DoD's $38.5M Advanced Technology Support Program contract for microelectronic solutions awarded to Raytheon Company

Contract Overview

Contract Amount: $38,519,637 ($38.5M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2023-12-05

End Date: 2026-01-31

Contract Duration: 788 days

Daily Burn Rate: $48.9K/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 INTEGRATION, DELIVERY, AND TESTING OF THE MRIC PROTOTYPE SYSTEM

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $38.5 million to RAYTHEON COMPANY for work described as: THE ADVANCED TECHNOLOGY SUPPORT PROGRAM (ATSP) CONTRACT ACQUIRED PROGRESSIVE MICROELECTRONIC CAPABILITY SOLUTIONS FOR INTEGRATION, DELIVERY, AND TESTING OF THE MRIC PROTOTYPE SYSTEM Key points: 1. Contract focuses on critical microelectronic capability solutions for prototype system integration, delivery, and testing. 2. Awarded under full and open competition, suggesting a robust market for these specialized engineering services. 3. The Cost Plus Fixed Fee (CPFF) contract type may present cost control challenges if not closely monitored. 4. Performance period extends over 788 days, indicating a significant, multi-year effort. 5. The contract is managed by the Defense Microelectronics Activity, highlighting its strategic importance within the DoD. 6. No small business set-aside was utilized, which is typical for highly specialized, large-scale technology contracts.

Value Assessment

Rating: fair

The contract's value of $38.5 million for engineering services over approximately two years requires careful benchmarking against similar advanced technology development contracts. The CPFF structure necessitates rigorous oversight to ensure cost efficiency. Without specific comparable contract data, it's difficult to definitively assess value for money, but the specialized nature of microelectronics suggests potentially high unit costs. The base award amount of $4.88 million for the initial delivery order provides a starting point for cost analysis.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple qualified vendors had the opportunity to bid. This competitive process is generally expected to yield fair market pricing and encourage innovation. The fact that it was competed broadly suggests a healthy market for advanced microelectronic engineering services.

Taxpayer Impact: Full and open competition is beneficial for taxpayers as it drives efficiency and potentially lower costs through market forces, ensuring that the government receives competitive pricing for specialized services.

Public Impact

The Department of Defense benefits from advanced microelectronic capabilities crucial for next-generation systems. Services delivered include integration, delivery, and testing of prototype microelectronic systems. The contract's performance is geographically located in Arizona, potentially impacting the local tech workforce. This contract supports the development of cutting-edge technology, enhancing national defense capabilities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Fixed Fee (CPFF) contract type can lead to cost overruns if not managed diligently.
The specialized nature of microelectronics may limit the pool of qualified contractors, potentially impacting future competition.
Long performance period requires sustained oversight to ensure continued value and adherence to objectives.

Positive Signals

Awarded through full and open competition, indicating a competitive market for these services.
Focus on advanced technology development aligns with strategic defense modernization goals.
Managed by a specialized agency (Defense Microelectronics Activity) suggesting focused expertise and oversight.

Sector Analysis

This contract falls within the Engineering Services sector (NAICS 541330), specifically focusing on advanced microelectronics. The market for defense-related microelectronics is highly specialized and critical for national security, involving significant R&D investment. Comparable spending benchmarks would likely be found within other advanced technology development programs for defense agencies, often characterized by high R&D costs and specialized expertise requirements.

Small Business Impact

This contract does not appear to have a small business set-aside component, which is common for large, highly specialized technology development contracts requiring extensive resources and expertise. Subcontracting opportunities for small businesses may exist, but they would likely be driven by the prime contractor's (Raytheon Company) strategic sourcing decisions rather than a direct government mandate.

Oversight & Accountability

Oversight for this contract is likely managed by the Defense Microelectronics Activity, a specialized entity within the DoD. Accountability measures would be embedded in the CPFF contract terms, requiring detailed reporting and justification of costs. Transparency is typically managed through contract reporting mechanisms and potentially through program reviews, though specific public transparency details are not provided.

Related Government Programs

Advanced Technology Support Program (ATSP)
Microelectronics Research and Development
DoD Prototype Development Contracts
Defense Microelectronics Activity Contracts

Risk Flags

Cost Plus Fixed Fee contract type requires diligent oversight to manage potential cost overruns.
Specialized nature of microelectronics may limit future competition.
Long performance period necessitates sustained monitoring.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $38.5 million to RAYTHEON COMPANY. THE ADVANCED TECHNOLOGY SUPPORT PROGRAM (ATSP) CONTRACT ACQUIRED PROGRESSIVE MICROELECTRONIC CAPABILITY SOLUTIONS FOR INTEGRATION, DELIVERY, AND TESTING OF THE MRIC PROTOTYPE SYSTEM

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 $38.5 million.

What is the period of performance?

Start: 2023-12-05. End: 2026-01-31.

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

Raytheon Company, now part of RTX, has a long and extensive history of contracting with the Department of Defense across a wide range of advanced technology and defense systems. They are a major defense contractor with significant experience in areas such as aerospace, defense, and intelligence services. Their track record includes numerous large-scale, complex projects involving research, development, integration, and production of sophisticated technologies. Specific to microelectronics, Raytheon has been involved in various initiatives related to semiconductor technology, advanced packaging, and integrated circuit design for defense applications. Performance on past contracts would typically be assessed through contract performance reports (CPARs), which evaluate factors like technical quality, cost control, schedule adherence, and management. While specific details of all past performance are not publicly available, their continued status as a prime contractor on high-value programs indicates a generally positive or acceptable performance history.

How does the $38.5 million contract value compare to other DoD microelectronics development efforts?

The $38.5 million contract value for the Advanced Technology Support Program (ATSP) is a significant but not exceptionally large sum for advanced technology development within the Department of Defense, particularly in the specialized field of microelectronics. DoD investments in microelectronics research, development, and prototyping can range from tens of millions to billions of dollars, depending on the scope, technological maturity, and strategic importance. Contracts for foundational research might be smaller, while those for full-scale system integration or production of advanced microelectronic components for major weapon systems can be substantially larger. This particular contract, focused on prototype system integration, delivery, and testing, appears to be in the mid-range for such specialized R&D efforts. Benchmarking against similar contracts would require access to detailed contract databases and analysis of scope, duration, and specific technological objectives.

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

The primary risks associated with a Cost Plus Fixed Fee (CPFF) contract, like the one awarded to Raytheon Company for the ATSP, revolve around cost control and contractor incentive. In a CPFF structure, the contractor is reimbursed for allowable costs plus a fixed fee representing their profit. The main risk for the government is that the contractor may have less incentive to control costs compared to fixed-price contracts, as cost overruns are generally reimbursed. This can lead to the project exceeding its budgeted amount if not managed diligently. For the contractor, the risk lies in accurately estimating the costs to ensure the fixed fee remains profitable. Effective management of a CPFF contract requires robust government oversight, detailed cost tracking, regular audits, and clear definition of allowable costs to mitigate the risk of cost escalation and ensure value for taxpayer money.

How does the Defense Microelectronics Activity (DMA) ensure program effectiveness for contracts like ATSP?

The Defense Microelectronics Activity (DMA) is specifically chartered to address the unique challenges and strategic importance of microelectronics within the DoD. For contracts like the ATSP, DMA likely ensures program effectiveness through several mechanisms. Firstly, their specialized focus allows for deep technical expertise in overseeing microelectronics development. This includes rigorous technical reviews at key milestones, validation of performance metrics, and ensuring the prototype system meets the demanding requirements for integration, delivery, and testing. Secondly, DMA would employ stringent contract management practices, closely monitoring cost expenditures, schedule adherence, and deliverable quality, especially given the CPFF structure. Thirdly, they foster collaboration between government engineers and the contractor to resolve technical hurdles proactively. Finally, DMA's role often involves aligning these development efforts with broader DoD strategic objectives, ensuring that the outcomes of the ATSP contract contribute meaningfully to national defense capabilities.

What are historical spending patterns for advanced technology support programs within the DoD?

Historical spending patterns for advanced technology support programs within the DoD show a consistent and significant investment, reflecting the continuous need for technological superiority. These programs often span multiple agencies and directorates, with substantial allocations directed towards research, development, testing, and evaluation (RDT&E). Spending fluctuates based on strategic priorities, emerging threats, and technological advancements. For instance, periods of heightened geopolitical tension or rapid technological change often see increased investment in areas like artificial intelligence, cybersecurity, advanced materials, and microelectronics. The ATSP contract, valued at $38.5 million, represents a specific instance within this broader pattern. Analyzing historical data reveals that while individual contract values vary, the aggregate DoD spending on advanced technology support remains a substantial portion of its overall budget, underscoring its critical role in maintaining military readiness and innovation.

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: $38,519,637

Exercised Options: $38,519,637

Current Obligation: $38,519,637

Actual Outlays: $11,224,599

Subaward Activity

Number of Subawards: 1

Total Subaward Amount: $34,115

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