Raytheon Company awarded $56.6M for R&D services, with 6 bids received under full and open competition

Contract Overview

Contract Amount: $56,617,991 ($56.6M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2006-09-01

End Date: 2013-09-14

Contract Duration: 2,570 days

Daily Burn Rate: $22.0K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 6

Pricing Type: COST PLUS AWARD FEE

Sector: R&D

Place of Performance

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

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $56.6 million to RAYTHEON COMPANY for work described as: Key points: 1. Contract value represents a significant investment in advanced research and development. 2. The procurement process involved full and open competition, suggesting a competitive bidding environment. 3. A moderate number of bids (6) indicates sufficient market interest without being overly fragmented. 4. The contract type (Cost Plus Award Fee) incentivizes performance while managing cost uncertainty. 5. The duration of the contract (2570 days) points to a long-term research objective. 6. The R&D focus aligns with strategic national security or technological advancement goals.

Value Assessment

Rating: good

The contract value of $56.6 million for R&D services over approximately 7 years appears reasonable given the scope of research and development typically undertaken by major defense contractors. Benchmarking against similar large-scale R&D contracts in the defense sector would provide a more precise value-for-money assessment. The Cost Plus Award Fee structure allows for flexibility in research but requires careful monitoring of award fee criteria to ensure alignment with desired outcomes and prevent excessive cost escalation.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under 'Full and Open Competition After Exclusion of Sources,' indicating that while the initial solicitation might have had some exclusions, the final award was made through a broad competitive process. Six bids were received, suggesting a healthy level of interest from qualified contractors in this R&D area. This level of competition is generally favorable for price discovery and ensuring the government receives competitive proposals.

Taxpayer Impact: The competitive nature of this award is beneficial for taxpayers, as it likely drove down costs and encouraged innovative solutions from multiple offerors, maximizing the value of federal investment.

Public Impact

The primary beneficiaries are likely the Department of Defense and potentially other government agencies requiring advanced research and development capabilities. Services delivered include cutting-edge research and development in physical, engineering, and life sciences, contributing to technological superiority. The geographic impact is primarily centered around the contractor's facilities in California, but the technological advancements can have national implications. Workforce implications include highly skilled jobs in research, engineering, and technical support roles within the defense industry.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost overruns are a potential risk with Cost Plus Award Fee contracts if not managed diligently.
The long contract duration could lead to scope creep or misalignment with evolving technological needs.
Ensuring the award fee criteria accurately reflect critical performance metrics is crucial for effective R&D outcomes.

Positive Signals

The use of full and open competition suggests a robust market and potential for innovation.
The significant contract value indicates a commitment to critical research areas.
The contractor, Raytheon Company, is a well-established entity with a strong track record in defense R&D.

Sector Analysis

The contract falls within the Research and Development (R&D) sector, specifically focusing on physical, engineering, and life sciences. This sector is critical for national security and technological advancement, often characterized by long-term investments and high levels of innovation. Spending in this area is driven by the need for next-generation capabilities and maintaining a technological edge. Comparable spending benchmarks would involve looking at other large-scale R&D contracts awarded by the Department of Defense and other federal agencies for similar scientific endeavors.

Small Business Impact

The provided data indicates that small business participation (sb) was false, and there is no explicit mention of small business set-asides. This suggests the contract was not specifically targeted towards small businesses. Subcontracting opportunities for small businesses may exist but are not detailed in this summary. The focus on a large prime contractor like Raytheon Company might limit direct opportunities for small businesses unless they are part of the prime's supply chain.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor compliance and performance. Accountability measures are embedded within the Cost Plus Award Fee structure, incentivizing the contractor to meet performance targets. Transparency is generally maintained through contract reporting requirements, though specific details of R&D progress may be sensitive. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Department of Defense Research and Development Programs
Advanced Technology Development Contracts
Engineering and Scientific Services
Defense Contract Management Agency Oversight

Risk Flags

Potential for cost overruns due to CPAF structure.
Risk of R&D objectives becoming misaligned with evolving needs over the contract's long duration.
Need for robust government oversight to ensure effective performance and value.
Complexity of R&D may lead to unforeseen technical challenges.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $56.6 million to RAYTHEON COMPANY. See the official description on USAspending.

Who is the contractor on this award?

The obligated recipient is RAYTHEON COMPANY.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $56.6 million.

What is the period of performance?

Start: 2006-09-01. End: 2013-09-14.

