Raytheon's $26.1M DoD contract for R&D in physical sciences shows fair value with 2 bidders

Contract Overview

Contract Amount: $26,123,169 ($26.1M)

Contractor: Raytheon Applied Signal Technology, Inc.

Awarding Agency: Department of Defense

Start Date: 2019-07-12

End Date: 2024-07-01

Contract Duration: 1,816 days

Daily Burn Rate: $14.4K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: COST PLUS FIXED FEE

Sector: R&D

Official Description: PERICLES

Place of Performance

Location: SAN JOSE, SANTA CLARA County, CALIFORNIA, 95134

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $26.1 million to RAYTHEON APPLIED SIGNAL TECHNOLOGY, INC. for work described as: PERICLES Key points: 1. Contract value appears reasonable given the R&D nature and limited competition. 2. The competition level suggests potential for price discovery but may not be fully optimized. 3. Risk indicators are moderate, typical for complex R&D efforts. 4. Performance context is within a broad R&D category, making direct comparisons challenging. 5. This contract fits within the broader defense R&D sector, focusing on advanced technologies. 6. The use of a cost-plus-fixed-fee structure is common for R&D where scope may evolve.

Value Assessment

Rating: fair

The contract's value of $26.1 million over approximately five years for R&D services is within a typical range for specialized defense research. Benchmarking is difficult due to the specific nature of R&D, but the presence of two bidders suggests a degree of market interest. The cost-plus-fixed-fee (CPFF) structure allows for flexibility but requires careful oversight to manage costs effectively. Without more granular data on deliverables and specific research outcomes, a definitive value assessment is challenging, but it does not appear excessively priced.

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 offers. Two bids were received, which is a moderate level of competition for a specialized R&D contract. While two bidders are better than one, a higher number could potentially lead to more aggressive pricing and a wider range of innovative solutions. The agency's approach to competition appears to have met statutory requirements.

Taxpayer Impact: The full and open competition, despite receiving only two bids, suggests that taxpayers are likely receiving a fair price for the services rendered. The presence of multiple bidders helps ensure that the government is not locked into a single provider, fostering a more competitive environment.

Public Impact

The primary beneficiaries are the Department of Defense and potentially the U.S. Air Force, receiving advanced research and development capabilities. Services delivered include research and development in physical, engineering, and life sciences, contributing to technological advancements. The geographic impact is primarily within California, where the contractor is located, but the technological advancements could have national security implications. Workforce implications include employment for highly skilled researchers, engineers, and technical staff at the contractor's facility.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus-fixed-fee contracts can lead to cost overruns if not managed diligently.
Limited competition (2 bidders) may reduce pressure on the contractor to offer the lowest possible price.
The specific R&D outcomes are not detailed, making it hard to assess the ultimate return on investment.
The duration of the contract (over 4 years) requires sustained oversight to ensure continued value.

Positive Signals

Awarded under full and open competition, ensuring a broad search for qualified contractors.
The contractor, Raytheon Applied Signal Technology, Inc., is a known entity in defense contracting.
The contract supports critical research and development for national security objectives.
The fixed fee component provides some cost certainty for the government once the base contract is established.

Sector Analysis

This contract falls within the Research and Development (R&D) sector, specifically focusing on physical, engineering, and life sciences. This is a critical area for defense modernization, involving innovation in areas like advanced materials, sensors, and complex systems. The market for defense R&D is characterized by high barriers to entry, specialized expertise, and significant government investment. Comparable spending benchmarks are difficult to establish without knowing the precise R&D focus, but R&D contracts of this magnitude are common within the Department of Defense's annual budget.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. There is no explicit information provided regarding subcontracting plans for small businesses. Therefore, the direct impact on the small business ecosystem is likely minimal unless the prime contractor voluntarily engages small businesses in their subcontracting efforts.

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 facilitated through contract databases, though specific R&D details may be sensitive. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Department of Defense Research and Development Programs
Air Force Advanced Technology Development
Physical Sciences Research Contracts
Engineering and Life Sciences R&D
Advanced Sensor Technology Development

Risk Flags

Moderate competition level for specialized R&D.
Cost-plus-fixed-fee structure requires diligent oversight to manage costs.
Specific R&D deliverables and outcomes not detailed in summary data.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $26.1 million to RAYTHEON APPLIED SIGNAL TECHNOLOGY, INC.. PERICLES

Who is the contractor on this award?

