DoD's $55M Raytheon Contract for Kinetic Response Improvements Faces Scrutiny Over Value and Competition

Contract Overview

Contract Amount: $55,023,423 ($55.0M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2025-06-26

End Date: 2026-06-30

Contract Duration: 369 days

Daily Burn Rate: $149.1K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: CET, 25-518: KU-RFS KINETIC RESPONSE IMPROVEMENTS (KUKRI)

Place of Performance

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

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $55.0 million to RAYTHEON COMPANY for work described as: CET, 25-518: KU-RFS KINETIC RESPONSE IMPROVEMENTS (KUKRI) Key points: 1. The $55 million contract for KUKRI program raises questions about cost-effectiveness given the 'Cost Plus Fixed Fee' structure. 2. Full and open competition was cited, but the specific impact on price discovery needs further examination. 3. Potential risks include cost overruns inherent in CPFF contracts and the effectiveness of the kinetic response improvements. 4. The Defense sector, particularly microelectronics, often involves complex R&D, making benchmarks difficult but essential.

Value Assessment

Rating: questionable

The Cost Plus Fixed Fee (CPFF) contract type can lead to higher costs for the government compared to fixed-price contracts, especially if cost controls are not robust. Benchmarking is difficult without detailed cost breakdowns.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

While advertised as full and open competition, the effectiveness of this method in achieving the best value for this specific engineering service contract is unclear. The CPFF structure may limit the incentive for the contractor to aggressively control costs.

Taxpayer Impact: Taxpayer funds are committed to a contract type that carries inherent cost risks. Ensuring robust oversight is crucial to mitigate potential overspending and maximize the value derived from the investment.

Public Impact

The contract aims to improve kinetic response capabilities, potentially impacting national security readiness. Raytheon Company, a major defense contractor, is awarded the contract, indicating reliance on established industry players. The duration of the contract (369 days) suggests a focused effort on specific improvements rather than a long-term program.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Fixed Fee contract type
Potential for cost overruns
Limited transparency on cost efficiency

Positive Signals

Full and open competition cited
Focus on critical defense capabilities

Sector Analysis

This contract falls within the Engineering Services sector, specifically supporting defense microelectronics. Spending in this area is often driven by technological advancements and national security requirements, with significant investment typically seen in R&D and specialized manufacturing.

Small Business Impact

The contract was awarded to Raytheon Company, a large defense contractor. There is no indication that small businesses were involved as prime contractors or significant subcontractors in this specific award.

Oversight & Accountability

Given the CPFF contract type, rigorous oversight by the Defense Microelectronics Activity is essential to monitor costs, track progress, and ensure the contractor is managing the project efficiently and effectively to meet the defined objectives.

Related Government Programs

Engineering Services
Department of Defense Contracting
Defense Microelectronics Activity Programs

Risk Flags

Cost Plus Fixed Fee contract type increases government cost risk.
Potential for scope creep and cost overruns.
Effectiveness of 'kinetic response improvements' is not yet proven.
Lack of transparency on specific cost drivers and profit margins.
Reliance on a single large contractor may limit future innovation.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $55.0 million to RAYTHEON COMPANY. CET, 25-518: KU-RFS KINETIC RESPONSE IMPROVEMENTS (KUKRI)

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 $55.0 million.

What is the period of performance?

Start: 2025-06-26. End: 2026-06-30.

What specific metrics will be used to evaluate the 'kinetic response improvements' and ensure they meet the program's objectives?

The effectiveness of the improvements will likely be measured through a combination of technical performance tests, simulation results, and operational readiness assessments. Key performance parameters (KPPs) should be clearly defined in the contract to ensure objective evaluation and accountability for achieving the desired enhancements in kinetic response capabilities.

How does the 'full and open competition' process ensure cost-effectiveness for a Cost Plus Fixed Fee contract in the defense microelectronics sector?

While full and open competition aims to solicit the best offers, the CPFF structure itself shifts risk to the government. Effective price discovery in this context relies heavily on the government's ability to negotiate a fair fixed fee and establish robust cost accounting standards and oversight mechanisms to prevent unnecessary expenditures by the contractor.

What is the potential long-term impact of these 'kinetic response improvements' on the Department of Defense's overall capabilities and budget?

The long-term impact depends on the success and scalability of the improvements. If successful, they could enhance operational effectiveness and potentially reduce risks in future engagements. However, the CPFF structure necessitates careful budget management to avoid escalating costs that could strain future defense spending allocations.

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

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: $55,023,423

Exercised Options: $55,023,423

Current Obligation: $55,023,423

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