Raytheon Company awarded $147M for Distributed Common Ground System mission support, with limited competition

Contract Overview

Contract Amount: $147,103,536 ($147.1M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2018-10-01

End Date: 2020-01-31

Contract Duration: 487 days

Daily Burn Rate: $302.1K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: IT

Official Description: DISTRIBUTED COMMON GROUND SYSTEM (DGCS) MISSION SUPPORT AND MAINTENANCE PERSONNEL (DMSMP)

Place of Performance

Location: STERLING, LOUDOUN County, VIRGINIA, 20166

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $147.1 million to RAYTHEON COMPANY for work described as: DISTRIBUTED COMMON GROUND SYSTEM (DGCS) MISSION SUPPORT AND MAINTENANCE PERSONNEL (DMSMP) Key points: 1. Contract awarded to Raytheon Company for mission support and maintenance personnel for the Distributed Common Ground System (DGCS). 2. The contract was not competed, raising questions about potential price discovery and value for money. 3. Performance period spans from October 2018 to January 2020, indicating a relatively short-term engagement. 4. The contract type is Cost Plus Fixed Fee (CPFF), which can incentivize cost overruns if not closely monitored. 5. The primary service category is Engineering Services, suggesting a need for specialized technical expertise. 6. The contract value of $147 million falls within a significant spending range for defense IT infrastructure.

Value Assessment

Rating: questionable

The contract's Cost Plus Fixed Fee (CPFF) structure, combined with a lack of competition, raises concerns about achieving optimal value. Without competitive benchmarking, it is difficult to definitively assess if the pricing is fair or if alternative, more cost-effective solutions were overlooked. The fixed fee component provides some cost control, but the overall cost-plus nature requires rigorous oversight to prevent potential overspending. Further analysis would be needed to compare this contract's unit costs and overall expenditure against similar DGCS support contracts or industry benchmarks for engineering services.

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 a specific contractor possesses unique capabilities or when urgency precludes a full and open competition. The lack of competition limits the government's ability to leverage market forces to drive down prices and ensure the most innovative or cost-effective solutions are considered. It suggests that Raytheon Company was deemed the only viable provider for these specific mission support and maintenance services for the DGCS.

Taxpayer Impact: Sole-source awards can potentially lead to higher costs for taxpayers as there is no competitive pressure to offer the lowest price. This necessitates strong government oversight to ensure the awarded price is reasonable.

Public Impact

The primary beneficiaries are the Department of the Air Force and its personnel who rely on the Distributed Common Ground System for critical operations. Services delivered include mission support and maintenance personnel, ensuring the operational readiness and effectiveness of the DGCS. The geographic impact is likely concentrated within areas where the DGCS is deployed and operated by the Air Force. Workforce implications include the employment of specialized engineering and technical personnel by Raytheon Company to fulfill the contract requirements.

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 contract type can incentivize cost escalation if not managed tightly.
Lack of transparency in the procurement process due to non-competitive award.
Potential for vendor lock-in if specialized knowledge is solely held by the incumbent.
Limited opportunity for small businesses to participate in this specific contract.

Positive Signals

Award to an established contractor (Raytheon) suggests a degree of confidence in their capability to deliver.
Focus on mission support and maintenance indicates a commitment to operational readiness of critical systems.
The contract addresses a specific need for specialized engineering services for a complex system (DGCS).
The fixed fee component provides a defined profit margin, offering some predictability for the contractor.

Sector Analysis

The Distributed Common Ground System (DGCS) is a critical intelligence, surveillance, and reconnaissance (ISR) platform for the Department of Defense. Contracts supporting such systems fall within the broader defense IT and engineering services sector. This sector is characterized by high complexity, long development cycles, and significant government investment. Spending benchmarks for similar ISR system support can vary widely based on system criticality, scope of services, and contract type. The $147 million awarded to Raytheon for mission support and maintenance aligns with the substantial investments typically made in maintaining and upgrading advanced defense technologies.

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 award. The sole-source nature of the award further limits the potential for small business participation, as there was no competitive solicitation where small businesses could bid or be considered for subcontracting roles.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Air Force's contracting and program management offices. As a Cost Plus Fixed Fee (CPFF) contract, rigorous financial oversight is crucial to monitor costs and ensure the fixed fee remains appropriate. Transparency is limited due to the sole-source nature of the award. Inspector General (IG) jurisdiction would apply if any allegations of fraud, waste, or abuse arise during the contract's performance or closeout.

