ($8.2M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2020-09-27

End Date: 2025-01-25

Contract Duration: 1,581 days

Daily Burn Rate: $5.2K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: THE PURPOSE OF THIS TASK ORDER IS TO PROCURE TECHNICAL, ENGINEERING, AND SOFTWARE SERVICES FOR SMART-T

Place of Performance

Location: ABERDEEN PROVING GROUND, HARFORD County, MARYLAND, 21005

State: Maryland Government Spending

Plain-Language Summary

Department of Defense obligated $8.2 million to RAYTHEON COMPANY for work described as: THE PURPOSE OF THIS TASK ORDER IS TO PROCURE TECHNICAL, ENGINEERING, AND SOFTWARE SERVICES FOR SMART-T Key points: 1. Contract awarded on a sole-source basis, raising questions about potential price overruns and limited market engagement. 2. Significant duration of over 4 years suggests a long-term need for specialized technical and engineering support. 3. Focus on technical, engineering, and software services indicates a critical role in maintaining or developing advanced systems. 4. Awarded by the Department of the Army, highlighting its importance within defense logistics and operational capabilities. 5. The 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System' industry classification points to high-tech defense applications. 6. Cost Plus Fixed Fee contract type may incentivize cost escalation if not closely monitored.

Value Assessment

Rating: questionable

Benchmarking the value of this $8.16 million contract is challenging without comparable sole-source procurements for similar technical services. The Cost Plus Fixed Fee (CPFF) contract type, while allowing for flexibility, can lead to higher costs compared to fixed-price contracts if cost controls are not robust. Without competitive bidding, it's difficult to ascertain if the pricing reflects fair market value or if taxpayers are receiving optimal value for the specialized services rendered.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award. The absence of competition means that only one vendor, Raytheon Company, was considered for these technical, engineering, and software services. This approach is typically justified when a specific capability is required that only one source can provide, or in urgent situations. However, it limits the government's ability to explore alternative solutions or leverage market competition to drive down costs.

Taxpayer Impact: Sole-source awards can result in higher costs for taxpayers as there is no competitive pressure to ensure the most economical price is achieved. This limits the government's negotiating power and potentially leads to less efficient use of public funds.

Public Impact

The Department of the Army benefits from specialized technical, engineering, and software services crucial for its Smart-T systems. These services likely support the maintenance, upgrade, or development of advanced defense systems related to search, detection, and navigation. The contract's duration suggests a sustained operational requirement, potentially impacting readiness and technological superiority for military operations. Workforce implications may include specialized engineers and software developers employed by Raytheon, contributing to the defense technology sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potential for cost savings.
Cost Plus Fixed Fee structure requires diligent oversight to prevent cost overruns.
Lack of competition may reduce incentive for innovation and efficiency from the contractor.
Contract duration of over 4 years necessitates long-term budget planning and commitment.

Positive Signals

Award to a known entity (Raytheon) suggests a potentially reliable provider of specialized services.
Focus on technical and engineering services indicates investment in critical defense capabilities.
The contract supports specific systems (Smart-T) suggesting a targeted and necessary procurement.

Sector Analysis

This contract falls within the Defense Industrial Base sector, specifically focusing on advanced systems manufacturing and support. The North American Industry Classification System (NAICS) code 334511, 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing,' represents a highly specialized and technologically intensive segment of the market. Spending in this area is critical for national security, often involving significant research and development, and is characterized by a limited number of large, established defense contractors capable of meeting stringent government requirements.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Furthermore, the 'ss' (small business subcontracting) is also false. This suggests that small businesses are unlikely to be directly involved as prime contractors or through mandatory subcontracting opportunities on this specific task order. The primary contractor, Raytheon Company, is a large defense firm, and the nature of the specialized technical services may not lend itself to significant subcontracting with small businesses.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Army's contracting and program management offices. As a Cost Plus Fixed Fee contract, rigorous financial oversight is crucial to monitor expenditures and ensure that costs remain within the fixed fee parameters and are reasonable. Transparency is limited due to the sole-source nature, but reporting requirements for CPFF contracts typically include detailed cost breakdowns. The Inspector General's office within the Department of Defense would have jurisdiction to investigate any potential fraud, waste, or abuse.

Related Government Programs

Department of Defense Technical Services
Army Command and Control Systems
Defense Navigation and Guidance Systems
Aeronautical and Nautical Instrument Manufacturing
Sole-Source Defense Procurements

Risk Flags

Sole-source award
Cost Plus Fixed Fee contract type
Lack of small business subcontracting

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $8.2 million to RAYTHEON COMPANY. THE PURPOSE OF THIS TASK ORDER IS TO PROCURE TECHNICAL, ENGINEERING, AND SOFTWARE SERVICES FOR SMART-T

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 $8.2 million.

What is the period of performance?

Start: 2020-09-27. End: 2025-01-25.

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

Raytheon Company, now part of RTX, has a long and extensive history of contracting with the Department of the Army and the broader Department of Defense. They are a major defense contractor known for providing a wide range of services, including systems engineering, software development, and technical support for complex defense platforms. Their track record typically involves large-scale, high-value contracts for advanced technologies. Specific to technical and engineering services for systems like Smart-T, Raytheon has consistently been a key player, often involved in the development, integration, and sustainment of critical defense capabilities. Performance reviews and past contract data would provide a more granular understanding of their specific success rates, on-time delivery, and adherence to technical specifications for similar past engagements.

How does the $8.16 million value compare to similar sole-source technical service contracts awarded by the DoD?

Comparing the $8.16 million value of this sole-source contract to similar procurements is challenging due to the inherent limitations of sole-source awards and the specificity of 'technical, engineering, and software services for Smart-T.' Generally, sole-source contracts can be more expensive than competed ones. The value itself is moderate for a multi-year defense contract, but its significance lies in the specialized nature of the services and the lack of competition. Without access to a database of comparable sole-source, CPFF contracts for highly specialized defense systems, a precise benchmark is difficult. However, the duration (nearly 4 years) suggests that the annual value is around $2 million, which is within the range for specialized technical support for complex defense systems, though the absence of competition prevents a definitive value-for-money assessment.

What are the primary risks associated with a sole-source, Cost Plus Fixed Fee contract for defense systems?

The primary risks associated with a sole-source, Cost Plus Fixed Fee (CPFF) contract for defense systems are twofold. Firstly, the sole-source nature eliminates competitive pressure, potentially leading to higher prices than could be achieved through bidding. This reduces the government's ability to secure the best possible value. Secondly, the CPFF structure, while providing flexibility, carries the risk of cost escalation. The contractor is reimbursed for allowable costs plus a fixed fee representing profit. If cost controls are weak or if the scope of work expands without adequate adjustments, costs can increase significantly, impacting the overall budget. Effective oversight, stringent cost monitoring, and clear definition of work are critical to mitigate these risks.

How effective are sole-source awards in ensuring the timely delivery of critical defense technologies like Smart-T?

Sole-source awards can be effective in ensuring the timely delivery of critical defense technologies when specific circumstances warrant it, such as unique technical expertise, proprietary technology, or urgent operational needs that cannot be met through a competitive process. In cases where only one contractor possesses the necessary specialized knowledge or capability, a sole-source award can expedite the procurement process by bypassing the time-consuming steps of solicitation, evaluation, and negotiation inherent in competitive bidding. For critical systems like Smart-T, if Raytheon is the sole entity capable of providing the required technical, engineering, and software services, this award mechanism might be deemed necessary to maintain operational readiness or technological advancement without delay. However, the effectiveness is contingent on the genuine absence of viable alternatives and robust justification.

What is the historical spending trend for 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' (NAICS 334511) by the Department of the Army?

Historical spending trends for NAICS code 334511 by the Department of the Army indicate a consistent and significant investment in this sector. This industry classification covers a broad range of sophisticated equipment essential for military operations, including radar systems, navigation aids, guidance systems, and related instruments. The Army, along with other branches of the DoD, relies heavily on these technologies for intelligence, surveillance, reconnaissance, command and control, and operational navigation. Spending in this area is typically characterized by large, complex contracts, often involving research, development, production, and sustainment. While specific annual figures fluctuate based on defense priorities and budget allocations, the overall trend demonstrates a sustained commitment to maintaining and advancing capabilities within this high-tech domain, reflecting its critical importance to national security.

Industry Classification

NAICS: Manufacturing › Navigational, Measuring, Electromedical, and Control Instruments Manufacturing › Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing

Product/Service Code: TECHNICAL REPRESENTATIVE SVCS. › TECHNICAL REPRESENTATIVE 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: 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: $8,159,637

Exercised Options: $8,159,637

Current Obligation: $8,159,637

Actual Outlays: $277,478

Contract Characteristics

Consolidated Contract: Yes

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: SPRBL115D0017

IDV Type: IDC

Timeline