Raytheon Company awarded $55.4M engineering services contract by Department of the Army, a sole-source definitive contract

Contract Overview

Contract Amount: $55,427,055 ($55.4M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2014-05-01

End Date: 2019-04-30

Contract Duration: 1,825 days

Daily Burn Rate: $30.4K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: IGF::OT::IGF

Place of Performance

Location: HUNTSVILLE, MADISON County, ALABAMA, 35898

State: Alabama Government Spending

Plain-Language Summary

Department of Defense obligated $55.4 million to RAYTHEON COMPANY for work described as: IGF::OT::IGF Key points: 1. Contract awarded on a sole-source basis, raising questions about potential price efficiencies. 2. The contract duration of 5 years suggests a long-term need for these engineering services. 3. Awarded as a Cost Plus Fixed Fee type, which can incentivize cost overruns. 4. The specific engineering services provided are not detailed, limiting performance assessment. 5. No small business subcontracting goals were indicated, potentially limiting small business participation.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging without detailed service descriptions and comparable sole-source awards. The Cost Plus Fixed Fee structure, while allowing for flexibility, can lead to higher costs compared to fixed-price contracts if not managed rigorously. The absence of competition inherently reduces the pressure on the contractor to offer the most cost-effective solution. Without further data on the specific engineering tasks and their market rates, a definitive value-for-money assessment is difficult.

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 or when urgency dictates a direct award. The lack of competition means there was no opportunity for price discovery through a bidding process, which could potentially lead to higher costs for the government.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive bidding. The government did not leverage market forces to secure the best possible price for these engineering services.

Public Impact

The Department of the Army benefits from specialized engineering services critical for its operations. The contract supports national defense by ensuring the availability of essential engineering expertise. The geographic impact is primarily within Alabama, where the contractor is located. The contract likely supports a workforce of engineers and technical specialists employed by Raytheon Company.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition.
Cost Plus Fixed Fee contract type can incentivize higher costs.
Lack of detail on specific services hinders performance evaluation.
No indication of small business subcontracting goals.

Positive Signals

Long-term contract duration suggests sustained need and potential for stable service delivery.
Award to a known entity (Raytheon Company) may imply established capabilities and reliability.

Sector Analysis

Engineering services are a critical component of the defense sector, supporting the design, development, and maintenance of complex military systems. The market for defense engineering services is substantial, with significant government spending allocated annually. This contract fits within the broader category of professional services supporting defense readiness and technological advancement. Comparable spending benchmarks would typically involve analyzing other sole-source or competed engineering contracts within the Department of Defense for similar scope and duration.

Small Business Impact

This contract does not appear to have been set aside for small businesses, nor is there explicit information regarding subcontracting goals for small businesses. This suggests that the primary awardee, Raytheon Company, will likely perform the majority of the work. The absence of small business participation requirements could limit opportunities for smaller firms to contribute to this defense engineering effort and potentially reduce the overall economic impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Army's contracting and program management offices. Accountability measures would be defined within the contract's terms and conditions, including performance standards and payment schedules. Transparency is limited due to the sole-source nature and lack of publicly detailed service descriptions. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Department of Defense Engineering Services Contracts
Raytheon Company Defense Contracts
Sole-Source Defense Procurements
Cost Plus Fixed Fee Contracts in Defense

Risk Flags

Sole-source award
Cost Plus Fixed Fee contract type
Lack of competition
Limited transparency on services

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $55.4 million to RAYTHEON COMPANY. IGF::OT::IGF

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 Army).

What is the total obligated amount?

The obligated amount is $55.4 million.

What is the period of performance?

Start: 2014-05-01. End: 2019-04-30.

What specific engineering services were procured under this contract, and how do they align with the Army's stated mission requirements?

The provided data does not specify the exact engineering services procured under this contract (NAICS code 541330 covers Engineering Services broadly). These services could range from systems engineering and integration to design, testing, and technical support for various Army platforms or infrastructure. To align with mission requirements, one would need to consult the contract's Statement of Work (SOW) or Performance Work Statement (PWS), which are not publicly available in this dataset. Typically, such services are crucial for maintaining and modernizing military equipment, developing new technologies, or ensuring the operational readiness of forces. Without the SOW, it's impossible to definitively state the alignment, but engineering services are fundamental to nearly all aspects of military operations and development.

How does the $55.4 million award amount compare to other similar engineering services contracts awarded by the Department of the Army or other defense agencies?

Comparing the $55.4 million award to similar contracts requires access to a broader dataset of federal procurements. However, for a definitive contract spanning five years (2014-2019), this amount represents an average annual value of approximately $11 million. This figure is within a common range for significant engineering support contracts within the Department of Defense. Larger, more complex programs might see annual values in the tens or hundreds of millions, while smaller, more specialized tasks could be in the low millions. The sole-source nature of this award means direct price comparisons with competitively bid contracts are less meaningful, but the overall dollar value suggests a substantial requirement for Raytheon's engineering expertise.

What are the potential risks associated with a sole-source, Cost Plus Fixed Fee contract for engineering services?

Sole-source contracts carry inherent risks, primarily the lack of competitive pressure, which can lead to inflated pricing and reduced incentive for the contractor to innovate or optimize costs. The government does not benefit from the price discovery mechanisms of a competitive bidding process. Furthermore, the Cost Plus Fixed Fee (CPFF) structure, while providing flexibility for undefined scopes or evolving requirements, can incentivize the contractor to incur higher costs to increase the fixed fee, which is a percentage of the actual costs. This structure requires robust government oversight to manage costs effectively and ensure the contractor remains focused on efficiency and value. Without strong oversight, there's a risk of cost overruns and reduced overall value for the taxpayer.

What is Raytheon Company's track record with the Department of the Army, particularly concerning engineering services contracts?

Raytheon Company (now RTX) is a major defense contractor with a long-standing and extensive history of providing a wide array of services and products to the Department of the Army and other military branches. Their track record typically includes complex systems integration, platform development, weapons systems support, and various engineering services. While specific performance metrics for this particular $55.4 million contract are not detailed here, Raytheon is generally recognized for its technical capabilities. However, like any large contractor, they may have faced scrutiny or performance issues on specific contracts over their history. A comprehensive assessment would require reviewing past performance evaluations (e.g., Contractor Performance Assessment Reporting System - CPARS) for Raytheon's awards with the Army.

How has federal spending on engineering services (NAICS 541330) evolved over the period this contract was active (2014-2019) and beyond?

Federal spending on engineering services, categorized under NAICS code 541330, has historically been substantial, driven largely by defense and infrastructure needs. During the period this contract was active (FY2014-FY2019), defense spending remained a significant portion of the federal engineering services market. Post-2019, while defense spending has continued, there has also been increased focus and investment in areas like infrastructure renewal, energy, and technology, potentially diversifying the recipients and types of engineering services procured. Overall trends indicate a consistent demand for engineering expertise across various government sectors, with fluctuations often tied to budget appropriations, geopolitical events, and national priorities. Analyzing specific spending trends would require detailed historical procurement data.

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: W31P4Q12R0130

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Rockwell Collins Australia PTY Limited

Address: 350 LOWELL ST, ANDOVER, MA, 01810

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: $67,077,005

Exercised Options: $55,427,055

Current Obligation: $55,427,055

Subaward Activity

Number of Subawards: 10

Total Subaward Amount: $1,180,990

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline