Raytheon Company awarded $57.1M for Hawk Eye Phase 2 system development by Defense Microelectronics Activity

Contract Overview

Contract Amount: $57,160,485 ($57.2M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2019-08-26

End Date: 2022-08-31

Contract Duration: 1,101 days

Daily Burn Rate: $51.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: ENGINEERING SERVICES, CET 19-971, HAWK EYE PHASE 2 SYSTEM DEVELOPMENT

Place of Performance

Location: PELHAM, HILLSBOROUGH County, NEW HAMPSHIRE, 03076

State: New Hampshire Government Spending

Plain-Language Summary

Department of Defense obligated $57.2 million to RAYTHEON COMPANY for work described as: ENGINEERING SERVICES, CET 19-971, HAWK EYE PHASE 2 SYSTEM DEVELOPMENT Key points: 1. Contract awarded via full and open competition, suggesting a competitive bidding process. 2. The contract type is Cost Plus Fixed Fee (CPFF), which can lead to cost overruns if not managed carefully. 3. The duration of 1101 days indicates a significant, long-term project. 4. The award is a delivery order under a larger contract, implying a phased approach to system development. 5. The specific NAICS code (541330) points to engineering services, a critical component of defense systems. 6. The contract is for system development, highlighting its role in advancing defense technology.

Value Assessment

Rating: fair

The contract value of $57.1 million for engineering services related to system development appears to be within a reasonable range for a project of this nature and duration. However, without specific benchmarks for the 'Hawk Eye Phase 2 System Development' or comparable projects, a definitive value-for-money assessment is challenging. The CPFF contract type introduces inherent risk for cost control, which could impact overall value if not managed diligently by the agency.

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 number of bidders is not specified, but this method generally promotes a competitive environment, which can lead to better pricing and innovation. The agency's choice of full and open competition suggests confidence in the market's ability to provide suitable solutions.

Taxpayer Impact: Taxpayers benefit from the potential for competitive pricing and a wider pool of qualified contractors, which can drive down costs and improve the quality of services received.

Public Impact

The primary beneficiaries are the Department of Defense and its personnel who will utilize the advanced capabilities of the Hawk Eye Phase 2 system. The services delivered involve the development of a complex defense system, crucial for national security. The geographic impact is likely focused on defense installations and operational theaters where the system will be deployed. Workforce implications include specialized engineering and technical roles required for system development and integration.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Fixed Fee (CPFF) contract type can incentivize contractor to increase costs to maximize fee.
Lack of specific performance metrics or detailed scope of work in the provided data makes it difficult to assess performance risks.
The long duration of the contract (1101 days) increases the potential for scope creep and cost escalation.

Positive Signals

Awarded under full and open competition, suggesting a robust and competitive bidding process.
The contract is for system development, indicating investment in advanced defense capabilities.
The agency is the Defense Microelectronics Activity, suggesting specialized oversight for critical technology.

Sector Analysis

This contract falls within the Engineering Services sector, a critical component of the broader Defense industry. The market for defense system development is characterized by high barriers to entry, specialized expertise, and significant government investment. Comparable spending benchmarks would typically involve other large-scale defense system development contracts, often in the hundreds of millions or billions of dollars, depending on the complexity and scope.

Small Business Impact

The provided data does not indicate any specific small business set-asides or subcontracting requirements for this contract. As a large contract awarded to Raytheon Company, it is possible that subcontracting opportunities may exist for small businesses, but this is not explicitly detailed. Further analysis would be needed to determine the extent of small business participation.

Oversight & Accountability

Oversight mechanisms for this contract would typically involve the Defense Microelectronics Activity's contracting officers, program managers, and potentially the Inspector General's office. Accountability measures are usually embedded within the contract terms, including performance standards and reporting requirements. Transparency is facilitated through contract award databases, though detailed project specifics may be classified or proprietary.

Related Government Programs

Defense System Development
Advanced Technology Development
Microelectronics Engineering
Intelligence, Surveillance, and Reconnaissance (ISR) Systems

Risk Flags

Cost Plus Fixed Fee contract type can lead to cost overruns if not managed properly.
Long contract duration increases risk of scope creep and obsolescence.
Lack of detailed performance metrics in public data hinders assessment of execution risk.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $57.2 million to RAYTHEON COMPANY. ENGINEERING SERVICES, CET 19-971, HAWK EYE PHASE 2 SYSTEM DEVELOPMENT

Who is the contractor on this award?

