Raytheon Company awarded $75M for engineering services to enhance factory capacity and develop interceptor prototypes

Contract Overview

Contract Amount: $74,986,939 ($75.0M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2024-01-16

End Date: 2026-01-31

Contract Duration: 746 days

Daily Burn Rate: $100.5K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: THE PURPOSE OF THIS TASK IS TO ACQUIRE ENGINEERING SERVICES TO ANALYZE, DESIGN, DEVELOP, PROTOTYPE, TEST, AND IMPROVE FACTORY CAPACITY ENHANCEMENTS AND BUILD PROTOTYPE INTERCEPTORS.

Place of Performance

Location: EL SEGUNDO, LOS ANGELES County, CALIFORNIA, 90245

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $75.0 million to RAYTHEON COMPANY for work described as: THE PURPOSE OF THIS TASK IS TO ACQUIRE ENGINEERING SERVICES TO ANALYZE, DESIGN, DEVELOP, PROTOTYPE, TEST, AND IMPROVE FACTORY CAPACITY ENHANCEMENTS AND BUILD PROTOTYPE INTERCEPTORS. Key points: 1. Contract focuses on critical defense manufacturing capabilities, including interceptor development. 2. Engineering services encompass analysis, design, development, prototyping, and testing. 3. The contract duration of approximately two years suggests a project with defined milestones. 4. Awarded by the Defense Microelectronics Activity, indicating a focus on advanced technological needs. 5. The cost-plus-fixed-fee pricing structure allows for flexibility but requires careful cost management. 6. This award is a single delivery order, suggesting it's part of a larger potential framework agreement.

Value Assessment

Rating: good

The contract value of $75 million for engineering services over approximately two years appears reasonable given the scope of work, which includes design, development, and prototyping of advanced defense systems. Benchmarking against similar large-scale engineering and R&D contracts within the Department of Defense suggests this is within expected parameters. The cost-plus-fixed-fee structure, while common for complex R&D, necessitates close monitoring to ensure cost efficiency and prevent overruns.

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 had the opportunity to submit proposals. This competitive process is designed to foster price discovery and ensure the government receives the best value. The specific number of bidders is not provided, but the 'full and open' designation suggests a robust competition.

Taxpayer Impact: Full and open competition generally benefits taxpayers by driving down costs through market forces and encouraging innovation among a wider pool of potential contractors.

Public Impact

The primary beneficiaries are the Department of Defense and its associated agencies requiring advanced interceptor technology. Services delivered include critical engineering analysis, design, prototyping, and testing for factory capacity enhancements. The geographic impact is primarily within California, where the Defense Microelectronics Activity is located. This contract supports a specialized workforce of engineers and technical personnel in advanced manufacturing and defense systems.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus-fixed-fee contracts can lead to cost overruns if not managed diligently.
The complexity of interceptor development carries inherent technical and schedule risks.
Reliance on a single delivery order might indicate a need for further competitive actions for subsequent phases.

Positive Signals

Awarded through full and open competition, suggesting a competitive pricing environment.
Focus on enhancing factory capacity addresses critical national defense manufacturing needs.
The contractor, Raytheon Company, is a well-established defense contractor with significant experience in this domain.

Sector Analysis

This contract falls within the Engineering Services sector, specifically supporting defense manufacturing and advanced technology development. The market for defense engineering services is substantial, driven by ongoing modernization efforts and the need for specialized expertise in areas like missile defense and advanced prototyping. Comparable spending often involves significant R&D investments by agencies like the Department of Defense to maintain technological superiority.

Small Business Impact

The data indicates that this contract was not set aside for small businesses, nor does it explicitly mention subcontracting requirements for small businesses. Therefore, the direct impact on the small business ecosystem is likely minimal unless Raytheon Company voluntarily engages small businesses for subcontracting opportunities.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officers and program managers within the Defense Microelectronics Activity. Accountability measures are embedded in the contract terms, including performance standards and reporting requirements. Transparency is generally maintained through contract award databases, though specific project details may be sensitive.

