Raytheon Company awarded $105.7M for distributed common ground system mission support, a sole-source contract

Contract Overview

Contract Amount: $105,702,707 ($105.7M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2016-10-01

End Date: 2021-02-03

Contract Duration: 1,586 days

Daily Burn Rate: $66.6K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: IGF::OT::IGF DISTRIBUTED COMMON GROUND SYSTEM MISSION SUPPORT MAINTENANCE PERSONNEL SUPPORT

Place of Performance

Location: STERLING, LOUDOUN County, VIRGINIA, 20166

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $105.7 million to RAYTHEON COMPANY for work described as: IGF::OT::IGF DISTRIBUTED COMMON GROUND SYSTEM MISSION SUPPORT MAINTENANCE PERSONNEL SUPPORT Key points: 1. Contract awarded on a cost-plus-fixed-fee basis, which can lead to cost overruns if not managed carefully. 2. The contract was not competed, raising questions about potential price efficiencies and market-driven value. 3. Long performance period of over 4 years suggests a sustained need for these services. 4. The specific services include maintenance and personnel support for a critical defense system. 5. This contract falls under engineering services, a broad category with varying cost structures. 6. The award was made to Raytheon Company, a major defense contractor with a significant existing footprint.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging due to its sole-source nature and the specific technical services provided. Cost-plus-fixed-fee contracts inherently carry a risk of higher costs compared to fixed-price agreements, as the contractor is reimbursed for allowable costs plus a negotiated fee. Without competitive bids, it's difficult to ascertain if the pricing reflects market rates or represents a fair value for the services rendered. The significant dollar amount suggests a substantial requirement, but the lack of competition prevents a robust value-for-money assessment.

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 among multiple vendors. This approach is typically used when only one vendor possesses the necessary capabilities, technology, or security clearances, or in cases of urgent need. The absence of competition means that the government did not benefit from the price discovery mechanisms that typically occur in a competitive bidding process, potentially leading to higher costs for taxpayers.

Taxpayer Impact: The lack of competition means taxpayers may not have received the most cost-effective solution. Without bids from other qualified companies, the government had limited leverage to negotiate the lowest possible price.

Public Impact

The primary beneficiaries are the Department of Defense and specifically the Air Force, which relies on the Distributed Common Ground System for intelligence and operational support. The services delivered include essential maintenance and personnel support, ensuring the continuous operation and effectiveness of a critical defense intelligence platform. The geographic impact is likely global, given the nature of intelligence gathering and dissemination for military operations. Workforce implications include the employment of personnel by Raytheon Company to fulfill the contract requirements, potentially including specialized technical and maintenance roles.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially increasing costs for taxpayers.
Cost-plus-fixed-fee contract structure can incentivize higher spending if not closely monitored.
Lack of transparency in the procurement process due to sole-sourcing.
Long-term nature of the contract may reduce flexibility for future technology adoption or vendor changes.
Potential for contractor lock-in given the specialized nature of the system supported.

Positive Signals

Ensures continuity of operations for a critical defense intelligence system.
Leverages the specialized expertise of a known contractor (Raytheon Company) for a complex system.
Provides essential maintenance and personnel support, crucial for system reliability.
The contract duration suggests a stable and predictable operational environment for the system.

Sector Analysis

The defense intelligence sector is characterized by highly specialized technology, long development cycles, and significant government investment. Contracts like this are crucial for maintaining the operational readiness of complex systems such as the Distributed Common Ground System (DCGS). The market is dominated by a few large defense contractors capable of handling such sophisticated requirements. Spending in this area is driven by national security needs, often involving proprietary technologies and extensive security protocols, which can limit competition and influence contract types and values.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Furthermore, the 'ss' flag is also false, suggesting it's not a small business prime award. Large sole-source contracts awarded to major prime contractors like Raytheon Company often have subcontracting opportunities for small businesses. However, the specific subcontracting plan and its effectiveness in supporting the small business ecosystem would require further investigation into the contract's detailed terms and performance.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Air Force and the Department of Defense's contracting and program management offices. Given the sole-source nature and the significant dollar value, robust oversight is critical to ensure cost control and performance. Inspector General (IG) jurisdiction would apply for investigations into fraud, waste, or abuse. Transparency is limited by the sole-source award, but contract performance reports and financial audits would be key accountability measures.

