DoD Awards Raytheon $346M for Engineering Services, Lacking Competition
Contract Overview
Contract Amount: $346,307,729 ($346.3M)
Contractor: Raytheon Company
Awarding Agency: Department of Defense
Start Date: 2008-01-17
End Date: 2018-12-30
Contract Duration: 4,000 days
Daily Burn Rate: $86.6K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: COST PLUS FIXED FEE
Sector: Defense
Official Description: BASE YEAR ENGINEERING SERVICES
Place of Performance
Location: SEMINOLE, PINELLAS County, FLORIDA, 33777
State: Florida Government Spending
Plain-Language Summary
Department of Defense obligated $346.3 million to RAYTHEON COMPANY for work described as: BASE YEAR ENGINEERING SERVICES Key points: 1. Significant contract value of $346M awarded to a single large defense contractor. 2. Lack of competition raises concerns about potential overpricing and reduced innovation. 3. The contract type (Cost Plus Fixed Fee) can incentivize cost overruns. 4. Sector is Defense, specifically Navigation and Guidance Systems.
Value Assessment
Rating: questionable
The Cost Plus Fixed Fee contract type, combined with a lack of competition, suggests potential for higher-than-necessary costs. Benchmarking against similar sole-source contracts would be necessary for a definitive assessment, but the structure itself warrants scrutiny.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was not competed, indicating a sole-source award. This significantly limits price discovery and potentially leads to less favorable terms for the government compared to a competitive process.
Taxpayer Impact: The absence of competition likely results in higher costs for taxpayers, as there was no market pressure to drive down prices.
Public Impact
Taxpayers may be paying a premium due to the lack of competitive bidding. The long duration of the contract (10 years) means sustained potential for overspending. Reliance on a single provider for critical defense systems could pose a long-term risk.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award
- Cost-plus contract type
- Long contract duration
Positive Signals
- Award to established defense contractor
- Contract supports critical defense systems
Sector Analysis
This contract falls within the Defense sector, specifically manufacturing instruments for search, detection, navigation, guidance, and related systems. Spending in this sub-sector is often characterized by high R&D costs and long procurement cycles.
Small Business Impact
The awardee, Raytheon Company, is a large defense contractor. There is no indication that small businesses were involved in this specific contract, either as prime contractors or subcontractors.
Oversight & Accountability
The sole-source nature of this award warrants close oversight to ensure costs are reasonable and performance meets requirements. Transparency in reporting and regular audits would be crucial.
Related Government Programs
- Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing
- Department of Defense Contracting
- Defense Contract Management Agency Programs
Risk Flags
- Lack of competition
- Cost-plus contract type
- Long contract duration (10 years)
- Potential for cost overruns
- Limited price discovery
Tags
search-detection-navigation-guidance-aer, department-of-defense, fl, definitive-contract, 100m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $346.3 million to RAYTHEON COMPANY. BASE YEAR ENGINEERING SERVICES
Who is the contractor on this award?
The obligated recipient is RAYTHEON COMPANY.
Which agency awarded this contract?
Awarding agency: Department of Defense (Defense Contract Management Agency).
What is the total obligated amount?
The obligated amount is $346.3 million.
What is the period of performance?
Start: 2008-01-17. End: 2018-12-30.
What specific justification was provided for the sole-source award, and were alternative competitive strategies considered?
The provided data indicates the contract was 'NOT COMPETED.' A thorough review would require access to the justification documentation (e.g., Justification and Approval - J&A) to understand why competition was deemed impracticable or not advantageous. This would typically involve detailing market research and the rationale for selecting a sole-source provider.
How does the 'Cost Plus Fixed Fee' structure impact cost control and potential for contractor profit in this specific contract?
Cost Plus Fixed Fee (CPFF) contracts reimburse the contractor for allowable costs plus a fixed fee representing profit. While the fee is fixed, the contractor has less incentive to control costs compared to fixed-price contracts. This structure can lead to higher overall costs if not rigorously managed and audited by the government.
What are the long-term strategic implications of awarding such a significant contract without competition in a critical defense technology area?
Awarding a large, long-term contract without competition can stifle innovation by reducing market pressure and potentially create vendor lock-in. It may also limit the government's flexibility to adopt newer technologies or alternative solutions that emerge during the contract's life, posing a strategic risk.
Industry Classification
NAICS: Manufacturing › Navigational, Measuring, Electromedical, and Control Instruments Manufacturing › Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing
Product/Service Code: FIRE CONTROL EQPT.
Competition & Pricing
Extent Competed: NOT COMPETED
Solicitation Procedures: ONLY ONE SOURCE
Solicitation ID: N0002408R5202
Offers Received: 1
Pricing Type: COST PLUS FIXED FEE (U)
Evaluated Preference: NONE
Contractor Details
Parent Company: Rockwell Collins Australia PTY Limited
Address: 1501 72ND ST N, SAINT PETERSBURG, FL, 33710
Business Categories: Category Business, Not Designated a Small Business
Financial Breakdown
Contract Ceiling: $360,880,174
Exercised Options: $346,565,946
Current Obligation: $346,307,729
Contract Characteristics
Multi-Year Contract: Yes
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2008-01-17
Current End Date: 2018-12-30
Potential End Date: 2018-12-30 00:00:00
Last Modified: 2025-10-10
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