The obligated recipient is RAYTHEON COMPANY.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Microelectronics Activity).

What is the total obligated amount?

The obligated amount is $57.2 million.

What is the period of performance?

Start: 2019-08-26. End: 2022-08-31.

What is the track record of Raytheon Company in delivering similar defense system development contracts?

Raytheon Company, now part of RTX, has a long and extensive track record in delivering complex defense systems for the U.S. government and international allies. They are a major prime contractor for a wide array of programs including missile defense, radar systems, command and control, and advanced electronics. Their experience spans decades and covers numerous successful, large-scale development and production contracts. While specific performance metrics for past contracts are not publicly detailed, their consistent role as a prime contractor in major defense initiatives suggests a generally strong capability in managing complex technical projects and meeting program requirements. However, like any large defense contractor, they have also faced scrutiny and challenges on specific programs regarding cost, schedule, and performance, which is typical for the industry.

How does the Cost Plus Fixed Fee (CPFF) contract type compare to other contract types for system development in terms of value for money?

Cost Plus Fixed Fee (CPFF) contracts are often used when the scope of work is not well-defined or is expected to evolve, as is common in system development. In a CPFF contract, the contractor is reimbursed for allowable costs plus a fixed fee representing profit. This structure incentivizes the contractor to control costs to maximize their profit margin, as the fee is fixed regardless of the final cost. However, it also places a significant burden on the government to closely monitor costs and ensure they are reasonable and allocable. Compared to Firm-Fixed-Price (FFP) contracts, CPFF offers more flexibility but carries a higher risk of cost overruns if not managed effectively. Compared to Cost Plus Incentive Fee (CPIF) contracts, the profit is fixed, removing the incentive for exceeding performance targets beyond what is contractually required, but also avoiding the potential for excessive profit if costs are significantly reduced.

What are the primary risks associated with the 'Hawk Eye Phase 2 System Development' contract?

The primary risks associated with the 'Hawk Eye Phase 2 System Development' contract likely include technical risks related to the complexity of developing advanced defense technology, potential for schedule delays due to unforeseen technical challenges or integration issues, and cost risks inherent in the Cost Plus Fixed Fee (CPFF) contract type. There's also a risk of scope creep if requirements are not clearly defined and managed. Furthermore, reliance on specific microelectronics could introduce supply chain risks. The long duration of the contract (1101 days) amplifies these risks, as market conditions, threat landscapes, and technological advancements can change significantly over time, potentially impacting the system's relevance or requiring costly modifications.

What is the historical spending pattern for engineering services by the Defense Microelectronics Activity?

Analyzing historical spending patterns for engineering services by the Defense Microelectronics Activity (DMA) requires access to detailed federal procurement data. Generally, agencies like DMA, which focus on critical defense technologies, would have consistent spending on engineering services to support research, development, and sustainment of advanced systems. Spending can fluctuate based on specific program lifecycles, technological advancements, and national security priorities. Without direct access to DMA's historical contract databases, it's difficult to provide precise figures. However, it's reasonable to assume that such an agency would allocate significant resources to specialized engineering services to maintain its technological edge and support the warfighter.

How does the 'full and open competition' approach impact the overall cost-effectiveness of this contract?

The 'full and open competition' approach is designed to maximize cost-effectiveness by encouraging a broad range of qualified contractors to bid on the contract. This competition typically drives down prices as contractors strive to offer the most competitive bids to win the award. It also allows the government to access a wider pool of innovative solutions and potentially identify more efficient methods for achieving project goals. While the CPFF contract type introduces some cost uncertainty, the initial competitive bidding process sets a baseline for pricing and incentivizes efficiency. The agency's ability to manage the contract effectively and monitor costs will ultimately determine the extent to which the cost-effectiveness of the full and open competition is realized.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Solicitation ID: HQ072715R0001

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: RTX Corp

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: $57,160,485

Exercised Options: $57,160,485

Current Obligation: $57,160,485

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HQ072716D0006

IDV Type: IDC

Timeline