Related Government Programs

Intelligence, Surveillance, and Reconnaissance (ISR) Systems
Defense Information Technology Services
Military Maintenance and Support Services
Ground Systems Development and Maintenance
Department of Defense IT Modernization Programs

Risk Flags

Sole-source award
Cost-plus-fixed-fee contract type
Lack of competitive bidding
Potential for cost overruns
Long contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $105.7 million to RAYTHEON COMPANY. IGF::OT::IGF DISTRIBUTED COMMON GROUND SYSTEM MISSION SUPPORT MAINTENANCE PERSONNEL SUPPORT

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 Air Force).

What is the total obligated amount?

The obligated amount is $105.7 million.

What is the period of performance?

Start: 2016-10-01. End: 2021-02-03.

What is the track record of Raytheon Company in delivering similar mission support and maintenance services for complex defense systems?

Raytheon Company, now part of RTX, has a long and extensive history of providing mission support, maintenance, and sustainment services for various complex defense systems, including intelligence, surveillance, and reconnaissance (ISR) platforms and ground systems. They are a primary contractor for numerous Department of Defense programs, often involving sophisticated software, hardware, and personnel integration. Their experience typically includes managing large-scale contracts, ensuring system availability, and providing technical expertise. While specific performance metrics for this particular contract are not detailed here, Raytheon's general track record in the defense sector indicates a capacity to handle such requirements. However, the effectiveness and efficiency of their performance can vary across different contracts and programs, necessitating ongoing oversight.

How does the cost-plus-fixed-fee (CPFF) structure compare to other contract types for similar defense system maintenance?

Cost-plus-fixed-fee (CPFF) contracts are often used when the scope of work is not precisely defined or involves research and development, making it difficult to establish a firm fixed price. In this structure, the contractor is reimbursed for all allowable costs incurred, plus a predetermined fixed fee representing profit. Compared to fixed-price contracts, CPFF offers flexibility but carries a higher risk of cost overruns for the government, as the contractor has less incentive to control costs once the fee is fixed. For maintenance and support services where requirements can evolve, CPFF can be appropriate, but it demands rigorous government oversight of costs and performance. Fixed-price incentive fee (FPIF) or other performance-based contracts might offer better value if performance metrics can be clearly defined and measured, encouraging efficiency.

What are the potential risks associated with a sole-source award for critical defense system support?

Sole-source awards for critical defense system support present several risks. Foremost is the lack of price competition, which can lead to the government paying a premium compared to what might be achieved in a competitive bidding process. This can result in suboptimal value for taxpayer money. Another risk is contractor lock-in; once a sole-source provider is established for a complex system, it can be difficult and costly to switch vendors, even if performance or pricing becomes unsatisfactory. This can reduce the government's leverage. Furthermore, without the pressure of competition, there might be less incentive for the incumbent contractor to innovate or aggressively pursue cost efficiencies. Finally, sole-sourcing can sometimes raise concerns about fairness and transparency in the procurement process.

What is the significance of the Distributed Common Ground System (DCGS) and the services provided under this contract?

The Distributed Common Ground System (DCGS) is a critical intelligence, surveillance, and reconnaissance (ISR) system used by the U.S. military to collect, process, exploit, and disseminate intelligence data from various platforms (e.g., drones, satellites, aircraft). It provides commanders with actionable intelligence to support decision-making. The services provided under this contract—mission support, maintenance, and personnel support—are essential for ensuring the DCGS operates reliably and effectively. Without proper maintenance and skilled personnel, the system's availability and performance could degrade, impacting the military's ability to gather and act upon vital intelligence, which has direct implications for national security operations.

How does the contract's duration (1586 days) impact the overall cost and strategic flexibility?

A contract duration of 1586 days (approximately 4.3 years) for mission support and maintenance indicates a long-term commitment to the current system and contractor. This extended period provides stability and ensures continuity of operations, which is valuable for critical defense infrastructure like the DCGS. However, it also means that the government is locked into this specific solution and contractor for a significant duration. This can reduce strategic flexibility, making it harder to pivot to new technologies or alternative vendors if better options emerge during the contract period. From a cost perspective, a longer duration can sometimes lead to economies of scale or more predictable budgeting, but it also means a larger total financial commitment and potentially higher overall costs if efficiencies are not realized or if market prices decrease over time.

Industry Classification

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

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL 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 (UEI: 001344142)

Address: 22260 PACIFIC BLVD, DULLES, VA, 20166

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: $105,702,707

Exercised Options: $105,702,707

Current Obligation: $105,702,707

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA852716D0050

IDV Type: IDC

Timeline