DoD's $217M Advanced Technology Support Program contract awarded to Raytheon Company for microelectronics capability solutions

Contract Overview

Contract Amount: $216,902,654 ($216.9M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2024-08-27

End Date: 2026-12-31

Contract Duration: 856 days

Daily Burn Rate: $253.4K/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 ACQUIRES PROGRESSIVE MICROELECTRONIC CAPABILITY SOLUTIONS FOR ADVANCED TECHNOLOGY MAINTAINABILITY OF THE MICROELECTRONICS-BASED COUNTER UNMANNED AIRCRAFT SYSTEM

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $216.9 million to RAYTHEON COMPANY for work described as: THE ADVANCED TECHNOLOGY SUPPORT PROGRAM (ATSP) CONTRACT ACQUIRES PROGRESSIVE MICROELECTRONIC CAPABILITY SOLUTIONS FOR ADVANCED TECHNOLOGY MAINTAINABILITY OF THE MICROELECTRONICS-BASED COUNTER UNMANNED AIRCRAFT SYSTEM Key points: 1. Contract focuses on advanced microelectronics for counter-unmanned aircraft systems, a critical defense capability. 2. Awarded via full and open competition, suggesting a broad market search for the best solution. 3. The contract type is Cost Plus Fixed Fee, which can incentivize contractor efficiency while managing risk. 4. Performance period extends over two years, allowing for sustained development and integration. 5. The primary service area is engineering, aligning with the technical nature of microelectronics development. 6. The contract is not set aside for small businesses, indicating a focus on large, established prime contractors.

Value Assessment

Rating: good

The contract value of $217 million over approximately two years for advanced microelectronics development appears reasonable given the specialized nature of the work. Benchmarking against similar R&D contracts for advanced defense technologies is challenging due to unique requirements, but the cost-plus-fixed-fee structure allows for cost transparency while providing incentives for efficient performance. The fixed fee component provides a predictable profit margin for the contractor, which can be compared to industry standards for similar risk profiles.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that the Department of Defense sought proposals from all responsible sources. The specific number of bidders is not provided, but this method generally fosters a competitive environment, driving innovation and potentially leading to more favorable pricing. The open competition suggests that the agency was confident in its ability to define requirements broadly enough to attract multiple qualified offerors.

Taxpayer Impact: Full and open competition is beneficial for taxpayers as it maximizes the potential for receiving the best value through a wide range of technical solutions and competitive pricing pressures.

Public Impact

The primary beneficiaries are the Department of Defense, which will receive advanced microelectronic capabilities to enhance its counter-unmanned aircraft systems. The services delivered will focus on developing and maintaining progressive microelectronic solutions. The geographic impact is primarily within the defense sector, with potential applications across various military branches. Workforce implications may include specialized engineering and technical roles within Raytheon Company and its potential subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus-fixed-fee contracts can sometimes lead to cost overruns if not managed diligently, requiring robust oversight.
The specialized nature of microelectronics may limit the pool of highly qualified subcontractors, potentially impacting competition at lower tiers.

Positive Signals

Awarded through full and open competition, suggesting a robust market response and potential for strong technical solutions.
The contract aims to advance critical defense technology, addressing a growing threat landscape.
Raytheon Company is a well-established defense contractor with a proven track record in advanced technologies.

Sector Analysis

The defense microelectronics sector is a highly specialized and critical area within the broader aerospace and defense industry. It involves the design, development, and manufacturing of integrated circuits and other electronic components essential for advanced military systems. Spending in this sector is driven by the need for technological superiority, particularly in areas like electronic warfare, command and control, and advanced sensing. This contract fits within the trend of increasing investment in capabilities to counter emerging threats, such as unmanned aerial systems, requiring cutting-edge microelectronic solutions.

Small Business Impact

This contract was not set aside for small businesses, and there is no indication of specific small business subcontracting goals in the provided data. As a large prime contract awarded to a major defense contractor, the primary focus is likely on leveraging the prime's capabilities. However, Raytheon Company may engage small businesses for specialized components or services, but this is not explicitly detailed. The absence of a small business set-aside suggests that the scope of work requires capabilities typically found in larger, more established firms.

