Raytheon Company awarded $81.3M for R&D services, with 7 bids received

Contract Overview

Contract Amount: $81,272,413 ($81.3M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2010-12-08

End Date: 2017-09-29

Contract Duration: 2,487 days

Daily Burn Rate: $32.7K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 7

Pricing Type: COST PLUS FIXED FEE

Sector: R&D

Official Description: VACM

Place of Performance

Location: FORT WAYNE, ALLEN County, INDIANA, 46808

State: Indiana Government Spending

Plain-Language Summary

Department of Defense obligated $81.3 million to RAYTHEON COMPANY for work described as: VACM Key points: 1. Contract value of $81.3M for R&D services. 2. Awarded to Raytheon Company by the Department of Defense. 3. Research and Development in Physical, Engineering, and Life Sciences (except Biotechnology) sector. 4. Full and open competition with 7 bids received. 5. Contract type: Cost Plus Fixed Fee. 6. Contract duration of 2487 days. 7. Performance location in Indiana. 8. No small business set-aside or subcontracting reported.

Value Assessment

Rating: fair

The contract value of $81.3 million for a period of approximately 6.8 years represents a significant investment in research and development. Benchmarking this against similar R&D contracts is challenging without more specific details on the nature of the research. The Cost Plus Fixed Fee (CPFF) structure can sometimes lead to higher costs if not carefully managed, but it is common for R&D where scope can be uncertain. The number of bids suggests a competitive environment, which should have helped in achieving a reasonable price.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. The receipt of 7 bids suggests a healthy level of interest and competition for this R&D requirement. A higher number of bidders generally leads to better price discovery and potentially more innovative solutions, as contractors vie to win the award.

Taxpayer Impact: The robust competition for this contract is beneficial for taxpayers, as it likely drove down costs and encouraged contractors to offer their best value propositions to secure the award.

Public Impact

Benefits the Department of Defense through advanced research and development. Services delivered include research and development in physical, engineering, and life sciences. Geographic impact primarily in Indiana, where the contract was performed. Potential workforce implications in the R&D sector, supporting specialized technical roles.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Fixed Fee (CPFF) contracts can incentivize cost overruns if not rigorously monitored.
Long contract duration (2487 days) increases the risk of scope creep or evolving requirements.
Lack of small business subcontracting data may indicate limited opportunities for smaller firms in this specific award.

Positive Signals

Full and open competition with 7 bidders suggests a competitive market and potential for good value.
Award to a major defense contractor like Raytheon implies access to significant technical expertise.
Performance in Indiana may stimulate local economic activity and R&D ecosystem.

Sector Analysis

This contract falls within the Research and Development (R&D) sector, specifically focusing on physical, engineering, and life sciences, excluding biotechnology. This is a critical area for defense modernization and technological advancement. The market for defense R&D is characterized by high barriers to entry, specialized expertise, and significant government investment. Comparable spending benchmarks would depend heavily on the specific research area, but R&D contracts of this magnitude are common within the Department of Defense.

Small Business Impact

The contract was not set aside for small businesses, and there is no indication of small business subcontracting requirements. This suggests that the primary contractor, Raytheon, was expected to perform the majority of the work internally or through larger partners. This may limit direct opportunities for small businesses to participate in this specific contract, although they might be involved in the broader R&D ecosystem or supply chain.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and program management office within the Department of the Air Force. Accountability measures are inherent in the CPFF structure, requiring detailed reporting and justification of costs. Transparency is generally maintained through contract award databases, though specific R&D details might be sensitive. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Defense Research and Development
Advanced Technology Development
Engineering Services Contracts
Physical Sciences Research
Life Sciences Research (non-biotech)
Cost-Plus Contracts

Risk Flags

Long contract duration may lead to obsolescence or scope creep.
Cost Plus Fixed Fee structure requires diligent cost oversight.
Lack of small business subcontracting data limits visibility into broader economic impact.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $81.3 million to RAYTHEON COMPANY. VACM

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 $81.3 million.

What is the period of performance?

Start: 2010-12-08. End: 2017-09-29.

What specific research areas were covered under this $81.3M R&D contract awarded to Raytheon?

The contract description specifies 'Research and Development in the Physical, Engineering, and Life Sciences (except Biotechnology)' under NAICS code 541712. However, the precise scientific or engineering domains are not detailed in the provided data. This could encompass a wide range of activities, from materials science and advanced manufacturing to sensor technology, propulsion systems, or complex simulation modeling. Without further documentation, such as the Statement of Work (SOW) or contract modifications, the exact nature of the R&D remains unspecified. This level of detail is common for broad R&D vehicles, with specific project scopes often defined in task orders or subsequent agreements.

How does the Cost Plus Fixed Fee (CPFF) structure impact the value for money in this contract?

The Cost Plus Fixed Fee (CPFF) contract structure is often used for R&D where the scope of work is not fully defined at the outset, making it difficult to establish a firm fixed price. In this structure, the contractor is reimbursed for allowable costs plus a predetermined fixed fee representing profit. While this allows flexibility, it can incentivize cost overruns if not managed diligently, as the contractor's profit is fixed regardless of the final cost. For taxpayers, value for money depends heavily on the government's ability to effectively monitor costs, ensure efficient performance, and verify that the research objectives are met. The presence of 7 bids suggests competition may have helped mitigate potential price inflation associated with the CPFF model.

What are the key risks associated with the long duration (2487 days) of this contract?

A contract duration of 2487 days (approximately 6.8 years) presents several risks. Firstly, the technological landscape can change significantly over such a period, potentially rendering the initial research objectives obsolete or requiring substantial scope adjustments. Secondly, maintaining consistent project focus and contractor performance over an extended timeframe can be challenging. Thirdly, there's an increased risk of 'scope creep,' where the project's objectives expand beyond the original intent, leading to cost increases. Effective program management, regular reviews, and clear communication channels are crucial to mitigate these risks and ensure the contract remains relevant and cost-effective throughout its lifecycle.

Given the 'full and open competition' and 7 bidders, what can be inferred about Raytheon's pricing competitiveness?

The fact that Raytheon Company was awarded this contract under full and open competition with 7 total bids suggests that their proposal was deemed the most advantageous to the government. This implies that Raytheon's pricing, technical approach, and overall offer met or exceeded the evaluation criteria set forth in the solicitation. While we don't have Raytheon's specific bid price relative to others, the competitive environment indicates that their price was likely considered fair and reasonable by the contracting authority, especially when weighed against the technical merit and expected outcomes of the R&D effort. The government likely performed a thorough evaluation to select the best value.

What is the historical spending context for R&D contracts of this nature within the Department of Defense?

The Department of Defense (DoD) is consistently one of the largest government spenders on Research and Development (R&D), allocating billions annually to advance military technology and maintain strategic superiority. Contracts like this one, focusing on physical, engineering, and life sciences (excluding biotech), are fundamental to this mission. Historically, the DoD utilizes various contract types, including CPFF, for R&D due to the inherent uncertainties. Spending in this category fluctuates based on national security priorities, technological advancements, and budget allocations. An $81.3 million award for a multi-year R&D effort is substantial but falls within the typical range for significant research projects undertaken by major defense contractors.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Scientific Research and Development Services › Research and Development in the Physical, Engineering, and Life Sciences (except Biotechnology)

Product/Service Code: RESEARCH AND DEVELOPMENT › C – National Defense R&D Services

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 7

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: RTX Corp

Address: 1010 PRODUCTION RD, FORT WAYNE, IN, 46808

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $90,125,002

Exercised Options: $90,124,732

Current Obligation: $81,272,413

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline