Raytheon Company awarded $68.8M for Engineering Services by the Department of the Army

Contract Overview

Contract Amount: $68,778,609 ($68.8M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2017-11-01

End Date: 2019-07-31

Contract Duration: 637 days

Daily Burn Rate: $108.0K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: IGF::OT::IGF AVIATION AND TRANSPORTATION TASK ORDER AWARD

Place of Performance

Location: ORLANDO, ORANGE County, FLORIDA, 32828

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $68.8 million to RAYTHEON COMPANY for work described as: IGF::OT::IGF AVIATION AND TRANSPORTATION TASK ORDER AWARD Key points: 1. Contract awarded via full and open competition, suggesting a competitive bidding process. 2. The contract is for engineering services, a critical component of defense operations. 3. The duration of the contract is 637 days, indicating a medium-term project. 4. The contract type is Firm Fixed Price, which transfers cost risk to the contractor. 5. The award was made to Raytheon Company, a major defense contractor. 6. The contract was issued as a delivery order, suggesting it's part of a larger indefinite-delivery/indefinite-quantity (IDIQ) contract. 7. The North American Industry Classification System (NAICS) code 541330 points to specialized engineering services.

Value Assessment

Rating: fair

Benchmarking the value of this specific delivery order is challenging without knowing the underlying IDIQ contract's pricing structure and the specific engineering services rendered. However, the total award amount of $68.8 million for a period of approximately 21 months suggests a significant investment in specialized engineering capabilities. Without comparable delivery orders under the same IDIQ or similar contracts for comparable services, a precise value-for-money assessment is difficult. The firm fixed-price nature of the contract provides some cost certainty for the government.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. The specific number of bidders is not provided, but this method of procurement generally fosters a competitive environment, which can lead to better pricing and service offerings for the government. The use of full and open competition suggests that the agency sought to maximize the pool of potential offerors to ensure a robust selection process.

Taxpayer Impact: Full and open competition is generally favorable for taxpayers as it is designed to drive down costs through market forces and encourage a wider range of innovative solutions.

Public Impact

The Department of the Army benefits from specialized engineering expertise to support its operational and developmental needs. The services delivered are likely critical for maintaining and enhancing military systems or infrastructure. The geographic impact is primarily within Florida, where the contract was issued. The contract supports the defense industrial workforce, particularly in engineering and technical fields.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of specific details on the engineering services provided makes it difficult to assess the true value and necessity.
The reliance on a single large prime contractor (Raytheon) could limit opportunities for smaller, specialized subcontractors.
The duration of the contract, while medium-term, might not fully capture long-term engineering needs.
The absence of the number of bidders in the full and open competition makes it hard to gauge the intensity of the competition.

Positive Signals

Awarded under full and open competition, indicating a commitment to a fair and transparent procurement process.
Firm Fixed Price contract type helps manage cost overruns and provides budget predictability.
The contract is with a well-established defense contractor (Raytheon Company) with a proven track record.
Engineering services are crucial for maintaining and advancing defense capabilities.

Sector Analysis

Engineering services represent a significant segment of the professional services market within the defense sector. Companies like Raytheon provide a wide array of specialized engineering disciplines, including systems engineering, mechanical engineering, electrical engineering, and software engineering, crucial for the development, integration, and sustainment of complex defense systems. Spending in this category is often driven by modernization efforts, research and development, and the ongoing support of existing platforms. Benchmarking requires comparison against similar engineering service contracts awarded by the Department of Defense or other federal agencies for comparable scope and complexity.

Small Business Impact

The data indicates that small business participation (sb: false) was not a specific set-aside requirement for this contract. While Raytheon Company is a large prime contractor, there may be opportunities for small businesses to participate as subcontractors. However, without specific subcontracting plans or goals detailed in the award, the direct impact on the small business ecosystem is unclear. The absence of a small business set-aside suggests that the primary focus was on obtaining the most competitive offer from the broadest possible range of sources.

Oversight & Accountability

Oversight for this contract would typically fall under the purview of the Department of the Army's contracting and program management offices. As a delivery order under a potential IDIQ contract, oversight would involve monitoring performance against the specific task requirements, ensuring compliance with contract terms, and verifying deliverables. Transparency is generally facilitated through contract award databases like FPDS. Inspector General jurisdiction would apply if any allegations of fraud, waste, or abuse arise during the contract's performance.

Related Government Programs

Department of Defense Engineering Services Contracts
Army Aviation and Transportation Command Contracts
Indefinite Delivery/Indefinite Quantity (IDIQ) Contracts
Firm Fixed Price Contracts
Professional Services Contracts

Risk Flags

Potential for cost overruns if scope is not clearly defined.
Risk of contractor underperformance if not adequately monitored.
Limited visibility into specific engineering tasks without further details.
Dependence on a single large prime contractor.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $68.8 million to RAYTHEON COMPANY. IGF::OT::IGF AVIATION AND TRANSPORTATION TASK ORDER AWARD

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 $68.8 million.

What is the period of performance?

Start: 2017-11-01. End: 2019-07-31.

What specific engineering services were provided under this $68.8 million award to Raytheon Company?

The provided data indicates the contract is for 'Engineering Services' under NAICS code 541330. However, the specific nature of these services is not detailed. Given the agency (Department of the Army) and the mention of 'AVIATION AND TRANSPORTATION TASK ORDER AWARD' in the raw data description, it is highly probable that these engineering services relate to the design, development, testing, integration, sustainment, or modification of aviation and transportation systems, equipment, or infrastructure used by the Army. This could encompass areas such as aerospace engineering, mechanical engineering for vehicles, systems engineering for complex platforms, or logistical engineering support.

How does the $68.8 million award compare to typical spending on engineering services by the Department of the Army?

The $68.8 million award represents a substantial, but not extraordinary, investment for a single delivery order within the Department of the Army's vast budget. The Army procures a wide range of engineering services, from broad R&D efforts to highly specialized technical support for specific weapon systems or infrastructure projects. Without knowing the specific scope and duration of the services, direct comparison is difficult. However, the Department of Defense as a whole spends billions annually on engineering and technical services. This particular award likely falls within the typical range for significant, medium-term engineering support contracts, especially if it's part of a larger IDIQ vehicle.

What are the primary risks associated with a Firm Fixed Price contract of this magnitude for engineering services?

The primary risk with a Firm Fixed Price (FFP) contract, especially for complex engineering services, is that the contractor (Raytheon) may underestimate the costs or effort required. If unforeseen technical challenges arise, or if the scope of work expands significantly without a formal modification, Raytheon could incur losses. Conversely, if Raytheon accurately estimates and executes efficiently, they stand to make a higher profit margin. For the government, the risk is that the FFP structure might disincentivize the contractor from proactively identifying cost-saving opportunities if they are already assured of their profit margin. There's also a risk that the contractor might cut corners on quality if not rigorously overseen, although this is mitigated by performance standards and acceptance criteria.

What is the significance of this contract being a 'Delivery Order' under a potential IDIQ contract?

This contract being a 'Delivery Order' signifies that it is a specific task or order placed against a pre-existing Indefinite Delivery/Indefinite Quantity (IDIQ) contract. IDIQ contracts establish terms and conditions, pricing, and general scope for services over a period, but the actual quantity and specific tasks are defined through individual delivery orders. This approach allows agencies to procure services more efficiently and rapidly once the initial IDIQ contract is awarded, as the competition and negotiation for the overarching framework have already occurred. For taxpayers, this can lead to faster acquisition and potentially better pricing due to pre-negotiated rates, assuming the IDIQ itself was competitively awarded.

What does the NAICS code 541330 (Engineering Services) imply about the contractor's qualifications and the nature of the work?

The North American Industry Classification System (NAICS) code 541330 specifically designates 'Engineering Services.' This classification implies that the primary business activity of the services procured involves the application of engineering principles and knowledge to provide consulting, design, and development services. Contractors under this code typically employ licensed professional engineers and technical staff with expertise in various engineering disciplines (e.g., civil, mechanical, electrical, aerospace, environmental). For this contract, it suggests that Raytheon Company is providing specialized engineering expertise, likely involving complex problem-solving, design, analysis, and technical support related to the Army's aviation and transportation needs.

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: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: RTX Corp (UEI: 001344142)

Address: 2603 CHALLENGER CT STE150, ORLANDO, FL, 32826

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $68,778,609

Exercised Options: $68,778,609

Current Obligation: $68,778,609

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: W900KK07D0001

IDV Type: IDC

Timeline