Raytheon Company awarded $31.8M for Exo-Atmospheric Kill Vehicle Software Development by Missile Defense Agency

Contract Overview

Contract Amount: $31,766,740 ($31.8M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2023-06-02

End Date: 2027-01-31

Contract Duration: 1,339 days

Daily Burn Rate: $23.7K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS INCENTIVE FEE

Sector: R&D

Official Description: EXO-ATMOSPHERIC KILL VEHICLE (EKV) SOFTWARE 12.0 DEVELOPMENT AND DELIVERY

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $31.8 million to RAYTHEON COMPANY for work described as: EXO-ATMOSPHERIC KILL VEHICLE (EKV) SOFTWARE 12.0 DEVELOPMENT AND DELIVERY Key points: 1. Contract awarded as a sole-source, indicating limited competition. 2. Research and Development focus within the physical sciences sector. 3. Long performance period of over three years suggests complex development. 4. Cost-plus incentive fee contract type allows for shared risk and reward. 5. High value contract for a critical defense system component. 6. Missile Defense Agency is the primary customer for this specialized technology.

Value Assessment

Rating: questionable

Benchmarking the value of this specific contract is challenging due to its specialized nature and sole-source award. The cost-plus incentive fee structure suggests that while there are incentives for efficiency, the government bears a significant portion of the cost risk. Without comparable sole-source contracts for similar EKV software development, a definitive value-for-money assessment is difficult. However, the substantial award amount for a critical defense component warrants close scrutiny of cost drivers and performance metrics.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, Raytheon Company, was solicited. This approach is typically used when a unique capability or proprietary technology is required, or when there is insufficient time to conduct a competitive procurement. The lack of competition means that price discovery through market forces was not utilized, potentially leading to higher costs for the government.

Taxpayer Impact: Taxpayers may face higher costs due to the absence of competitive bidding. The government relies on the contractor's proposed pricing and negotiation to ensure a fair price, which can be less effective than a competitive process.

Public Impact

The primary beneficiaries are the U.S. Department of Defense, specifically the Missile Defense Agency, which will receive advanced EKV software. The services delivered include the development and delivery of critical software for missile defense systems. The geographic impact is primarily within Arizona, where Raytheon's operations are located, but the ultimate impact is national security. Workforce implications include specialized software engineering and development roles within Raytheon.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure on pricing.
Cost-plus incentive fee structure shifts some cost risk to the government.
Long contract duration may lead to scope creep or cost overruns if not managed tightly.
Lack of transparency in sole-source justification requires careful review.

Positive Signals

Award to a known contractor with existing expertise in missile defense systems.
Focus on R&D for a critical national security capability.
Incentive fee structure aims to align contractor and government interests.
Missile Defense Agency's oversight is expected to be rigorous for such a critical system.

Sector Analysis

This contract falls within the Research and Development sector, specifically focusing on advanced software for missile defense systems. The market for such specialized defense technology is highly concentrated, with a few prime contractors dominating. Spending in this area is driven by national security priorities and technological advancements in threat capabilities. Comparable spending benchmarks are difficult to establish due to the unique nature of EKV software, but overall defense R&D spending is in the tens of billions annually.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb: false'. Raytheon Company is a large prime contractor. There is no explicit information provided regarding subcontracting plans for small businesses. The focus on specialized R&D may limit opportunities for broad small business participation, though specific component or service needs could potentially be subcontracted.

Oversight & Accountability

Oversight for this contract will likely be managed by the Missile Defense Agency, given its critical nature. As a sole-source award, transparency may be limited compared to competitively bid contracts. Accountability measures will be tied to the cost-plus incentive fee structure, performance milestones, and delivery schedules. The Inspector General's office within the Department of Defense would have jurisdiction for audits and investigations if any irregularities were suspected.

Related Government Programs

Missile Defense Systems
Ballistic Missile Defense
Ground-based Midcourse Defense (GMD)
Aegis Ballistic Missile Defense System
Standard Missile-3 (SM-3)

Risk Flags

Sole Source Award
Cost-Plus Incentive Fee Contract Type
Long Contract Duration
Critical Defense System Component

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $31.8 million to RAYTHEON COMPANY. EXO-ATMOSPHERIC KILL VEHICLE (EKV) SOFTWARE 12.0 DEVELOPMENT AND DELIVERY

Who is the contractor on this award?

The obligated recipient is RAYTHEON COMPANY.

Which agency awarded this contract?

Awarding agency: Department of Defense (Missile Defense Agency).

What is the total obligated amount?

The obligated amount is $31.8 million.

What is the period of performance?

Start: 2023-06-02. End: 2027-01-31.

What is Raytheon Company's track record with the Missile Defense Agency and similar contracts?

Raytheon Company, now part of RTX, has a long and extensive history of working with the Missile Defense Agency (MDA) and the Department of Defense (DoD) on various missile defense programs. They are a key contractor for several components of the U.S. missile defense architecture, including radar systems, interceptors, and associated software. Their experience includes developing and delivering complex systems under various contract types, often involving research, development, testing, and production. Given their established role in missile defense, Raytheon possesses significant institutional knowledge and technical expertise relevant to the EKV software development. Past performance reviews and contract histories with the MDA would provide further detail on their reliability and success rates in delivering on complex defense contracts.

How does the $31.8 million award compare to historical spending on EKV software development?

Direct historical spending comparisons for 'Exo-Atmospheric Kill Vehicle (EKV) Software 12.0 Development and Delivery' are difficult to ascertain without access to specific historical contract databases and line items. However, the $31.8 million figure represents a significant investment in a critical component of missile defense. EKV development is inherently complex and costly, involving advanced research and engineering. The Missile Defense Agency's overall budget runs into billions of dollars annually, supporting a wide array of programs. This specific award, while substantial, should be viewed within the context of the broader MDA portfolio and the ongoing need for technological advancement in missile defense capabilities. Without more granular data on previous EKV software iterations or comparable projects, a precise historical comparison is challenging.

What are the primary risks associated with this sole-source, cost-plus incentive fee contract?

The primary risks associated with this sole-source, cost-plus incentive fee (CPIF) contract are multifaceted. Firstly, the sole-source nature eliminates competitive pressure, potentially leading to less favorable pricing for the government and a reduced incentive for the contractor to minimize costs aggressively. Secondly, the CPIF structure, while incentivizing performance, means the government shares in cost overruns if targets are not met, and the contractor benefits from cost savings if targets are exceeded. This can create complex negotiation dynamics. Thirdly, the long performance period (over three years) increases the risk of scope creep, evolving requirements, and potential cost escalation if not managed meticulously. Finally, the inherent complexity of developing advanced software for a critical defense system like the EKV introduces technical risks, such as integration challenges, performance issues, and cybersecurity vulnerabilities.

How effective is the Missile Defense Agency in managing R&D contracts of this nature?

The Missile Defense Agency (MDA) generally has a robust framework for managing complex Research and Development (R&D) contracts, given its mission-critical focus. They employ program managers, systems engineers, and contracting officers with specialized expertise. For contracts like this EKV software development, oversight typically involves rigorous milestone tracking, technical reviews, and performance assessments. The CPIF structure itself is a management tool designed to align contractor and government interests. However, the effectiveness can vary depending on specific program challenges, contractor performance, and the adequacy of government oversight resources. Sole-source awards, while sometimes necessary, require particularly diligent oversight to ensure fair pricing and prevent potential inefficiencies. The agency's history includes both successes and challenges in managing large-scale, technologically advanced programs.

What are the potential long-term implications of this contract for U.S. missile defense capabilities?

This contract has significant long-term implications for U.S. missile defense capabilities by focusing on the development and delivery of advanced software for the Exo-Atmospheric Kill Vehicle (EKV). The EKV is a crucial component of the nation's ballistic missile defense system, responsible for intercepting incoming threats in space. Enhancements to its software directly impact the system's ability to track, discriminate, and neutralize targets more effectively. Successful development under this contract could lead to improved performance, greater reliability, and potentially expanded operational envelopes for the missile defense system. Conversely, delays or technical shortcomings could impact the overall readiness and effectiveness of U.S. strategic defense, potentially necessitating further investment or program adjustments down the line.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Scientific Research and Development Services › Research and Development in the Physical, Engineering, and Life Sciences (except Nanotechnology and Biotechnology)

Product/Service Code: MODIFICATION OF EQUIPMENT › MODIFICATION OF EQUIPMENT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: HQ085622R0004

Pricing Type: COST PLUS INCENTIVE FEE (V)

Evaluated Preference: NONE

Contractor Details

Parent Company: Rockwell Collins Australia PTY Limited

Address: 1151 E HERMANS RD, TUCSON, AZ, 85756

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: $84,500,000

Exercised Options: $84,500,000

Current Obligation: $31,766,740

Actual Outlays: $10,549,887

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: HQ085623D0002

IDV Type: IDC

Timeline