Raytheon Company awarded $86.6M for Distributed Common Ground Station Mission Support, raising questions on competition and value

Contract Overview

Contract Amount: $86,573,788 ($86.6M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2020-10-01

End Date: 2022-03-29

Contract Duration: 544 days

Daily Burn Rate: $159.1K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: IT

Official Description: DISTRIBUTED COMMON GROUND STATION 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 $86.6 million to RAYTHEON COMPANY for work described as: DISTRIBUTED COMMON GROUND STATION MISSION SUPPORT AND MAINTENANCE PERSONNEL (DMSMP) Key points: 1. Contract awarded on a sole-source basis, limiting price discovery and potentially increasing costs. 2. Significant contract value for engineering services, requiring careful benchmarking against similar support. 3. Performance period spans over 1.5 years, indicating a need for sustained oversight. 4. The Cost Plus Fixed Fee (CPFF) contract type may incentivize cost overruns. 5. Lack of competition raises concerns about the government securing the best possible value. 6. The contract supports critical mission functions, highlighting its strategic importance.

Value Assessment

Rating: questionable

Benchmarking the value of this $86.6 million contract is challenging due to the sole-source award. Without competitive bids, it's difficult to ascertain if the pricing reflects market rates or if Raytheon Company provided the most cost-effective solution. The CPFF structure, while allowing flexibility, can lead to higher costs if not managed rigorously. Further analysis of the cost components and comparison to similar sole-source engineering support contracts would be necessary to definitively assess value for money.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning the Department of Defense did not conduct a competitive bidding process. This approach is typically used when only one vendor can provide the required services or in urgent situations. The absence of multiple bidders means there was no direct price competition, which can limit the government's ability to negotiate the lowest possible price and may indicate a lack of market alternatives for this specific support.

Taxpayer Impact: Sole-source awards can result in higher costs for taxpayers as the government does not benefit from the downward pressure that competition typically provides. This limits the opportunity to achieve cost savings through a bidding process.

Public Impact

The primary beneficiaries are the Department of the Air Force, which receives essential mission support and maintenance personnel. Services delivered include personnel support for the Distributed Common Ground Station (DCGS) mission. The contract's geographic impact is likely concentrated where DCGS operations are located, primarily within the United States. Workforce implications include the employment of specialized personnel required for complex engineering and maintenance tasks.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially leading to higher costs.
Cost Plus Fixed Fee contract type can incentivize cost escalation if not closely monitored.
Lack of transparency in the procurement process due to sole-source nature.
Potential for vendor lock-in given the specialized nature of the support.
Limited visibility into alternative solutions or pricing benchmarks.

Positive Signals

Contract supports critical mission functions for the Department of Defense.
Raytheon Company is an established defense contractor with relevant experience.
The contract duration allows for sustained support and operational continuity.
Fixed fee component provides some cost predictability within the CPFF structure.

Sector Analysis

This contract falls within the Engineering Services sector, specifically supporting defense-related IT infrastructure and operations. The market for such specialized engineering and mission support services is dominated by large defense contractors. Spending in this area is substantial, driven by the need for advanced technological capabilities and ongoing maintenance for complex systems like the Distributed Common Ground Station. Comparable spending benchmarks would involve analyzing other large-scale IT and engineering support contracts awarded by the Department of Defense.

Small Business Impact

There is no indication that this contract included a small business set-aside. Given the sole-source nature and the likely specialized requirements, it is improbable that small businesses were primary awardees or significant subcontractors. Further investigation would be needed to determine if any subcontracting opportunities were directed towards small businesses, which is often a requirement even in larger, non-set-aside contracts.

Oversight & Accountability

Oversight for this contract would primarily reside with the contracting officers and program managers within the Department of the Air Force. Accountability measures are typically embedded in the contract terms, including performance metrics and reporting requirements. Transparency is limited due to the sole-source award, but contract details and performance reports may be available through official channels. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected.