The obligated recipient is RAYTHEON APPLIED SIGNAL TECHNOLOGY, INC..

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 $26.1 million.

What is the period of performance?

Start: 2019-07-12. End: 2024-07-01.

What is the specific research and development focus of this contract?

The contract data indicates the North American Industry Classification System (NAICS) code is 541715, which covers 'Research and Development in the Physical, Engineering, and Life Sciences (except Nanotechnology and Biotechnology)'. While the specific project details are not provided in the summary data, this broad classification suggests the research could encompass a wide range of scientific and engineering disciplines. Examples might include advanced materials science, novel sensor development, complex system modeling, or fundamental research into physical phenomena relevant to defense applications. The 'PERICLES' designation might be an internal project name or code that would require further lookup within DoD systems for precise definition.

How does the value of this contract compare to similar R&D efforts within the DoD?

The contract value of $26.1 million over approximately 1816 days (roughly 5 years) is a moderate-sized award for a definitive R&D contract within the Department of Defense. DoD R&D spending spans billions of dollars annually, with individual contracts ranging from a few million to hundreds of millions, or even billions for major system development. Given that this is a 'Research and Development in the Physical, Engineering, and Life Sciences' contract and was competed, its value appears reasonable. However, a precise comparison would require access to a database of similar R&D contracts with comparable scope, duration, and technological complexity, which is beyond the scope of the provided data.

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

The primary risk with a Cost Plus Fixed Fee (CPFF) contract, especially for R&D, is the potential for cost overruns. While the contractor is reimbursed for allowable costs, the 'fixed fee' component provides a set profit margin. If costs escalate significantly beyond initial projections due to unforeseen technical challenges, scope creep, or inefficient management, the government bears the brunt of the increased costs while the contractor's fee remains fixed. This necessitates robust government oversight, detailed cost tracking, and proactive management to ensure the project stays within budget and achieves its objectives. The CPFF structure is often used when the scope of work is not precisely defined at the outset, which is common in R&D.

What is the track record of Raytheon Applied Signal Technology, Inc. in performing R&D contracts?

Raytheon Applied Signal Technology, Inc. is a subsidiary of RTX Corporation (formerly Raytheon Technologies), a major defense contractor with extensive experience in research, development, and production of advanced technologies. While specific performance metrics for this particular contract ('PERICLES') are not detailed in the provided summary, the parent company and its subsidiaries have a long history of executing complex defense contracts. Their track record generally includes a wide range of R&D projects, system integration, and technological development for various government agencies, particularly the DoD. Performance reviews and past performance information would typically be available through government contract databases like the Contractor Performance Assessment Reporting System (CPARS).

How does the competition level of two bidders impact taxpayer value?

A competition level of two bidders for this contract represents a moderate level of competition. While it is superior to a sole-source award, it may not achieve the full price discovery and cost savings that could result from a larger pool of bidders. With only two offers, there is a risk that the government might not receive the most competitive pricing available in the market. However, for highly specialized R&D requiring specific expertise, two qualified bidders might represent a significant portion of the available market. Taxpayers benefit from the existence of competition, as it incentivizes contractors to propose reasonable prices and efficient approaches, but the value could potentially be enhanced with broader participation.

What are the implications of the contract duration (1816 days) on oversight and value?

A contract duration of 1816 days, approximately five years, is substantial for an R&D effort. This extended period necessitates consistent and rigorous oversight from the government to ensure the contractor remains on track, adheres to cost controls, and delivers the expected research outcomes. Long durations can increase the risk of scope creep or shifts in technological priorities. From a value perspective, a longer contract allows for deeper exploration and development, potentially leading to more significant breakthroughs. However, it also means taxpayer funds are committed over a longer horizon, making effective program management and performance monitoring crucial to realizing the intended value and avoiding potential cost inefficiencies.

Industry Classification

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

Product/Service Code: RESEARCH AND DEVELOPMENT › DEFENSE (OTHER) R&D

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: BASIC RESEARCH

Solicitation ID: HR001119S0001

Offers Received: 2

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Rockwell Collins Australia PTY Limited

Address: 460 W CALIFORNIA AVE, SUNNYVALE, CA, 94086

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

Financial Breakdown

Contract Ceiling: $26,123,169

Exercised Options: $26,123,169

Current Obligation: $26,123,169

Actual Outlays: $6,026,185

Subaward Activity

Number of Subawards: 16

Total Subaward Amount: $6,683,315

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline