DoD's $637M Advanced Technology Support Program contract awarded to Raytheon Company for microelectronic capabilities

Contract Overview

Contract Amount: $6,368,618 ($6.4M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2024-09-18

End Date: 2026-09-30

Contract Duration: 742 days

Daily Burn Rate: $8.6K/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.

Place of Performance

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

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $6.4 million to RAYTHEON COMPANY for work described as: THE ADVANCED TECHNOLOGY SUPPORT PROGRAM (ATSP) CONTRACT ACQUIRES PROGRESSIVE MICROELECTRONIC CAPABILITY SOLUTIONS. Key points: 1. Contract aims to acquire progressive microelectronic capability solutions, indicating a focus on advanced technological development. 2. The award to Raytheon Company suggests a reliance on established defense contractors for critical technology needs. 3. The contract's duration of 742 days (approximately 2 years) points to a medium-term investment in this capability. 4. The use of a Cost Plus Fixed Fee (CPFF) pricing structure may incentivize cost control while allowing for flexibility in scope. 5. The 'Defense Microelectronics Activity' as the servicing agency highlights the strategic importance of microelectronics within the DoD. 6. The contract's primary focus on engineering services (NAICS 541330) underscores the research and development nature of the acquisition.

Value Assessment

Rating: good

The total award amount of $636.86 million for engineering services over approximately two years is substantial. Benchmarking this against similar advanced technology development contracts is challenging due to the specialized nature of microelectronics. However, the CPFF contract type suggests that the government will monitor costs closely to ensure value. The fixed fee component provides a baseline for contractor profit, which, when combined with cost controls, aims for a reasonable return on investment for the government.

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 generally expected to yield better pricing and innovative solutions. The specific number of bidders is not provided, but the 'full and open' designation suggests a robust competition was intended.

Taxpayer Impact: Full and open competition is favorable for taxpayers as it drives down costs through market forces and encourages a wider range of technological approaches, potentially leading to more cost-effective solutions.

Public Impact

The primary beneficiaries are the Department of Defense and its various branches, which will gain access to advanced microelectronic capabilities. The contract will deliver progressive microelectronic capability solutions, crucial for next-generation defense systems and technologies. The geographic impact is likely concentrated around Raytheon's facilities and potentially defense research hubs, though the ultimate deployment of the technology will be nationwide. Workforce implications include employment opportunities for engineers, scientists, and technicians specializing in microelectronics and advanced manufacturing.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The CPFF contract type can lead to cost overruns if not managed diligently, as the contractor is reimbursed for allowable costs plus a fixed fee.
The specialized nature of microelectronics may limit the pool of qualified small businesses that can participate as subcontractors.
The long-term sustainment and upgrade costs of the acquired microelectronic capabilities are not detailed in this award.

Positive Signals

Awarding under full and open competition suggests a commitment to leveraging the broadest possible market for innovation and cost-effectiveness.
The focus on 'advanced technology' indicates investment in future capabilities, potentially enhancing national security and technological leadership.
The selection of Raytheon Company, a major defense contractor, suggests a high level of confidence in their technical expertise and past performance.

Sector Analysis

The defense microelectronics sector is critical for national security, encompassing the design, development, and manufacturing of integrated circuits and other semiconductor-based components. This contract fits within the broader landscape of defense modernization efforts aimed at maintaining a technological edge. Spending in this sector is often characterized by long development cycles, high R&D costs, and significant government investment due to the strategic importance and specialized nature of the technology. Comparable spending benchmarks are difficult to establish precisely due to the proprietary nature of many defense microelectronics projects.

Small Business Impact

The data indicates that small business participation (SB set-aside and subcontracting) was not a primary consideration for this specific contract award (ss: false, sb: false). This suggests that the scope and technical requirements were likely geared towards larger, established prime contractors with specialized capabilities. Consequently, the direct impact on the small business ecosystem for this particular contract may be limited, although opportunities could arise through subcontracting if Raytheon chooses to engage smaller firms.

Oversight & Accountability

Oversight for this contract will likely be managed by the Defense Microelectronics Activity (DMEA) and potentially the Department of Defense's Inspector General. The CPFF contract type necessitates rigorous cost monitoring and auditing to ensure that expenditures are allowable and reasonable. Transparency will depend on DMEA's reporting practices and any public disclosures made by the Department of Defense regarding the program's progress and outcomes.

Related Government Programs

Defense Microelectronics Activity (DMEA) Contracts
Advanced Technology Development Programs
Engineering Services Contracts
Department of Defense Research and Development

Risk Flags

Cost Overrun Risk (CPFF Contract Type)
Technological Obsolescence
Supply Chain Dependencies (if not domestically sourced)
Integration Challenges with Existing Systems

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $6.4 million to RAYTHEON COMPANY. THE ADVANCED TECHNOLOGY SUPPORT PROGRAM (ATSP) CONTRACT ACQUIRES PROGRESSIVE MICROELECTRONIC CAPABILITY SOLUTIONS.

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 $6.4 million.

What is the period of performance?

Start: 2024-09-18. End: 2026-09-30.

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

Raytheon Company, now part of RTX, has a long and extensive history of performing complex engineering and advanced technology development contracts for the Department of Defense. They are a major defense contractor with significant expertise in areas relevant to microelectronics, including systems engineering, advanced materials, and integrated circuit design. Their track record includes numerous large-scale programs across various defense domains, often involving cutting-edge technologies. While specific details on past microelectronics-focused CPFF contracts are proprietary, Raytheon's overall performance history with the DoD is generally characterized by its capability to handle large, technically challenging projects. However, like any large contractor, specific contract performance can vary, and a detailed review of past performance metrics for analogous contracts would be necessary for a comprehensive assessment.

How does the $636.86 million award compare to typical spending on microelectronics R&D within the DoD?

The $636.86 million award for the Advanced Technology Support Program (ATSP) represents a significant investment in microelectronics R&D. The Department of Defense's overall budget for research, development, testing, and evaluation (RDT&E) is substantial, often in the tens of billions of dollars annually. Within this, funding for critical technologies like microelectronics is a priority, driven by national security imperatives. While specific figures for microelectronics R&D can fluctuate and are often embedded within larger program elements, an award of this magnitude suggests a focused effort on acquiring advanced capabilities rather than incremental improvements. It aligns with strategic initiatives aimed at ensuring a secure and advanced domestic microelectronics supply chain, which the DoD views as a critical national security issue.

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, particularly for advanced technology development, revolve around cost control and potential for scope creep. For the government, the risk is that the contractor may not be sufficiently incentivized to control costs rigorously, as all allowable costs are reimbursed. If the initial cost estimates are inaccurate or if unforeseen technical challenges arise, the total project cost could exceed initial projections, even with a fixed fee. For the contractor, the risk lies in accurately estimating the costs involved in developing novel technologies. If costs exceed estimates significantly, the fixed fee might not provide an adequate profit margin. Effective oversight, clear definition of allowable costs, and robust change management processes are crucial to mitigate these risks.

What does the 'Defense Microelectronics Activity' (DMEA) do, and how does it influence this contract?

The Defense Microelectronics Activity (DMEA) is an agency within the Department of Defense responsible for ensuring the availability and security of microelectronics for defense systems. Its mission includes managing the supply chain, fostering innovation, and providing specialized microelectronic services and products. As the servicing agency for this ATSP contract, DMEA plays a crucial role in defining the technical requirements, overseeing the contractor's performance, and ensuring that the acquired microelectronic capabilities align with DoD's strategic objectives. DMEA's involvement signifies the high priority placed on securing advanced microelectronic solutions, and its expertise is vital for navigating the complexities of this specialized technological domain.

How might this contract contribute to the broader goal of securing the U.S. microelectronics supply chain?

This contract directly contributes to the broader goal of securing the U.S. microelectronics supply chain by investing in the development of advanced capabilities. By funding Raytheon Company to acquire progressive microelectronic solutions, the DoD is stimulating innovation and potentially fostering domestic expertise in critical areas of semiconductor technology. This can reduce reliance on foreign sources for advanced microelectronics, which are essential for defense systems and increasingly for civilian infrastructure. The ATSP contract aims to ensure that the U.S. maintains a technological edge and a resilient supply chain for components vital to national security, addressing concerns about vulnerabilities and potential disruptions.

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: $10,494,349

Exercised Options: $10,494,349

Current Obligation: $6,368,618

Subaward Activity

Number of Subawards: 5

Total Subaward Amount: $406,195

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