Related Government Programs

Missile Defense Systems
Advanced Manufacturing Initiatives
Defense Research and Development
Interceptor Programs
Factory Modernization

Risk Flags

Cost Overrun Risk (CPFF)
Technical Complexity Risk
Schedule Delay Risk

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $75.0 million to RAYTHEON COMPANY. THE PURPOSE OF THIS TASK IS TO ACQUIRE ENGINEERING SERVICES TO ANALYZE, DESIGN, DEVELOP, PROTOTYPE, TEST, AND IMPROVE FACTORY CAPACITY ENHANCEMENTS AND BUILD PROTOTYPE INTERCEPTORS.

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 $75.0 million.

What is the period of performance?

Start: 2024-01-16. End: 2026-01-31.

What is Raytheon Company's track record with similar engineering services contracts for the Department of Defense?

Raytheon Company, now part of RTX, has a long and extensive history of performing complex engineering, research, and development services for the Department of Defense across numerous programs. They are a prime contractor on many major defense systems, including missile defense, aircraft, and space systems. Their track record typically involves large-scale, high-value contracts requiring advanced technical expertise. While specific performance metrics for past contracts are often not publicly detailed, their continued selection for significant defense work suggests a generally positive performance history and capability to meet demanding requirements. However, like any large contractor, they may have faced scrutiny or challenges on specific projects, which would be detailed in contract performance reports not publicly available.

How does the $75 million value compare to other engineering services contracts for similar defense capabilities?

The $75 million contract value for engineering services related to factory capacity enhancements and interceptor prototypes is substantial but falls within the typical range for major defense development projects. Large-scale R&D and engineering efforts for advanced weapon systems can easily reach hundreds of millions or even billions of dollars over their lifecycle. For a two-year delivery order focused on specific enhancements and prototyping, $75 million represents a significant investment, reflecting the complexity and criticality of the work. Benchmarking against similar contracts for missile component development or advanced manufacturing process engineering would likely show this value to be competitive and commensurate with the scope and technical challenges involved.

What are the primary risks associated with this cost-plus-fixed-fee contract structure?

The primary risk associated with a Cost-Plus-Fixed-Fee (CPFF) contract structure, like the one awarded to Raytheon Company, is the potential for cost overruns. While the 'fixed fee' component provides a guaranteed profit margin for the contractor, the 'cost-plus' element means the government reimburses the contractor for allowable costs incurred. If the project encounters unforeseen technical difficulties, scope creep, or inefficiencies, the total cost to the government can escalate beyond initial estimates. This necessitates robust oversight from the contracting agency to meticulously track and audit all incurred costs, ensuring they are reasonable, allocable, and necessary for the project's completion. The government bears the financial risk of cost increases, while the contractor's risk is primarily related to managing costs effectively to stay within projected expenditure levels.

What is the expected program effectiveness given the contract's objectives?

The effectiveness of this contract hinges on its ability to successfully achieve its stated objectives: analyzing, designing, developing, prototyping, testing, and improving factory capacity enhancements and building prototype interceptors. If these engineering services lead to demonstrable improvements in manufacturing efficiency, reduced production times, or enhanced capabilities for interceptor systems, the program will be considered effective. The success will be measured by the quality of the prototypes, the viability of the factory enhancements, and the successful transfer of technology or processes. Given the contractor's experience and the competitive award process, there is a reasonable expectation of achieving these technical goals, contributing to the overall readiness and technological advancement of defense capabilities.

How does this contract fit into the broader historical spending patterns for defense engineering services?

This $75 million contract for engineering services aligns with historical spending patterns by the Department of Defense, which consistently allocates significant funds towards research, development, and advanced manufacturing capabilities. Defense spending on engineering services, particularly for critical areas like missile defense and strategic systems, has been a long-standing priority. Contracts of this magnitude are typical for projects involving complex prototyping and the enhancement of specialized production facilities. Over the years, the DoD has invested heavily in maintaining and advancing its technological edge, making contracts like this a recurring component of its budget, reflecting ongoing needs for innovation and modernization in defense infrastructure and weaponry.

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: Rockwell Collins Australia PTY Limited

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: $74,986,939

Exercised Options: $74,986,939

Current Obligation: $74,986,939

Subaward Activity

Number of Subawards: 18

Total Subaward Amount: $7,674,265

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