DoD's $51.3M Advanced Technology Support Program contract awarded to Raytheon Company for microelectronic solutions

Contract Overview

Contract Amount: $51,291,750 ($51.3M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2023-05-18

End Date: 2024-09-30

Contract Duration: 501 days

Daily Burn Rate: $102.4K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: THE ADVANCED TECHNOLOGY SUPPORT PROGRAM (ATSP) CONTRACT ACQUIRED PROGRESSIVE MICROELECTRONIC CAPABILITY SOLUTIONS FOR DESIGN, DEVELOPMENT AND OPERATIONAL ENHANCEMENTS FOR THE SENSE & WARN AND MISSIONS.

Place of Performance

Location: MCKINNEY, COLLIN County, TEXAS, 75071

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $51.3 million to RAYTHEON COMPANY for work described as: THE ADVANCED TECHNOLOGY SUPPORT PROGRAM (ATSP) CONTRACT ACQUIRED PROGRESSIVE MICROELECTRONIC CAPABILITY SOLUTIONS FOR DESIGN, DEVELOPMENT AND OPERATIONAL ENHANCEMENTS FOR THE SENSE & WARN AND MISSIONS. Key points: 1. Contract focuses on critical microelectronic capabilities for defense sensing and warning missions. 2. Awarded via full and open competition, suggesting a robust market for these specialized services. 3. Performance period extends through September 2024, indicating ongoing support needs. 4. The contract type (Cost Plus Fixed Fee) allows for flexibility in R&D but requires careful cost oversight. 5. Texas is the performance location, potentially indicating a concentration of related defense industry activity. 6. This award represents a significant investment in advanced technology for national security.

Value Assessment

Rating: good

The contract value of $51.3 million for engineering services related to advanced microelectronics appears reasonable given the specialized nature of the work. Benchmarking against similar contracts for R&D and engineering support in the defense sector suggests that this pricing is within an expected range. The Cost Plus Fixed Fee structure, while common for research and development, necessitates diligent oversight to ensure cost efficiency and prevent scope creep. Without specific per-unit cost data, a direct value-for-money assessment is challenging, but the competitive award process provides some assurance of fair pricing.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple qualified vendors had the opportunity to bid. The specific number of bidders is not provided, but the open competition suggests a healthy market for advanced technology support services in microelectronics. This process is designed to foster price discovery and encourage competitive proposals, potentially leading to better value for the government.

Taxpayer Impact: A full and open competition generally benefits taxpayers by driving down costs through market forces and ensuring that the government receives proposals from a wide range of capable contractors.

Public Impact

The primary beneficiaries are the Department of Defense, specifically units relying on advanced sensing and warning capabilities. Services delivered include design, development, and operational enhancements for microelectronic solutions. The geographic impact is centered in Texas, where the contract is being performed. This contract supports a specialized segment of the defense technology workforce, requiring expertise in microelectronics engineering.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Fixed Fee contracts can sometimes lead to higher costs if not managed rigorously.
The specialized nature of microelectronics may limit the pool of truly competitive bidders in the long run.
Reliance on a single awardee for such critical technology could pose a risk if performance issues arise.

Positive Signals

Awarded through full and open competition, indicating a competitive marketplace.
The contract supports advanced technological capabilities crucial for national security.
The performance period extends over a year, suggesting a commitment to sustained capability development.

Sector Analysis

The defense microelectronics sector is a critical but highly specialized area within the broader engineering services industry. It involves the design, fabrication, and integration of advanced semiconductor and integrated circuit technologies for defense applications, including sensing, communication, and computing. The market is characterized by high barriers to entry due to complex technology, significant R&D investment, and stringent security requirements. This contract fits within the R&D and engineering services sub-sector, supporting the development of next-generation defense systems.

Small Business Impact

There is no indication that this contract included a small business set-aside. Given the specialized and advanced nature of microelectronic solutions, it is likely that the prime contractor, Raytheon Company, possesses the unique capabilities and resources required. Subcontracting opportunities for small businesses may exist, particularly in areas requiring specific components or support services, but this is not explicitly detailed in the provided data.

Oversight & Accountability

Oversight for this contract would typically fall under the Defense Microelectronics Activity (DMEA) and the broader Department of Defense contracting oversight mechanisms. The Cost Plus Fixed Fee (CPFF) contract type necessitates robust financial and performance monitoring to ensure costs are reasonable and allocable, and that the fixed fee is earned through satisfactory performance. Transparency is generally maintained through contract reporting requirements, and the Inspector General's office would have jurisdiction over any allegations of fraud, waste, or abuse.

Related Government Programs

Advanced Technology Support Program (ATSP)
Defense Microelectronics Activity (DMEA) Contracts
Microelectronics Research and Development
Sensing and Warning Systems Procurement
Department of Defense Engineering Services

Risk Flags

Cost Plus Fixed Fee contract type requires diligent oversight to manage costs.
Specialized nature of microelectronics may limit long-term competition.
Reliance on a single prime contractor for critical technology.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $51.3 million to RAYTHEON COMPANY. THE ADVANCED TECHNOLOGY SUPPORT PROGRAM (ATSP) CONTRACT ACQUIRED PROGRESSIVE MICROELECTRONIC CAPABILITY SOLUTIONS FOR DESIGN, DEVELOPMENT AND OPERATIONAL ENHANCEMENTS FOR THE SENSE & WARN AND MISSIONS.

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 $51.3 million.

What is the period of performance?

Start: 2023-05-18. End: 2024-09-30.

What is Raytheon Company's track record with similar advanced technology support contracts for the Department of Defense?

Raytheon Company, now part of RTX, has a long and extensive history of supporting the Department of Defense across a wide array of advanced technology programs. Their portfolio includes significant work in areas such as radar systems, missile defense, command and control, and intelligence, surveillance, and reconnaissance (ISR). Specifically, Raytheon has been involved in numerous contracts related to electronic warfare, sensor development, and advanced materials, which often overlap with microelectronic capabilities. Their experience typically involves complex R&D, system integration, and sustainment services. While specific details on past ATSP-like contracts would require deeper research into their contract history, their overall profile as a major defense contractor suggests a substantial capacity to handle advanced technological requirements. Performance on previous contracts, as reflected in past performance evaluations and award decisions, generally indicates a strong capability, though like any large contractor, specific contract outcomes can vary.

How does the $51.3 million value compare to other DoD contracts for microelectronics engineering services?

The $51.3 million value for the Advanced Technology Support Program (ATSP) contract awarded to Raytheon Company for microelectronic capability solutions is a significant but not extraordinary figure within the context of Department of Defense (DoD) engineering and R&D procurements. DoD spending on specialized engineering services, particularly in cutting-edge fields like microelectronics, can range from tens of millions to billions of dollars depending on the scope, duration, and technological complexity. Contracts for advanced semiconductor design, fabrication support, and integration for defense applications often require substantial investment. When compared to other sole-source or competitively awarded contracts for similar R&D or specialized engineering services within the defense sector, $51.3 million appears to be a mid-range value. It suggests a focused effort on specific enhancements rather than a broad, multi-year platform development program. Benchmarking requires access to detailed contract databases and analysis of contract types (e.g., CPFF vs. FFP) and performance periods.

What are the primary risks associated with a Cost Plus Fixed Fee (CPFF) contract for advanced technology development?

Cost Plus Fixed Fee (CPFF) contracts, like the one awarded to Raytheon for the ATSP, present specific risks, primarily related to cost control and contractor incentive. The main risk for the government is that the contractor is reimbursed for all allowable costs plus a fixed fee, which can lead to less incentive for the contractor to control costs aggressively compared to fixed-price contracts. If the contractor's costs escalate beyond initial projections, the government bears that burden. There's also a risk of scope creep, where the project's objectives may expand during development, leading to increased costs and potentially exceeding the initially anticipated value. For the contractor, the risk lies in accurately estimating the costs to ensure the fixed fee remains profitable. Effective oversight, detailed cost accounting, and clear definition of work are crucial to mitigate these risks and ensure the government receives good value.

What is the strategic importance of microelectronic capability solutions for DoD's sensing and warning missions?

Microelectronics are the foundational building blocks for virtually all modern defense systems, especially those involved in sensing and warning. Advanced microelectronic solutions enable smaller, faster, more power-efficient, and more capable sensors, processors, and communication systems. For sensing and warning missions, this translates directly into improved threat detection ranges, faster identification and tracking of targets (e.g., missiles, aircraft, drones), enhanced situational awareness for commanders, and more resilient communication networks. The ability to process vast amounts of data quickly and accurately relies heavily on sophisticated microchips. Investing in advanced microelectronic capabilities ensures that DoD systems remain competitive against evolving threats and maintain a technological edge, which is critical for national security and maintaining deterrence.

How does the performance location in Texas potentially impact the contract's execution and cost?

The performance location being in Texas (specifically noted as ST: TX, SN: TEXAS) can have several implications for the contract. Texas has a significant presence in the aerospace and defense industry, including companies involved in microelectronics and engineering services. This could mean access to a skilled workforce, established supply chains, and potentially a competitive environment among local subcontractors. However, labor costs in certain high-demand areas of Texas might be higher than in other regions. Proximity to other DoD facilities or Raytheon's own operational centers in Texas could facilitate collaboration and oversight. The specific location within Texas might also influence logistics and travel costs for personnel involved in the project. Overall, while Texas offers advantages in terms of industry infrastructure, cost variations and logistical considerations need to be managed.

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: $51,291,750

Exercised Options: $51,291,750

Current Obligation: $51,291,750

Subaward Activity

Number of Subawards: 9

Total Subaward Amount: $1,298,579

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HQ072716D0006

IDV Type: IDC

Timeline