Related Government Programs

Intelligence, Surveillance, and Reconnaissance (ISR) Systems Support
Defense IT Infrastructure Modernization
Mission Critical Systems Maintenance
Engineering Services for Defense Platforms
Distributed Common Ground System (DGCS) Program

Risk Flags

Sole-source award
Cost Plus Fixed Fee contract type
Lack of competitive bidding
Potential for cost overruns without strict oversight

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $147.1 million to RAYTHEON COMPANY. DISTRIBUTED COMMON GROUND SYSTEM (DGCS) MISSION SUPPORT AND MAINTENANCE PERSONNEL (DMSMP)

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 $147.1 million.

What is the period of performance?

Start: 2018-10-01. End: 2020-01-31.

What is Raytheon Company's track record with the Distributed Common Ground System (DGCS) prior to this contract?

Raytheon Company has a long-standing history of developing and supporting complex defense systems, including elements related to ground systems and intelligence processing. While specific details on their prior involvement with the DGCS prior to this $147 million contract are not provided in the abbreviated data, their position as a major defense contractor suggests a likely role in its development, integration, or sustainment. Companies like Raytheon often have deep institutional knowledge of these systems, which can be a factor in sole-source awards. Further investigation into historical contract awards and program documentation would be necessary to fully delineate their previous contributions and performance metrics related to the DGCS.

How does the $147 million contract value compare to other DGCS mission support contracts?

Without access to a comprehensive database of all DGCS mission support contracts, a direct comparison of the $147 million value is challenging. However, given that the DGCS is a critical and complex intelligence, surveillance, and reconnaissance (ISR) platform, annual sustainment and support costs can easily reach tens to hundreds of millions of dollars. The duration of this contract (approximately 1.3 years) suggests an annualized spend of roughly $113 million ($147M / 1.3 years). This figure is substantial and aligns with the expected costs for maintaining and supporting such a vital defense system, especially when considering specialized personnel and engineering services. Benchmarking against similar contracts for other major ISR platforms or ground systems would provide a more robust comparison.

What are the primary risks associated with a sole-source, Cost Plus Fixed Fee (CPFF) contract for mission support?

The primary risks associated with a sole-source, CPFF contract are twofold. Firstly, the lack of competition means the government may not be achieving the best possible price, as there's no market pressure to drive down costs or encourage innovative, lower-cost solutions. Taxpayers could potentially pay more than necessary. Secondly, the CPFF structure, while providing a defined profit margin (the 'fixed fee'), can incentivize the contractor to incur higher costs, as their fee is a percentage of the total costs incurred. This necessitates robust government oversight to scrutinize costs, prevent inefficiencies, and ensure the contractor is performing diligently to manage expenses within reasonable bounds. Without strong oversight, cost overruns are a significant risk.

How effective is the Distributed Common Ground System (DGCS) likely to be with this level of support?

The effectiveness of the DGCS is highly dependent on the quality and continuity of the mission support and maintenance personnel provided under this contract. Raytheon's role in providing these services suggests a focus on ensuring the system's operational readiness and technical integrity. The $147 million investment over approximately 1.3 years indicates a significant commitment to sustaining this critical platform. Assuming the personnel are highly skilled and the oversight is effective, this contract should contribute positively to the DGCS's ability to collect, process, and disseminate intelligence data. However, the effectiveness is ultimately tied to the system's design, integration with other assets, and the strategic utilization of the intelligence it provides.

What are the historical spending patterns for DGCS mission support and maintenance personnel?

The provided data only details one specific contract award of $147 million from October 2018 to January 2020. To understand historical spending patterns for DGCS mission support and maintenance personnel, a broader analysis of all related contracts over multiple fiscal years would be required. This would involve examining contract databases for all awards related to DGCS sustainment, maintenance, and operational support, regardless of the contracting agency or prime contractor. Such an analysis would reveal trends in annual spending, identify key contractors, and potentially highlight periods of increased or decreased investment in the system's support infrastructure.

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

Solicitation ID: FA852718R0024

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

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: $147,103,536

Exercised Options: $147,103,536

Current Obligation: $147,103,536

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA852716D0050

IDV Type: IDC

Timeline