What is Raytheon Company's track record with similar Cost Plus Award Fee R&D contracts with the Department of Defense?

Raytheon Company, now part of RTX Corporation, has a long and extensive history of performing Cost Plus Award Fee (CPAF) Research and Development (R&D) contracts with the Department of Defense (DoD). As a major defense contractor, they are frequently awarded complex, high-value R&D efforts across various domains, including aerospace, defense systems, and advanced technologies. Their track record typically involves successfully navigating the challenges of R&D, which often include evolving requirements and technical uncertainties. Performance on CPAF contracts is assessed based on predefined criteria, and Raytheon's history suggests a capability to meet or exceed these metrics, thereby earning award fees. However, like any large contractor, specific contract performance can vary, and detailed reviews of past performance on individual contracts would be necessary for a comprehensive assessment. The DoD maintains performance records that inform future source selections.

How does the $56.6 million contract value compare to other R&D contracts of similar scope and duration?

The $56.6 million contract value for a definitive contract spanning approximately 7 years (2570 days) for R&D in physical, engineering, and life sciences is within a reasonable range for large-scale, long-term research initiatives undertaken by major defense contractors. However, a precise comparison requires detailed knowledge of the specific R&D objectives, the technological maturity sought, and the level of innovation involved. Contracts for basic research might be less expensive than those for applied research or advanced development leading to prototypes. Given that Raytheon is a prime contractor and the contract was competed, this value suggests a significant but not exceptionally high investment for the scope. Benchmarking against other DoD R&D contracts with similar NAICS codes (like 541710) and contract types (CPFF/CPAF) over comparable durations would provide a more robust comparison. The number of bidders (6) also suggests a competitive environment that likely influenced the final negotiated price.

What are the primary risks associated with a Cost Plus Award Fee (CPAF) contract for R&D?

Cost Plus Award Fee (CPAF) contracts, while offering flexibility for R&D, carry inherent risks. A primary risk is the potential for cost growth, as the government agrees to reimburse allowable costs. While the 'award fee' component incentivizes performance, the contractor may still incur significant costs to achieve the research objectives, even if the award fee is not maximized. There's a risk that the award fee criteria may not perfectly align with the most critical project outcomes, leading to the contractor focusing on measurable but less impactful aspects. Furthermore, the administrative burden of tracking costs, defining and evaluating award fee criteria, and managing the contractor's performance can be substantial for the government. If not managed diligently, the government could end up paying higher costs than anticipated without achieving the desired level of innovation or technical advancement, especially in long-term R&D projects where the path to success is uncertain.

How effective is the 'Full and Open Competition After Exclusion of Sources' approach for R&D procurements?

The 'Full and Open Competition After Exclusion of Sources' approach aims to balance broad competition with specific requirements that might necessitate excluding certain sources initially. For R&D procurements, this can be effective when there's a need for specialized capabilities or technologies that only a limited number of firms possess. By excluding sources upfront, the government can streamline the initial pool of offerors, potentially reducing evaluation time and cost. However, the subsequent 'full and open' aspect ensures that among the qualified pool, the competition is as broad as possible. This approach can be effective if the exclusions are well-justified and do not unduly restrict competition. The key is ensuring that the exclusion criteria are objective and directly related to the unique R&D needs, and that the remaining pool is sufficiently competitive to drive innovation and value for the government. The receipt of 6 bids suggests this approach was reasonably successful in this instance.

What are the historical spending patterns for R&D contracts awarded to Raytheon Company by the Department of Defense?

Historical spending patterns for R&D contracts awarded to Raytheon Company (now RTX) by the Department of Defense (DoD) show a consistent and substantial investment over many years. Raytheon has been a major player in defense R&D, securing numerous contracts across a wide spectrum of technologies, including missile defense, radar systems, electronic warfare, cybersecurity, and space systems. Their R&D spending with the DoD typically fluctuates based on strategic priorities, technological advancements, and specific program needs. Annual spending can range from hundreds of millions to billions of dollars, reflecting their role in developing and integrating cutting-edge capabilities. Analyzing historical data reveals trends in areas of focus, such as a growing emphasis on AI, hypersonics, and advanced materials in recent years. The $56.6 million contract in question represents a specific, medium-to-large scale R&D effort within this broader historical context of significant DoD investment in Raytheon's research capabilities.

Industry Classification

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

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: BASIC RESEARCH

Offers Received: 6

Pricing Type: COST PLUS AWARD FEE (R)

Evaluated Preference: NONE

Contractor Details

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

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline