Raytheon Company awarded $26.5M for electro-optic strategic sensors, with R&D focus

Contract Overview

Contract Amount: $26,527,033 ($26.5M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2016-11-10

End Date: 2023-02-23

Contract Duration: 2,296 days

Daily Burn Rate: $11.6K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: R&D

Official Description: IGF::OT::IGF FOCUSED OPPORTUNITY REACHING TOWARD RELIABLE ELECTRO-OPTIC STRATEGIC SENSORS (FORTRESS)

Place of Performance

Location: GOLETA, SANTA BARBARA County, CALIFORNIA, 93117

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $26.5 million to RAYTHEON COMPANY for work described as: IGF::OT::IGF FOCUSED OPPORTUNITY REACHING TOWARD RELIABLE ELECTRO-OPTIC STRATEGIC SENSORS (FORTRESS) Key points: 1. Contract awarded for research and development in physical sciences, focusing on advanced sensor technology. 2. Significant duration of over 2000 days suggests a complex, long-term research effort. 3. Sole-source award raises questions about potential lack of competitive pressure on pricing. 4. Contract type (Cost Plus Fixed Fee) can incentivize cost overruns if not closely monitored. 5. The specific NAICS code (541712) indicates a focus on non-biotech physical and engineering research. 6. California is the state of performance, potentially indicating a concentration of defense R&D activity. 7. The contract's value, while substantial, needs to be benchmarked against similar R&D efforts.

Value Assessment

Rating: questionable

The contract value of $26.5 million for a definitive contract spanning over 6 years requires careful benchmarking. Without comparable sole-source R&D contracts for similar electro-optic sensor development, assessing value for money is challenging. The Cost Plus Fixed Fee (CPFF) contract type, while common for R&D where costs are uncertain, carries inherent risks of cost escalation. Robust oversight is crucial to ensure the fixed fee remains reasonable and that costs are controlled effectively. The lack of competition further complicates a direct value assessment.

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 a specific contractor possesses unique capabilities, proprietary technology, or when urgency dictates a direct award. The absence of a competitive bidding process means that the government did not benefit from price discovery through market competition, potentially leading to higher costs than if multiple offers had been solicited.

Taxpayer Impact: Taxpayers may have paid a premium due to the lack of competitive bidding. Without a competitive process, there is less assurance that the price reflects the best possible value achievable in the market.

Public Impact

The primary beneficiaries are likely the Department of Defense, which will receive advanced electro-optic strategic sensor technology. The services delivered involve research and development, aiming to enhance national security capabilities. Performance is located in California, potentially impacting the local economy and workforce in the aerospace and defense sector. The contract supports specialized R&D roles, contributing to the high-tech defense industry workforce.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially impacting cost-effectiveness.
Cost Plus Fixed Fee contract type can lead to cost overruns if not managed diligently.
Long contract duration (over 6 years) increases the risk of scope creep or evolving requirements.
Lack of transparency in the sole-source justification makes it difficult to assess necessity.
Limited public information on specific deliverables hinders performance assessment.

Positive Signals

Award to Raytheon Company, a major defense contractor with established expertise in aerospace and defense.
Focus on R&D in strategic sensors addresses critical national security needs.
Definitive contract structure provides a framework for a long-term relationship.
Specific NAICS code indicates a focus on advanced technological development.

Sector Analysis

The contract falls within the Research and Development in the Physical, Engineering, and Life Sciences sector, specifically NAICS code 541712. This sector is characterized by innovation and the pursuit of new technologies. The defense industry, a significant part of this sector, heavily invests in R&D for advanced capabilities like strategic sensors. Comparable spending benchmarks would involve looking at other sole-source or competed R&D contracts for advanced sensor systems within the Department of Defense or other federal agencies.

Small Business Impact

This contract does not appear to have a small business set-aside (ss=false, sb=false). As a sole-source award to a large prime contractor, it is unlikely to have direct subcontracting opportunities specifically mandated for small businesses within the set-aside framework. However, the prime contractor may engage small businesses as subcontractors for specialized components or services, but this is not explicitly detailed in the provided data.

Oversight & Accountability

Oversight for this contract would typically fall under the Defense Contract Management Agency (DCMA), as indicated by the 'sa' field. DCMA is responsible for ensuring contractor compliance with contract terms, monitoring performance, and verifying costs. The effectiveness of oversight depends on the rigor of DCMA's surveillance, including audits and progress reviews, especially given the CPFF contract type. Transparency is limited due to the sole-source nature, but contract modifications and performance reports would be key areas for scrutiny.

Related Government Programs

Advanced Sensor Development Programs
Electro-Optical Systems Research
Department of Defense Research and Development
Strategic Defense Technology Initiatives

Risk Flags

Sole-source award
Cost-plus contract type
Long contract duration
Lack of public competition details

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $26.5 million to RAYTHEON COMPANY. IGF::OT::IGF FOCUSED OPPORTUNITY REACHING TOWARD RELIABLE ELECTRO-OPTIC STRATEGIC SENSORS (FORTRESS)

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 $26.5 million.

What is the period of performance?

Start: 2016-11-10. End: 2023-02-23.

What is Raytheon Company's track record with sole-source R&D contracts for similar sensor technologies?

Raytheon Company, now part of RTX, has a long history of developing advanced defense technologies, including electro-optical systems. While specific data on their sole-source R&D contracts for similar sensors is not publicly detailed here, their extensive experience in defense contracting suggests a capacity for such work. However, sole-source awards, by definition, lack the transparency of competitive processes. To assess their track record effectively, one would need to examine past sole-source awards, their justifications, performance outcomes, and cost management on similar projects. Publicly available contract databases and defense news archives might offer insights into their broader portfolio of R&D efforts, but direct comparisons for sole-source awards are inherently difficult due to limited public disclosure.

How does the $26.5 million contract value compare to similar R&D efforts in electro-optic sensors?

Benchmarking the $26.5 million contract value for electro-optic strategic sensors is challenging without more specific details on the scope of work, technological maturity, and duration. R&D costs can vary significantly based on complexity, novelty, and the stage of development. Sole-source awards, like this one, often lack direct price comparisons. However, general trends in defense R&D spending for advanced sensor systems can provide context. Larger, more complex programs can easily run into hundreds of millions or even billions of dollars. This $26.5 million award appears to be for a specific, potentially focused, R&D effort rather than a full-scale production or system-wide development. Further analysis would require comparing it to other R&D contracts awarded for similar technological capabilities, ideally those that were competed to establish a clearer market price.

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

The Cost Plus Fixed Fee (CPFF) contract type, used here, presents specific risks for R&D projects. The primary risk is that the contractor is reimbursed for all allowable costs incurred, plus a predetermined fixed fee. While the fee is fixed, the total cost to the government is not. This can incentivize contractors to incur higher costs, as their fee remains constant regardless of the final project cost. For the government, this means the total expenditure can exceed initial estimates if cost controls are not robust. Effective oversight is critical to scrutinize allowable costs, prevent inefficiencies, and ensure the contractor exercises due diligence in managing expenses. Without stringent monitoring, CPFF contracts can lead to cost overruns and reduced value for money.

What does the 'sole-source' designation imply for program effectiveness and taxpayer value?

The 'sole-source' designation implies that the contract was awarded without competition. This can impact program effectiveness and taxpayer value in several ways. On the positive side, it might ensure the use of highly specialized or proprietary technology essential for the program's success, or it could be used in situations requiring rapid deployment where competition is impractical. However, the lack of competition generally reduces downward pressure on prices, potentially leading to higher costs for taxpayers. It also limits the government's ability to explore alternative solutions or benefit from innovations that might arise from a competitive environment. Program effectiveness could be compromised if the sole-source provider lacks the necessary agility or if alternative, potentially superior, solutions were overlooked due to the absence of competition.

How does the contract's performance location in California potentially influence the defense R&D ecosystem?

Performance in California, a state with a significant aerospace and defense industry presence, likely leverages existing infrastructure, a skilled workforce, and a network of specialized suppliers. This concentration can foster innovation and collaboration within the defense R&D ecosystem. For Raytheon, operating in California may provide access to top-tier engineering talent and research institutions. The presence of such contracts can stimulate economic activity in the region, supporting local businesses and creating high-value jobs. However, it also means that a substantial portion of federal R&D funds are concentrated geographically, which could be a consideration in broader discussions about equitable distribution of defense spending across different regions.

What are the implications of the contract's long duration (2296 days) for risk and oversight?

A contract duration of 2296 days (over six years) for R&D introduces significant risks and necessitates robust oversight. Long-term projects are more susceptible to changes in technological requirements, geopolitical landscapes, and budget priorities. Scope creep, where the project's objectives expand beyond the original intent, is a considerable risk. For oversight, this extended timeline requires continuous monitoring of progress, performance, and cost management. Regular reviews and potential contract modifications will be necessary to adapt to evolving needs and ensure the project remains aligned with strategic goals. The extended duration also means that accountability for outcomes needs to be maintained over a prolonged period, demanding consistent engagement from contracting officers and program managers.

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: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Rockwell Collins Australia PTY Limited

Address: 75 COROMAR DR, GOLETA, CA, 93117

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: $26,527,033

Exercised Options: $26,527,033

Current Obligation: $26,527,033

Actual Outlays: $1,127,740

Subaward Activity

Number of Subawards: 32

Total Subaward Amount: $4,110,051

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline