Raytheon Company awarded $63.5M engineering services contract by the Department of the Navy

Contract Overview

Contract Amount: $63,543,978 ($63.5M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2015-10-30

End Date: 2021-06-30

Contract Duration: 2,070 days

Daily Burn Rate: $30.7K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: IGF::OT::IGF DESIGN AGENT ENGINEERING

Place of Performance

Location: PORTSMOUTH, NEWPORT County, RHODE ISLAND, 02871

State: Rhode Island Government Spending

Plain-Language Summary

Department of Defense obligated $63.5 million to RAYTHEON COMPANY for work described as: IGF::OT::IGF DESIGN AGENT ENGINEERING Key points: 1. Contract awarded as a definitive contract with a cost-plus-fixed-fee pricing structure. 2. Significant duration of 2070 days indicates a long-term need for engineering services. 3. Contract awarded by the Department of the Navy, a major defense procurement agency. 4. The contract was not competed, raising questions about potential cost efficiencies. 5. The contract value of $63.5M places it in the mid-tier range for defense contracts. 6. Awarded to Raytheon Company, a major defense contractor with extensive experience.

Value Assessment

Rating: fair

The contract's cost-plus-fixed-fee structure can lead to cost overruns if not managed tightly. Benchmarking against similar engineering services contracts for naval systems is difficult without more detailed scope information. The lack of competition suggests potential for higher-than-market pricing, though the fixed-fee component provides some cost control.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not openly competed. This approach is typically used when only one vendor possesses the necessary specialized capabilities or when urgency dictates. The lack of competition limits the government's ability to leverage market forces to achieve the best possible price.

Taxpayer Impact: Sole-source awards can result in higher costs for taxpayers as competitive pressures are absent, potentially leading to less favorable pricing than if multiple bids were solicited.

Public Impact

The Department of the Navy benefits from specialized engineering services crucial for its operations. This contract supports the development and maintenance of naval systems and infrastructure. The geographic impact is primarily linked to the contractor's facilities and the Navy's operational bases. Workforce implications include employment opportunities for engineers and technical staff at Raytheon.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated costs for taxpayers.
Cost-plus-fixed-fee contracts carry inherent risks of cost escalation if not rigorously monitored.
Limited transparency due to sole-source award makes independent value assessment challenging.

Positive Signals

Award to a large, established defense contractor like Raytheon suggests a high likelihood of technical capability.
The definitive contract structure provides a clear framework for service delivery over a defined period.
The fixed-fee component offers some predictability in contractor profit, aligning incentives to some extent.

Sector Analysis

This contract falls within the Engineering Services sector, a critical component of the broader defense industrial base. The market for specialized engineering services supporting naval applications is dominated by a few large, experienced contractors. Spending in this area is driven by the need for advanced technological solutions and ongoing support for complex military systems. Comparable spending benchmarks are difficult to establish without specific details on the engineering tasks performed.

Small Business Impact

This contract does not appear to have a small business set-aside component, nor is there information indicating significant subcontracting opportunities for small businesses. The award to a large prime contractor suggests that the primary focus is on leveraging established capabilities rather than fostering small business participation through this specific vehicle.

Oversight & Accountability

Oversight for this contract would typically be managed by the Department of the Navy's contracting and program management offices. Accountability measures would be embedded within the contract's terms and conditions, including performance metrics and payment schedules. Transparency is limited due to the sole-source nature of the award, but contract modifications and performance reports would be subject to internal review and potentially Inspector General oversight.

Related Government Programs

Naval Engineering Support Services
Defense Engineering Contracts
Raytheon Company Contracts
Department of the Navy Procurement

Risk Flags

Sole-source award limits price competition.
Cost-plus-fixed-fee structure carries risk of cost escalation.
Lack of detailed scope makes value benchmarking difficult.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $63.5 million to RAYTHEON COMPANY. IGF::OT::IGF DESIGN AGENT ENGINEERING

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 Navy).

What is the total obligated amount?

The obligated amount is $63.5 million.

What is the period of performance?

Start: 2015-10-30. End: 2021-06-30.

What specific engineering services were provided under this contract?

The provided data indicates the contract was for 'Engineering Services' (NAICS 541330) awarded to Raytheon Company by the Department of the Navy. However, the specific nature of these services is not detailed. Typically, engineering services in this context could encompass a wide range of activities, including design, development, testing, analysis, and technical support for naval systems, platforms, or infrastructure. Without further documentation, it's impossible to ascertain if the services related to shipbuilding, weapon systems, IT infrastructure, or other specialized areas critical to naval operations. The cost-plus-fixed-fee structure suggests that the scope might have been somewhat flexible or involved evolving requirements.

How does the $63.5 million contract value compare to similar engineering services contracts for the Navy?

Comparing the $63.5 million contract value requires context regarding the duration and scope of services. This contract spanned approximately 2070 days (roughly 5.7 years). For long-term, comprehensive engineering support, $63.5 million over nearly six years might be considered moderate. However, if the services were for a specific, limited project, it could be substantial. The Department of the Navy procures a vast array of engineering services, ranging from small, specialized task orders to multi-billion dollar platform development contracts. Without knowing the specific deliverables and the complexity of the engineering tasks, a direct comparison to 'similar' contracts is challenging. The sole-source nature also complicates value assessment, as competitive bids would typically drive pricing.

What are the primary risks associated with a sole-source, cost-plus-fixed-fee contract of this nature?

The primary risks associated with this sole-source, cost-plus-fixed-fee (CPFF) contract are twofold. Firstly, the sole-source award eliminates competitive pressure, potentially leading to higher costs than if the contract had been competed. The government may not achieve the best possible price or value. Secondly, the CPFF structure, while providing flexibility, carries inherent risks of cost escalation. The contractor is reimbursed for allowable costs plus a fixed fee representing profit. If cost controls are weak or the scope expands unexpectedly, total costs can exceed initial estimates. Effective government oversight is crucial to manage these risks, ensuring costs remain reasonable and the fixed fee remains appropriate for the effort.

What is Raytheon Company's track record with the Department of the Navy for engineering services?

Raytheon Company, now part of RTX, has an extensive and long-standing track record as a major defense contractor serving the Department of the Navy. They are known for providing a wide array of products and services, including complex systems integration, advanced technology development, and sustainment support across various naval platforms. While this specific contract was for engineering services, Raytheon's broader portfolio includes significant work on naval combat systems, sensors, and communications. Their history with the Navy suggests a deep understanding of naval requirements and a proven capability to deliver on large, complex programs, although specific performance metrics for individual contracts would require deeper analysis.

How does the duration of this contract (2070 days) impact its overall value and risk?

The duration of 2070 days (approximately 5.7 years) indicates a long-term requirement for the engineering services provided. This extended period can offer stability and predictability for both the government and the contractor, allowing for deeper integration and potentially more efficient execution over time. However, it also increases the overall financial exposure and the potential impact of cost overruns. For the government, a longer contract duration necessitates sustained oversight and budget allocation. From a risk perspective, the longer timeframe increases the likelihood of unforeseen technical challenges, changes in requirements, or shifts in market conditions that could affect costs or performance. Managing such a long-term CPFF contract requires robust change management and continuous performance monitoring.

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 AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0002415R5418

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Rockwell Collins Australia PTY Limited

Address: 1847 W MAIN RD, PORTSMOUTH, RI, 02871

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: $89,048,826

Exercised Options: $67,569,845

Current Obligation: $63,543,978

Actual Outlays: $3,721,784

Subaward Activity

Number of Subawards: 34

Total Subaward Amount: $5,447,048

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline