DoD's $20.2M R&D contract with Raytheon Company for IGF MIST LR shows fair value despite limited competition

Contract Overview

Contract Amount: $20,227,917 ($20.2M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2013-09-16

End Date: 2015-05-30

Contract Duration: 621 days

Daily Burn Rate: $32.6K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: COST PLUS FIXED FEE

Sector: R&D

Official Description: IGF::OT::IGF MIST LR

Place of Performance

Location: EL SEGUNDO, LOS ANGELES County, CALIFORNIA, 90245

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $20.2 million to RAYTHEON COMPANY for work described as: IGF::OT::IGF MIST LR Key points: 1. Contract awarded to Raytheon Company for Research and Development in Physical, Engineering, and Life Sciences. 2. The contract duration was 621 days, indicating a medium-term project. 3. Awarded under a 'Cost Plus Fixed Fee' pricing structure. 4. The contract was competed using 'Full and Open Competition' but only received two bids. 5. The contract was awarded by the Department of the Air Force. 6. The contract was performed in California. 7. The contract was not set aside for small businesses.

Value Assessment

Rating: fair

The contract's value of $20.2 million over approximately two years for R&D services appears reasonable given the specialized nature of defense research. Benchmarking against similar R&D contracts is challenging due to the unique specifications of the IGF MIST LR program. However, the Cost Plus Fixed Fee (CPFF) structure suggests that costs were monitored, and the fixed fee provided a defined profit margin for the contractor, which can be a fair approach for R&D where exact costs are uncertain.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under 'Full and Open Competition,' meaning all responsible sources were permitted to submit an offer. However, only two bids were received. This limited number of bidders, despite open competition, could suggest a highly specialized field or a limited number of capable contractors, potentially impacting price discovery.

Taxpayer Impact: While open competition was advertised, the low number of bids may have limited the downward pressure on pricing, potentially resulting in a slightly higher cost for taxpayers than if more competition had been present.

Public Impact

The primary beneficiary of this contract is the Department of Defense, specifically the Air Force, in its pursuit of advanced research and development capabilities. The services delivered are focused on research and development, likely contributing to future technological advancements in defense systems. The geographic impact is concentrated in California, where the contractor, Raytheon Company, performed the work. The contract supports specialized technical and scientific workforce within Raytheon Company.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition (2 bidders) despite full and open solicitation may indicate barriers to entry or a concentrated market.
Cost Plus Fixed Fee (CPFF) contracts can sometimes incentivize cost overruns if not closely monitored, though the fixed fee component mitigates this risk to some extent.

Positive Signals

Awarded through full and open competition, adhering to principles of broad market access.
The fixed fee component in the CPFF structure provides a degree of cost certainty for the government.
Raytheon Company is a well-established defense contractor with a track record in R&D.

Sector Analysis

This contract falls within the Research and Development (R&D) sector, specifically focusing on physical, engineering, and life sciences, excluding biotechnology. The defense R&D market is characterized by high specialization, significant government investment, and a limited number of large prime contractors. Spending in this area is crucial for maintaining technological superiority. Comparable spending benchmarks are difficult to establish due to the unique nature of defense R&D projects, but the $20.2 million award is a moderate-sized contract for this type of specialized research.

Small Business Impact

This contract was not set aside for small businesses, and there is no indication of subcontracting requirements for small businesses in the provided data. Therefore, the direct impact on the small business ecosystem appears minimal for this specific award. However, large prime contractors like Raytheon often engage small businesses as subcontractors on broader programs, though this is not explicitly detailed here.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and program management within the Department of the Air Force. The Cost Plus Fixed Fee structure necessitates careful monitoring of costs to ensure they align with the contract's objectives and the fixed fee. Transparency is generally maintained through contract reporting mechanisms, and while no specific Inspector General (IG) jurisdiction is mentioned, the DoD IG could investigate if specific concerns arise regarding fraud, waste, or abuse.

Related Government Programs

Department of Defense Research and Development Programs
Air Force Advanced Technology Development
Raytheon Company Defense Contracts
Cost Plus Fixed Fee Contracts
Research and Development in Physical Sciences

Risk Flags

Limited competition despite open solicitation
Potential for cost overruns in CPFF contracts if not managed closely

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $20.2 million to RAYTHEON COMPANY. IGF::OT::IGF MIST LR

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 $20.2 million.

What is the period of performance?

Start: 2013-09-16. End: 2015-05-30.

What is the specific nature of the 'IGF MIST LR' research and development?

The provided data does not specify the exact nature of the 'IGF MIST LR' research and development. 'IGF' could potentially stand for 'Integrated Ground Facility' or a similar system, and 'MIST LR' might refer to a specific capability or component, possibly related to 'Missile Intercept System' or 'Mission Information System Technology' with a 'Long Range' designation. Typically, such R&D contracts aim to develop or enhance technologies for defense applications, potentially involving sensor systems, communication networks, or advanced materials. Further details would require access to the contract's statement of work or related program documentation.

How does the $20.2 million contract value compare to similar R&D efforts within the Air Force?

Comparing the $20.2 million contract value to similar R&D efforts within the Air Force is challenging without specific program details and access to a broader dataset of comparable contracts. However, for specialized R&D in areas like advanced systems or technology development, this value represents a moderate investment. Larger, more complex R&D programs can easily reach hundreds of millions or even billions of dollars, while smaller exploratory research might be in the low millions. The duration of 621 days (approx. 20 months) suggests a focused research effort rather than a multi-year, large-scale development program.

What are the potential risks associated with a Cost Plus Fixed Fee (CPFF) contract for R&D?

Cost Plus Fixed Fee (CPFF) contracts, while common for R&D where costs are uncertain, carry inherent risks. The primary risk for the government is that the contractor may not be sufficiently incentivized to control costs, as the government agrees to pay all allowable costs plus a fixed fee. If the contractor's cost estimates are inaccurate or if inefficiencies arise, the total cost to the government could exceed projections. However, the 'fixed fee' component does cap the contractor's profit, providing some predictability. Effective oversight, detailed cost tracking, and clear performance metrics are crucial to mitigate these risks and ensure value for money.

What does the limited number of bidders (2) for a 'Full and Open Competition' imply for this contract?

A 'Full and Open Competition' that results in only two bids suggests that the market for this specific R&D requirement may be concentrated. This could be due to the highly specialized nature of the technology, the significant expertise and resources required, or the existence of only a few capable contractors. While the competition process itself was open, the limited number of bidders might have reduced the competitive pressure on pricing. This could mean that the government did not achieve the lowest possible price compared to a scenario with more bidders, potentially impacting overall value for taxpayers.

What is Raytheon Company's track record with similar R&D contracts from the Department of Defense?

Raytheon Company (now RTX) has a long and extensive track record of performing Research and Development (R&D) contracts for the Department of Defense (DoD) and its various branches, including the Air Force. They are a major defense contractor involved in a wide array of technological advancements, from missile defense and aerospace systems to cybersecurity and intelligence solutions. While specific performance details for the 'IGF MIST LR' contract are not provided, Raytheon's general history indicates significant experience and capability in delivering complex R&D projects for the DoD. Their past performance would likely have been a key factor in their selection for this contract.

How has federal spending on R&D in physical, engineering, and life sciences (NAICS 541712) trended in recent years?

Federal spending on R&D in physical, engineering, and life sciences (NAICS 541712) has generally shown an upward trend over the past decade, driven by national security priorities, technological innovation goals, and public health initiatives. Agencies like the Department of Defense, National Science Foundation, and Department of Health and Human Services are major contributors to this spending. While specific year-over-year fluctuations occur based on budget appropriations and program priorities, the overall trajectory indicates a sustained commitment to advancing scientific and technological capabilities. The $20.2 million awarded to Raytheon for this specific contract is a component within this larger spending landscape.

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: 2

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 2000 E EL SEGUNDO BLVD, EL SEGUNDO, CA, 90245

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: $20,227,917

Exercised Options: $20,227,917

Current Obligation: $20,227,917

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline