Raytheon Company awarded $63.5M for Distributed Common Ground System mission support and maintenance personnel

Contract Overview

Contract Amount: $63,465,450 ($63.5M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2020-02-01

End Date: 2020-09-29

Contract Duration: 241 days

Daily Burn Rate: $263.3K/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 $63.5 million to RAYTHEON COMPANY for work described as: DISTRIBUTED COMMON GROUND SYSTEM (DGCS) MISSION SUPPORT AND MAINTENANCE PERSONNEL (DMSMP) Key points: 1. Contract awarded on a sole-source basis, limiting price competition. 2. Significant funding allocated for personnel services, indicating a need for specialized expertise. 3. Short contract duration (241 days) suggests a focused, potentially interim, support requirement. 4. The contract type (Cost Plus Fixed Fee) allows for cost reimbursement plus a fixed fee, which can incentivize cost control but also carries inherent risk. 5. This award represents a portion of broader Department of Defense IT infrastructure and sustainment spending. 6. The specific nature of mission support and maintenance for a common ground system implies critical operational reliance.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging due to its sole-source nature and specific personnel focus. The Cost Plus Fixed Fee structure, while common for complex services, can lead to higher costs compared to fixed-price contracts if not managed diligently. The provided data does not allow for direct comparison to similar contracts or market rates for the specific services rendered, making a definitive value-for-money assessment difficult. However, the total award amount suggests a substantial investment in maintaining critical systems.

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, security clearances, or proprietary knowledge to perform the required services. The lack of competition means that taxpayers did not benefit from potential price reductions that could arise from a competitive bidding process.

Taxpayer Impact: Sole-source awards limit the government's ability to leverage market competition to secure the best possible pricing, potentially leading to higher costs for taxpayers.

Public Impact

The Department of Defense benefits from the continued operational readiness and maintenance of the Distributed Common Ground System (DGCS). Personnel services are delivered to ensure the functionality and support of critical intelligence and mission systems. The geographic impact is primarily within Virginia, where the contractor is located, but the system's reach is likely global. Workforce implications include the employment of specialized personnel required for the maintenance and support of advanced defense systems.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure on pricing.
Cost Plus Fixed Fee contract type can lead to cost overruns if not closely monitored.
Short duration may indicate a stop-gap measure, potentially leading to future contract re-competition with associated transition costs.

Positive Signals

Award to an established defense contractor (Raytheon Company) suggests a degree of reliability and existing knowledge.
Focus on mission support and maintenance indicates a commitment to sustaining critical defense infrastructure.
Contracting for personnel services ensures specialized expertise is available for complex systems.

Sector Analysis

This contract falls within the Engineering Services sector, specifically supporting IT infrastructure for defense applications. The market for defense IT support and maintenance is substantial, characterized by long-term relationships between government agencies and specialized contractors. Raytheon Company is a major player in this sector, providing a wide range of defense and aerospace solutions. Benchmarking spending in this area is complex due to the classified nature of many defense systems, but overall IT spending by the DoD is in the tens of billions annually.

Small Business Impact

This contract was not set aside for small businesses, nor does the provided data indicate any subcontracting requirements for small businesses. As a sole-source award to a large prime contractor, the direct impact on the small business ecosystem is likely minimal, unless Raytheon Company voluntarily engages small businesses for specific support roles not detailed in this award.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Air Force's contracting and program management offices. Accountability measures would be tied to the performance metrics outlined in the contract and the fixed fee structure. Transparency is limited due to the sole-source nature and the classified aspects of the DGCS. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Intelligence, Surveillance, and Reconnaissance (ISR) Systems Support
Defense Information Technology Services
Ground Systems Maintenance and Operations
Department of Defense Personnel Services Contracts
Common Ground Systems Sustainment

Risk Flags

Sole-source award
Cost-plus contract type
Potential for cost overruns
Limited transparency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $63.5 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 $63.5 million.

What is the period of performance?

Start: 2020-02-01. End: 2020-09-29.

What is the track record of Raytheon Company in providing mission support and maintenance for similar ground systems?

Raytheon Company, now part of RTX, has a long and extensive history of providing mission support, maintenance, and sustainment services for complex defense systems, including intelligence, surveillance, and reconnaissance (ISR) platforms and common ground systems. They are a prime contractor on numerous large-scale defense programs requiring specialized engineering, software development, and lifecycle support. Their experience with systems like the Distributed Common Ground System (DGCS) is well-established, often involving secure environments and critical operational demands. This includes managing personnel, ensuring system availability, and implementing upgrades. The company's track record generally indicates a capacity to handle such requirements, though specific performance on individual contracts can vary and is subject to government oversight and evaluation.

How does the Cost Plus Fixed Fee (CPFF) contract type compare to other pricing arrangements for similar services in terms of cost efficiency?

The Cost Plus Fixed Fee (CPFF) contract type is often used for research and development or complex services where the scope of work is not precisely defined at the outset, or where innovation is a key component. It reimburses the contractor for allowable costs incurred plus a predetermined fixed fee representing profit. Compared to Firm-Fixed-Price (FFP) contracts, CPFF generally offers less cost certainty for the government, as costs can fluctuate. However, it can be more efficient than Cost Plus Incentive Fee (CPIF) or Cost Plus Award Fee (CPAF) contracts if the fixed fee is set appropriately and the contractor is motivated to control costs to maximize their profit margin relative to the fee. The CPFF structure places a significant burden on government oversight to ensure costs are reasonable and allocable.

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

Sole-source awards for critical IT mission support carry several potential risks. Primarily, the absence of competition can lead to higher prices than might be achieved in a competitive environment, as the contractor faces less pressure to offer the most cost-effective solution. There's also a risk of complacency, where the incumbent contractor may become less innovative or responsive over time, knowing they are the only option. Furthermore, sole-source awards can create vendor lock-in, making it difficult and costly to transition to a different provider in the future. Dependence on a single supplier also increases vulnerability if that supplier experiences financial difficulties, operational disruptions, or strategic shifts that impact their ability to deliver.

What is the typical duration and funding level for contracts supporting common ground systems like DGCS?

The duration and funding levels for contracts supporting common ground systems like the Distributed Common Ground System (DGCS) can vary significantly based on the system's lifecycle stage, complexity, and the specific services required. Sustainment and maintenance contracts, like the one awarded to Raytheon, can range from short-term bridge contracts (like this 241-day award) to multi-year indefinite-delivery/indefinite-quantity (IDIQ) vehicles. Funding can range from hundreds of thousands to hundreds of millions of dollars annually, depending on the scope. Factors influencing these levels include the number of system installations, the criticality of the system to national security, the pace of technological upgrades, and the availability of government personnel to perform support functions. This specific award of $63.5 million for less than a year suggests a substantial personnel requirement for a critical system.

How does the performance context of this contract relate to broader Department of Defense IT modernization efforts?

This contract for Distributed Common Ground System (DGCS) mission support and maintenance personnel is situated within the broader context of the Department of Defense's (DoD) ongoing IT modernization and digital transformation efforts. While this award focuses on sustaining an existing system, the DoD is simultaneously investing heavily in cloud computing, artificial intelligence, cybersecurity, and network modernization to maintain information superiority. Contracts like this highlight the challenge of balancing the need to maintain legacy systems, which are often critical for current operations, with the imperative to transition to more agile, secure, and advanced technological architectures. The efficiency and effectiveness of personnel supporting these legacy systems directly impact the resources available for and the success of modernization initiatives.

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: FA852719R0000

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: $63,465,450

Exercised Options: $63,465,450

Current Obligation: $63,465,450

Actual Outlays: $22,000,966

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA852716D0050

IDV Type: IDC

Timeline