Army Awards $30.6M Cost-Plus Contract to Raytheon for Capability Drop 4 Effort

Contract Overview

Contract Amount: $47,876,461 ($47.9M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2019-07-11

End Date: 2024-04-30

Contract Duration: 1,755 days

Daily Burn Rate: $27.3K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: COST PLUS FIXED FEE

Sector: IT

Official Description: CONTRACT W15P7T-14-D-C006, TASK ORDER W56KGY19F0016 IS HEREBY ISSUED ON A COST PLUS FIXED FEE BASIS. CAPABILITY DROP 4 EFFORT HAS BEEN NEGOTIATED FOR A TOTAL AMOUNT OF $30,575,920.00.

Place of Performance

Location: FORT WAYNE, ALLEN County, INDIANA, 46808

State: Indiana Government Spending

Plain-Language Summary

Department of Defense obligated $47.9 million to RAYTHEON COMPANY for work described as: CONTRACT W15P7T-14-D-C006, TASK ORDER W56KGY19F0016 IS HEREBY ISSUED ON A COST PLUS FIXED FEE BASIS. CAPABILITY DROP 4 EFFORT HAS BEEN NEGOTIATED FOR A TOTAL AMOUNT OF $30,575,920.00. Key points: 1. Contract awarded to Raytheon Company for custom computer programming services. 2. Significant value of $30.6 million for a 5-year period. 3. Full and open competition was utilized. 4. Cost-plus fixed fee pricing structure carries inherent risk.

Value Assessment

Rating: fair

The contract is a cost-plus fixed fee type, which can lead to higher costs than fixed-price contracts if not managed carefully. The total amount obligated is $30,575,920.00.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, suggesting a competitive bidding process. However, the cost-plus fixed fee structure means the final price is not fixed upfront, potentially impacting price discovery.

Taxpayer Impact: Taxpayer funds are being used for custom computer programming services. The cost-plus nature requires careful oversight to ensure value for money.

Public Impact

Enhances military capabilities through custom software development. Supports the Department of the Army's technological advancements. Long-term contract (5 years) indicates a sustained need for these services.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus fixed fee structure can incentivize higher spending.
Long contract duration increases exposure to potential cost overruns.
No small business participation noted.

Positive Signals

Awarded under full and open competition.
Supports critical defense capabilities.

Sector Analysis

This contract falls within the IT sector, specifically custom computer programming. Spending in this area is substantial across government, with benchmarks varying widely based on complexity and duration.

Small Business Impact

The data indicates that this contract was not awarded to a small business (ss: false, sb: false). There is no indication of subcontracting to small businesses.

Oversight & Accountability

The cost-plus fixed fee structure necessitates robust oversight from the Department of the Army to monitor costs, ensure performance, and prevent potential overruns. Task order issuance suggests ongoing management.

Related Government Programs

Custom Computer Programming Services
Department of Defense Contracting
Department of the Army Programs

Risk Flags

Cost-plus pricing model
Lack of small business participation
Long contract duration
Potential for scope creep in custom programming

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $47.9 million to RAYTHEON COMPANY. CONTRACT W15P7T-14-D-C006, TASK ORDER W56KGY19F0016 IS HEREBY ISSUED ON A COST PLUS FIXED FEE BASIS. CAPABILITY DROP 4 EFFORT HAS BEEN NEGOTIATED FOR A TOTAL AMOUNT OF $30,575,920.00.

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 $47.9 million.

What is the period of performance?

Start: 2019-07-11. End: 2024-04-30.

What is the estimated profit margin for Raytheon under this cost-plus fixed fee contract, and how does it compare to industry standards for similar IT services?

Cost-plus fixed fee contracts typically allow the contractor to recover all allowable costs plus a predetermined fixed fee representing profit. The fee is fixed regardless of the final cost. To assess the profit margin, one would need to analyze the total allowable costs incurred by Raytheon against the fixed fee. Without detailed cost breakdowns, it's difficult to provide an exact margin. However, industry standards for fixed fees in IT services can range from 5-15%, depending on contract complexity and risk.

What specific risks are associated with the 'Capability Drop 4 Effort' that justify a cost-plus pricing model, and what mitigation strategies are in place?

Cost-plus models are often used when the scope of work is not fully defined or involves significant research and development, making fixed-price contracts impractical. Risks could include unforeseen technical challenges, evolving requirements, or integration complexities. Mitigation strategies typically involve strong government oversight, detailed cost tracking, regular performance reviews, and clear definition of allowable costs and the fixed fee negotiation process to prevent contractor overspending.

How will the effectiveness of the custom computer programming services be measured throughout the 5-year contract duration to ensure the $30.6 million investment yields desired military capabilities?

Effectiveness is typically measured through performance metrics and deliverables outlined in the contract's Statement of Work (SOW). For custom programming, this could include successful software deployment, adherence to technical specifications, system performance benchmarks, user acceptance testing, and achievement of specific operational capabilities. Regular progress reports, milestone reviews, and final acceptance testing by the Department of the Army are crucial for ensuring the investment delivers the intended military value.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Computer Systems Design and Related Services › Custom Computer Programming Services

Product/Service Code: RESEARCH AND DEVELOPMENT › C – National Defense R&D Services

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Rockwell Collins Australia PTY Limited

Address: 1010 PRODUCTION RD, FORT WAYNE, IN, 46808

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $47,876,461

Exercised Options: $47,876,461

Current Obligation: $47,876,461

Subaward Activity

Number of Subawards: 8

Total Subaward Amount: $2,357,329

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: W15P7T14DC006

IDV Type: IDC

Timeline