Related Government Programs

Distributed Common Ground System (DCGS) Operations
Intelligence, Surveillance, and Reconnaissance (ISR) Support
Defense Information Technology Contracting
Engineering Services for Military Systems
Mission Support Contracts

Risk Flags

Sole-source award
Lack of competition
Cost Plus Fixed Fee structure
High contract value

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $86.6 million to RAYTHEON COMPANY. DISTRIBUTED COMMON GROUND STATION 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 $86.6 million.

What is the period of performance?

Start: 2020-10-01. End: 2022-03-29.

What is Raytheon Company's track record with similar sole-source contracts for mission support?

Raytheon Company, now RTX, has a long history of securing large sole-source contracts with the Department of Defense, particularly for complex systems integration, sustainment, and mission support. Their track record includes numerous awards for programs requiring specialized engineering and technical expertise, often in areas where they possess unique capabilities or are the incumbent provider. While sole-source awards are common for established, high-value defense programs, they necessitate rigorous justification by the agency to ensure fair and reasonable pricing and to demonstrate that competition was not feasible. Analyzing past sole-source awards to Raytheon for similar services can provide context on pricing trends and performance history, though each contract's specifics and justifications would need individual review.

How does the Cost Plus Fixed Fee (CPFF) pricing structure compare to other contract types for this type of service?

The Cost Plus Fixed Fee (CPFF) contract type is often used when the scope of work is not precisely defined or when there is uncertainty in the costs involved, such as in research and development or complex system support. It allows the contractor to recover all allowable costs plus a predetermined fixed fee representing profit. Compared to Firm-Fixed-Price (FFP) contracts, CPFF offers more flexibility for the government if requirements change but carries a higher risk of cost overruns, as the contractor is incentivized to incur costs to cover the fixed fee. Other types like Cost Plus Incentive Fee (CPIF) or Cost Plus Award Fee (CPAF) introduce performance incentives. For engineering services, CPFF can be appropriate if innovation or adaptation is key, but it requires robust government oversight to manage costs effectively.

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

The primary risks associated with a sole-source award for critical mission support include a lack of competitive pricing, potentially leading to higher costs for the government and taxpayers. Without competition, there is reduced incentive for the contractor to innovate or optimize efficiency to offer the best value. Furthermore, sole-source awards can create vendor lock-in, making it difficult and costly to switch providers in the future, especially if the contractor develops unique expertise or proprietary systems. There's also a risk that the government may not be aware of all available market solutions or alternative technologies that could be more cost-effective or performant. Robust justification and negotiation are crucial to mitigate these risks.

What is the historical spending trend for Distributed Common Ground Station (DCGS) mission support?

Historical spending on Distributed Common Ground Station (DCGS) mission support has been substantial and consistent, reflecting the critical role these systems play in intelligence, surveillance, and reconnaissance (ISR) operations for the U.S. military. The DCGS program involves complex networks of sensors, data processing, and analyst workstations, requiring continuous maintenance, upgrades, and personnel support. Over the years, the Department of Defense has allocated billions of dollars towards the sustainment and modernization of DCGS capabilities. Spending patterns often reflect evolving threats, technological advancements, and the need for interoperability across different military branches. Contracts for DCGS support, including personnel, software, and hardware, are frequently awarded to major defense contractors, often through competitive processes but also through sole-source or limited competition vehicles for specialized sustainment.

How does the $86.6 million contract value compare to other engineering services contracts awarded by the Department of the Air Force?

An $86.6 million contract for engineering services is a significant award, placing it within the upper tier of contracts awarded by the Department of the Air Force, particularly for specialized support functions. The Air Force procures a vast array of engineering services, ranging from aircraft design and maintenance to IT infrastructure and weapons systems development. While smaller engineering contracts are numerous, awards in the tens to hundreds of millions are common for major programs, sustainment efforts, or complex system integration projects. Comparing this specific contract's value requires looking at the average and median contract values for similar North American Industry Classification System (NAICS) codes (like 541330 for Engineering Services) awarded by the Air Force over comparable periods. Given its sole-source nature and specific mission support focus, it represents a substantial investment in maintaining critical operational capabilities.

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: FA852720R0019

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: RTX Corp

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: $86,573,788

Exercised Options: $86,573,788

Current Obligation: $86,573,788

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA852716D0050

IDV Type: IDC

Timeline