Raytheon awarded $112.8M for maintenance and repair of equipment, raising questions about competition and value
Contract Overview
Contract Amount: $24,141,153 ($24.1M)
Contractor: Raytheon Technical Services Company LLC
Awarding Agency: Department of Defense
Start Date: 1997-06-13
End Date: 1999-05-15
Contract Duration: 701 days
Daily Burn Rate: $34.4K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: COST PLUS FIXED FEE
Sector: Defense
Official Description: 199710!9700!0469!ZS01 !DEFENSE SPECIAL WEAPONS AGENCY !DSWA0197C0089 !A!*!* !19970613!19980716!112820840!147354161!005356613!N!2Y992!RAYTHEON TECHNICAL SERVICES CO!8614 WESTWOOD CENTER DR !VIENNA !VA!22182!* !* !RS!* !* !RUSSIA !0001!+000006394326!N!N!000000000000!J099!MAINT & REPAIR OF EQ/MISCELLANEOUS EQUIPMENT !S1 !SERVICES !1000!NOT DISCERNABLE OR CLASSIFIED !8744!1!*!*!*!B!A!*!D !U!U!1!001!N!2A!Z!N!Z!* !* !N!M!*!*!*!A!A!A!*!* !*!N!A!B!N!*!*!*!*!*!
Place of Performance
Location: STERLING, LOUDOUN County, VIRGINIA, 20166
State: Virginia Government Spending
Plain-Language Summary
Department of Defense obligated $24.1 million to RAYTHEON TECHNICAL SERVICES COMPANY LLC for work described as: 199710!9700!0469!ZS01 !DEFENSE SPECIAL WEAPONS AGENCY !DSWA0197C0089 !A!*!* !19970613!19980716!112820840!147354161!005356613!N!2Y992!RAYTHEON TECHNICAL SERVICES CO!8614 WESTWOOD CENTER DR !VIENNA !VA!22182!* !* !RS!* !* … Key points: 1. Contract awarded for maintenance and repair of equipment, with a significant value. 2. The contract was not competed, raising concerns about potential overpricing and lack of market validation. 3. The cost-plus-fixed-fee structure may incentivize cost overruns. 4. The contractor, Raytheon Technical Services Co., has a track record with the Department of Defense. 5. The contract duration of 701 days suggests a need for ongoing support. 6. The geographic scope of services includes Russia, indicating international operational requirements.
Value Assessment
Rating: questionable
The contract's value of $112.8 million for maintenance and repair of equipment is substantial. Without a competitive bidding process, it is difficult to benchmark the pricing against market rates or similar contracts. The cost-plus-fixed-fee (CPFF) pricing structure, while common for complex services, can lead to higher costs if not managed diligently, as the contractor is reimbursed for all allowable costs plus a fixed fee. This structure warrants close scrutiny to ensure cost efficiency.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was awarded on a sole-source basis, meaning it was not competed. This approach is typically used when only one source is capable of meeting the requirement, or in cases of urgent need. However, the lack of competition means there was no opportunity to solicit bids from multiple vendors, which could have led to better pricing and terms for the government. The absence of a competitive process limits the government's ability to ensure it received the best possible value.
Taxpayer Impact: The lack of competition means taxpayers may not have received the most cost-effective solution. Without bids from other qualified contractors, the government could not leverage market forces to drive down prices.
Public Impact
The primary beneficiaries are likely the Department of Defense units requiring maintenance and repair services for specialized equipment. The services delivered include the upkeep and repair of miscellaneous equipment, ensuring operational readiness. The contract has a geographic impact that extends to Russia, suggesting support for overseas operations or specific international agreements. The contract supports a workforce employed by Raytheon Technical Services Company, contributing to employment in the defense services sector.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Lack of competition for a significant contract value raises concerns about price reasonableness.
- Cost-plus-fixed-fee contract type can lead to higher costs if not closely monitored.
- The specific nature of the equipment being maintained is not detailed, potentially obscuring performance metrics.
- International service delivery (Russia) adds complexity and potential geopolitical risks.
Positive Signals
- Awarded to a known contractor with experience in defense services.
- Contract duration suggests a recognized need for sustained maintenance and repair.
- The contract specifies a clear service category (Maintenance & Repair of Equipment).
Sector Analysis
This contract falls within the broader defense services sector, specifically focusing on maintenance, repair, and overhaul (MRO) of equipment. The defense MRO market is substantial, driven by the need to maintain the operational readiness of military assets. Companies like Raytheon Technical Services Company are key players in this sector, providing specialized technical support to government agencies. Benchmarking this contract's value would require comparing it to other MRO contracts for similar types of equipment within the Department of Defense or other federal agencies, though the sole-source nature complicates direct comparisons.
Small Business Impact
There is no indication that this contract included a small business set-aside. Given the sole-source nature and the prime contractor, it is unlikely that significant subcontracting opportunities for small businesses were mandated or actively pursued through a competitive set-aside process. Further analysis would be needed to determine if Raytheon Technical Services Company has a subcontracting plan that benefits small businesses.
Oversight & Accountability
Oversight for this contract would typically fall under the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor compliance with contract terms and conditions. The cost-plus-fixed-fee structure necessitates robust financial oversight to scrutinize allowable costs and the reasonableness of the fixed fee. Transparency is limited due to the sole-source award, but contract performance reports and audits would serve as key accountability measures.
Related Government Programs
- Department of Defense Maintenance and Repair Contracts
- Defense Logistics Agency Support Contracts
- Foreign Military Sales Support
- Aerospace and Defense Services Contracts
Risk Flags
- Sole-source award lacks competitive pricing.
- CPFF contract type may incentivize higher costs.
- Lack of specific equipment details hinders value assessment.
- International service delivery (Russia) adds complexity and risk.
Tags
defense, department-of-defense, maintenance-and-repair, equipment-maintenance, raytheon-technical-services-company, sole-source, cost-plus-fixed-fee, definitive-contract, virginia, russia, 1997, large-contract
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $24.1 million to RAYTHEON TECHNICAL SERVICES COMPANY LLC. 199710!9700!0469!ZS01 !DEFENSE SPECIAL WEAPONS AGENCY !DSWA0197C0089 !A!*!* !19970613!19980716!112820840!147354161!005356613!N!2Y992!RAYTHEON TECHNICAL SERVICES CO!8614 WESTWOOD CENTER DR !VIENNA !VA!22182!* !* !RS!* !* !RUSSIA !0001!+000006394326!N!N!000000000000!J099!MAINT & REPAIR OF EQ/MISCELLANEOUS EQUIPMENT !S1 !SERVICES !1000!NOT DISCERNABLE OR CLASSIFIED !8744!1!*!*!*!B!A!*!D !U!U!1!0
Who is the contractor on this award?
The obligated recipient is RAYTHEON TECHNICAL SERVICES COMPANY LLC.
Which agency awarded this contract?
Awarding agency: Department of Defense (Defense Contract Management Agency).
What is the total obligated amount?
The obligated amount is $24.1 million.
What is the period of performance?
Start: 1997-06-13. End: 1999-05-15.
What is the specific type of equipment being maintained and repaired under this contract?
The provided data indicates the contract is for 'MAINT & REPAIR OF EQ/MISCELLANEOUS EQUIPMENT'. However, the specific type of equipment is not detailed in the available information. This lack of specificity makes it challenging to assess the complexity of the maintenance required, compare the contract value to industry benchmarks for similar equipment, or evaluate the contractor's specialized expertise. Further investigation into contract line item numbers (CLINs) or attached statements of work would be necessary to identify the precise equipment covered.
How does the $112.8 million contract value compare to similar maintenance and repair contracts within the Department of Defense?
Direct comparison of the $112.8 million contract value is difficult due to its sole-source nature and the lack of specific equipment details. Generally, maintenance and repair contracts for complex defense systems can range from a few million to hundreds of millions of dollars, depending on the scope, duration, and criticality of the equipment. Without knowing the specific systems involved, it's hard to definitively say if this price is high or low. However, the absence of competition suggests that the government may not have achieved the most favorable pricing achievable through a competitive process.
What are the potential risks associated with the Cost Plus Fixed Fee (CPFF) contract type for this service?
The CPFF structure reimburses the contractor for all allowable costs incurred, plus a predetermined fixed fee representing profit. The primary risk for the government is that the contractor may have less incentive to control costs, as cost overruns are generally covered. While the fixed fee provides some predictability, the overall contract cost can escalate significantly if the contractor's costs are higher than anticipated. Robust government oversight is crucial to scrutinize allowable costs and ensure the contractor exercises due diligence in managing expenses to prevent unnecessary cost growth.
What is Raytheon Technical Services Company's track record with similar sole-source maintenance contracts?
Raytheon Technical Services Company (RTSC) has a significant history of performing various services for the Department of Defense, including maintenance and repair. While specific data on their track record with sole-source contracts of this exact nature is not provided here, RTSC is a large defense contractor accustomed to complex service agreements. Their past performance on other DoD contracts, including those that may have been sole-sourced due to specialized requirements or urgency, would be a key factor in the initial decision to award this contract without competition. A review of their performance history and any past issues would be pertinent.
What are the implications of the service delivery location including Russia for this contract?
The inclusion of Russia as a service delivery location for maintenance and repair of defense equipment introduces several layers of complexity and risk. It suggests the equipment is deployed or utilized in Russia, potentially for training, joint exercises, or specific operational needs. This necessitates navigating international logistics, customs, and potentially different regulatory environments. Geopolitically, operating in Russia can carry risks related to political stability, sanctions, and access. Furthermore, ensuring the security of sensitive equipment and technical data while operating in a foreign country requires stringent protocols and vetting.
Competition & Pricing
Extent Competed: NOT COMPETED
Solicitation Procedures: ONLY ONE SOURCE
Offers Received: 1
Pricing Type: COST PLUS FIXED FEE (U)
Evaluated Preference: NONE
Contractor Details
Parent Company: Raytheon Company
Address: 22265 PACIFIC BLVD, STERLING, VA, 20166
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: NO
Timeline
Start Date: 1997-06-13
Current End Date: 1999-05-15
Potential End Date: 1999-05-15 00:00:00
Last Modified: 2025-03-28
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