DoD's $1.59B Advanced Technology Support Program contract for microelectronic solutions awarded to Raytheon Company

Contract Overview

Contract Amount: $158,960,654 ($159.0M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2023-09-21

End Date: 2026-11-30

Contract Duration: 1,166 days

Daily Burn Rate: $136.3K/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 TO ANALYZE, DESIGN, DEVELOP, PROTOTYPE, PROCURE AND DEPLOY OPERATIONAL ENHANCEMENTS FOR THE ENHANCED COYOTE BLOCK 2 PROTOTYPE.

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $159.0 million to RAYTHEON COMPANY for work described as: THE ADVANCED TECHNOLOGY SUPPORT PROGRAM (ATSP) CONTRACT ACQUIRED PROGRESSIVE MICROELECTRONIC CAPABILITY SOLUTIONS TO ANALYZE, DESIGN, DEVELOP, PROTOTYPE, PROCURE AND DEPLOY OPERATIONAL ENHANCEMENTS FOR THE ENHANCED COYOTE BLOCK 2 PROTOTYPE. Key points: 1. Contract focuses on critical microelectronic capability solutions for the Enhanced Coyote Block 2 Prototype. 2. Significant investment in advanced technology development and prototyping for defense applications. 3. Raytheon Company, a major defense contractor, is the sole awardee. 4. Contract duration extends over three years, indicating a long-term development effort. 5. The contract type, Cost Plus Fixed Fee, suggests potential for cost overruns. 6. No small business set-aside or subcontracting was indicated, potentially limiting small business participation.

Value Assessment

Rating: fair

The contract value of $1.59 billion is substantial, reflecting the complexity and strategic importance of advanced microelectronics. Benchmarking this specific contract's value is challenging without detailed cost breakdowns and comparisons to similar R&D efforts in microelectronics. The Cost Plus Fixed Fee (CPFF) contract type, while common for R&D, carries inherent risks of cost escalation if not managed tightly. Without more granular data on labor hours, material costs, and profit margins, a definitive value-for-money assessment is difficult, but the scale suggests a significant investment in cutting-edge technology.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple bidders were likely considered. However, the data does not specify the number of bids received or the evaluation process. Full and open competition is generally expected to foster price discovery and encourage competitive pricing among potential offerors. The selection of a single awardee suggests Raytheon Company presented the most advantageous offer based on the government's evaluation criteria.

Taxpayer Impact: Full and open competition is beneficial for taxpayers as it aims to secure the best value by allowing a wide range of qualified contractors to bid, potentially driving down costs through market forces.

Public Impact

The primary beneficiaries are the Department of Defense and its operational units requiring advanced microelectronic capabilities for defense systems. Services delivered include analysis, design, development, prototyping, procurement, and deployment of microelectronic solutions. The geographic impact is primarily within Arizona (ST/SN), where the contractor is located, but the technology developed will have national security implications. Workforce implications include highly skilled engineers, technicians, and researchers in the microelectronics and defense sectors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Fixed Fee contract type can lead to higher costs if not rigorously managed.
Lack of specific competition details (number of bidders) makes it hard to fully assess price competitiveness.
No indication of small business subcontracting goals could limit opportunities for smaller innovative firms.

Positive Signals

Awarded under full and open competition, suggesting a broad search for the best solution.
Focus on advanced technology development addresses critical national security needs.
Long-term contract duration allows for sustained development and integration of complex solutions.

Sector Analysis

This contract falls within the Engineering Services sector, specifically focusing on advanced microelectronics, a critical component of modern defense systems. The market for specialized defense microelectronics is highly concentrated, with a few large prime contractors dominating. Spending in this area is driven by the need for technological superiority and the rapid obsolescence of existing systems. Comparable spending benchmarks would involve other large-scale R&D contracts for advanced defense technologies, which often run into hundreds of millions or billions of dollars.

Small Business Impact

The contract data indicates that this was not a small business set-aside, and there is no explicit mention of small business subcontracting requirements. This suggests that the primary award went to a large prime contractor, Raytheon Company. While large contracts often have subcontracting plans, the absence of specific information here means the direct impact on the small business ecosystem is unclear. It is possible that Raytheon will subcontract portions to small businesses, but this is not guaranteed by the provided data.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Microelectronics Activity (DMEA) within the Department of Defense. Accountability measures would include performance metrics, milestone reviews, and financial reporting requirements inherent in the Cost Plus Fixed Fee structure. Transparency is generally maintained through contract award notices and reporting requirements, though detailed cost and performance data may be sensitive. Inspector General jurisdiction would apply to any allegations of fraud, waste, or abuse.

Related Government Programs

Advanced Technology Support Program (ATSP)
Enhanced Coyote Block 2 Prototype
Microelectronics Research and Development
Defense Microelectronics Activity (DMEA) Contracts
Raytheon Company Defense Contracts

Risk Flags

Cost Overrun Risk (CPFF Contract Type)
Limited Small Business Participation Indicated
Dependence on Single Prime Contractor
Technological Obsolescence Risk in Microelectronics

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $159.0 million to RAYTHEON COMPANY. THE ADVANCED TECHNOLOGY SUPPORT PROGRAM (ATSP) CONTRACT ACQUIRED PROGRESSIVE MICROELECTRONIC CAPABILITY SOLUTIONS TO ANALYZE, DESIGN, DEVELOP, PROTOTYPE, PROCURE AND DEPLOY OPERATIONAL ENHANCEMENTS FOR THE ENHANCED COYOTE BLOCK 2 PROTOTYPE.

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 $159.0 million.

What is the period of performance?

Start: 2023-09-21. End: 2026-11-30.

What is the track record of Raytheon Company in delivering similar advanced microelectronic solutions for defense programs?

Raytheon Company, now part of RTX, has a long and extensive track record in developing and delivering advanced technologies for defense applications, including microelectronics. They are a major player in areas such as radar systems, missile defense, and electronic warfare, all of which rely heavily on sophisticated microelectronic components. Their experience spans research, design, development, and production of complex systems. While specific details on past microelectronics contracts of this exact scale and nature are proprietary, Raytheon's overall portfolio demonstrates significant capability and experience in handling large, technologically advanced defense programs. Their history includes numerous successful large-scale contracts with the Department of Defense and other government agencies, underscoring their capacity to manage complex R&D efforts.

How does the $1.59 billion value of this contract compare to other similar advanced technology development contracts within the DoD?

The $1.59 billion value for the Advanced Technology Support Program (ATSP) contract is substantial and aligns with the scale of major defense R&D initiatives. Large-scale contracts for advanced technology development, particularly in areas like microelectronics, aerospace, and next-generation weapon systems, frequently reach or exceed this figure. For instance, contracts for developing new fighter jet technologies, advanced missile systems, or cybersecurity infrastructure can easily amount to billions of dollars over their lifecycle. The value reflects the long-term nature of the development (over three years), the complexity of the required solutions (analyzing, designing, developing, prototyping, procuring, and deploying), and the strategic importance of advanced microelectronics for national security. Without access to a comprehensive database of all DoD R&D contracts, a precise comparison is difficult, but this contract is certainly within the upper echelon of significant technology development investments.

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

The primary risk associated with a Cost Plus Fixed Fee (CPFF) contract, like the one awarded for the ATSP, is the potential for cost overruns. In a CPFF structure, the contractor is reimbursed for allowable costs plus a predetermined fixed fee representing profit. If the contractor's costs exceed initial estimates, the government bears the burden of these increased expenses, while the contractor's profit remains fixed. This can incentivize less cost-conscious behavior from the contractor if oversight is not stringent. For advanced technology development, where technical uncertainties and unforeseen challenges are common, cost estimation is inherently difficult, increasing the likelihood of cost growth. Effective risk mitigation requires robust government oversight, detailed cost tracking, and clear performance metrics to ensure the contractor manages resources efficiently.

What is the expected program effectiveness and impact of the Enhanced Coyote Block 2 Prototype?

The Enhanced Coyote Block 2 Prototype, supported by this contract, is expected to significantly advance the capabilities of the Coyote unmanned aerial system (UAS) or a similar platform. The focus on microelectronic capability solutions suggests improvements in areas such as processing power, sensor integration, communication systems, electronic warfare capabilities, or overall system efficiency and reliability. Enhanced microelectronics can lead to more sophisticated autonomous functions, improved data analysis onboard, greater resilience to electronic countermeasures, and potentially reduced size, weight, and power (SWaP) requirements. The effectiveness will be measured by the successful integration of these enhanced capabilities into the prototype and its subsequent performance in testing and operational evaluations, ultimately contributing to improved intelligence, surveillance, reconnaissance, or strike capabilities for the DoD.

How has spending on advanced microelectronics for defense programs evolved over the past five years?

Spending on advanced microelectronics for defense programs has been on a consistent upward trend over the past five years, driven by the increasing reliance on sophisticated electronics for all military platforms and the recognition of microelectronics as a critical national security domain. The DoD has prioritized investments in areas such as trusted microelectronics, artificial intelligence hardware, advanced sensors, and secure communication chips. This trend is fueled by the need to counter peer adversaries, maintain technological superiority, and address supply chain vulnerabilities. Government initiatives and funding have increased to support domestic manufacturing capabilities, research into next-generation materials and architectures, and the development of specialized chips for defense applications. Contracts like the ATSP reflect this strategic emphasis on bolstering advanced microelectronic capabilities.

What are the implications of awarding this contract to Raytheon Company for the broader defense industrial base?

Awarding a contract of this magnitude to Raytheon Company (RTX) reinforces its position as a key prime contractor within the defense industrial base, particularly in advanced electronics and systems integration. It signifies continued reliance on large, established defense primes for complex, high-value programs. For Raytheon, it represents significant revenue and a strategic win that can bolster its capabilities and market share. For the broader industrial base, it implies that Raytheon will likely engage a network of subcontractors, potentially including other large corporations and specialized small businesses, to fulfill the contract's requirements. This can stimulate activity within specific supply chains related to microelectronics, materials, and specialized manufacturing. However, it also highlights the consolidation trend in the defense industry, where a few major players handle the bulk of large-scale R&D and production contracts.

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: $158,960,654

Exercised Options: $158,960,654

Current Obligation: $158,960,654

Subaward Activity

Number of Subawards: 64

Total Subaward Amount: $15,318,051

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