Oversight & Accountability

Oversight for this Cost Plus Fixed Fee contract will likely be managed by the Department of Defense's contracting and program management offices, ensuring adherence to the contract terms and performance standards. Accountability measures will be tied to the achievement of milestones and the delivery of specified microelectronic capabilities. Transparency is facilitated through the contract reporting mechanisms within the DoD. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Counter-UAS Systems
Advanced Electronics Development
Microelectronics Research and Development
Defense Research and Development Contracts

Risk Flags

Cost-Plus-Fixed-Fee contract type requires diligent oversight to manage costs.
Specialized nature of microelectronics may limit competition for subcontractors.
Rapid technological evolution in microelectronics poses a risk of obsolescence.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $216.9 million to RAYTHEON COMPANY. THE ADVANCED TECHNOLOGY SUPPORT PROGRAM (ATSP) CONTRACT ACQUIRES PROGRESSIVE MICROELECTRONIC CAPABILITY SOLUTIONS FOR ADVANCED TECHNOLOGY MAINTAINABILITY OF THE MICROELECTRONICS-BASED COUNTER UNMANNED AIRCRAFT 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 $216.9 million.

What is the period of performance?

Start: 2024-08-27. End: 2026-12-31.

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 developing advanced technologies for the Department of Defense across various domains, including electronics, aerospace, and defense systems. They have been a prime contractor on numerous complex R&D and production programs, often involving cutting-edge technologies. Their track record includes significant contributions to missile defense, advanced radar systems, electronic warfare, and cyber capabilities. For microelectronics specifically, Raytheon has been involved in developing specialized chips and integrated systems for demanding military applications. While specific contract details and performance metrics are often proprietary, their consistent selection for large, high-stakes programs indicates a strong performance history and a high degree of trust from the DoD in their ability to deliver complex technological solutions.

How does the Cost Plus Fixed Fee (CPFF) contract structure compare to other contract types for this type of R&D work?

The Cost Plus Fixed Fee (CPFF) contract type is commonly used for research and development efforts where the scope of work is not precisely defined at the outset, or where innovation and exploration are key objectives. In a CPFF contract, the contractor is reimbursed for all allowable costs incurred, plus a predetermined fixed fee representing their profit. This structure aims to balance risk between the government and the contractor. For the government, it allows flexibility to adapt to evolving requirements during R&D. For the contractor, the fixed fee provides a guaranteed profit margin, incentivizing them to complete the work efficiently to maximize their return on investment. Compared to fixed-price contracts, CPFF offers more flexibility but potentially higher cost uncertainty for the government if costs escalate significantly. Compared to cost-plus-incentive-fee (CPIF) contracts, CPFF offers a more stable profit margin for the contractor, whereas CPIF can provide stronger incentives for cost savings and performance targets.

What are the primary risks associated with developing advanced microelectronic capabilities for counter-UAS systems?

Developing advanced microelectronic capabilities for counter-UAS systems presents several significant risks. Technical risks include the inherent difficulty in innovating at the cutting edge of microelectronics, potential for unforeseen design challenges, integration issues with existing platforms, and the rapid obsolescence of technology. Schedule risks are also high, as R&D projects can encounter delays due to technical hurdles or the need for iterative development. Cost risks are substantial, as R&D is often unpredictable, and cost-plus contract types, while flexible, can lead to higher final costs if not managed effectively. Furthermore, there's a risk of the technology not meeting the evolving threat landscape of UAS, which is constantly advancing. Ensuring the reliability and security of these critical components against potential adversaries is another key risk.

What is the typical spending pattern for advanced microelectronics within the Department of Defense, and how does this contract compare?

Spending on advanced microelectronics within the Department of Defense is substantial and has been increasing, driven by the need to maintain technological superiority and counter emerging threats. This spending encompasses research, development, prototyping, and procurement of specialized electronic components and systems. The DoD invests heavily in areas like secure microelectronics, radiation-hardened components, and high-performance computing for defense applications. Contracts in this domain often involve significant dollar values due to the complexity, specialized manufacturing processes, and high R&D investment required. The $217 million value of the ATSP contract awarded to Raytheon is consistent with the scale of investment seen in major defense R&D programs focused on critical technological advancements. It reflects the DoD's commitment to securing advanced capabilities in a strategically important sector.

What are the implications of this contract being awarded to a single prime contractor (Raytheon Company) for the broader defense microelectronics ecosystem?

Awarding a significant contract like the ATSP to a single prime contractor, such as Raytheon Company, has several implications for the broader defense microelectronics ecosystem. On one hand, it consolidates expertise and resources under a trusted entity, potentially leading to efficient development and integration of advanced capabilities. It allows the prime to leverage its established supply chains and R&D infrastructure. On the other hand, it can concentrate significant R&D funding and technological development within one large corporation, potentially limiting opportunities for smaller, innovative firms to directly participate in prime roles. However, large primes often subcontract specialized work, creating opportunities for smaller businesses within their supply chains. The long-term impact depends on how effectively the prime integrates and disseminates technological advancements and manages its subcontractor relationships.

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: $216,902,654

Exercised Options: $216,902,654

Current Obligation: $216,902,654

Subaward Activity

Number of Subawards: 88

Total Subaward Amount: $23,547,159

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