Raytheon Company awarded $23.3M for Naval Surveillance Application Upgrade, a Research and Development contract

Contract Overview

Contract Amount: $23,287,384 ($23.3M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2020-02-27

End Date: 2026-03-26

Contract Duration: 2,219 days

Daily Burn Rate: $10.5K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 99

Pricing Type: COST PLUS FIXED FEE

Sector: R&D

Official Description: NAVAL SURVEILLANCE APPLICATION UPGRADE

Place of Performance

Location: MCKINNEY, COLLIN County, TEXAS, 75071

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $23.3 million to RAYTHEON COMPANY for work described as: NAVAL SURVEILLANCE APPLICATION UPGRADE Key points: 1. Contract awarded via full and open competition, suggesting a competitive bidding process. 2. The contract type is Cost Plus Fixed Fee, which can lead to cost overruns if not managed carefully. 3. Performance period spans over 5 years, indicating a long-term investment in surveillance technology. 4. The NAICS code 541715 points to significant R&D investment in physical and engineering sciences. 5. The contract is managed by the Department of the Navy, a key defense agency. 6. The award amount of $23.3M is substantial for a single R&D application upgrade.

Value Assessment

Rating: fair

Benchmarking the value of this R&D contract is challenging without specific performance metrics and comparable project costs. The Cost Plus Fixed Fee structure introduces inherent risk for cost escalation. However, the fixed fee component provides some predictability for the contractor's profit margin. Further analysis would require understanding the specific technological advancements sought and their market value.

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 environment is generally expected to drive better pricing and innovation. The number of bidders (99) is exceptionally high, suggesting strong market interest and a robust competition.

Taxpayer Impact: A high level of competition typically benefits taxpayers by fostering a more efficient market, leading to potentially lower costs and higher quality solutions.

Public Impact

The primary beneficiaries are the Department of the Navy, which will receive an upgraded surveillance application. This upgrade is expected to enhance naval surveillance capabilities, potentially improving operational effectiveness and national security. The contract is being performed in Texas, implying potential economic benefits and job creation within the state. The R&D nature of the contract suggests advancements in technology that could have broader applications beyond the immediate naval requirement.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Fixed Fee contracts can incentivize contractors to incur higher costs to increase the fixed fee base, although the fixed fee itself is capped.
Long performance periods (over 5 years) increase the risk of scope creep or technological obsolescence if not managed proactively.
The specific details of the 'surveillance application' are not provided, making it difficult to assess the criticality and potential risks associated with its failure or underperformance.

Positive Signals

Awarded through full and open competition with a high number of bidders (99), indicating a healthy and competitive market.
The contract is for a critical function (naval surveillance), suggesting a strong need and potential for significant operational improvements.
The fixed fee component provides a degree of cost certainty for the government regarding contractor profit.

Sector Analysis

This contract falls within the Research and Development sector, specifically focusing on physical, engineering, and life sciences. The market for defense-related R&D is substantial, driven by continuous technological advancements and evolving security needs. Comparable spending in this sector often involves significant investment in areas like artificial intelligence, advanced materials, and sophisticated sensor technologies for defense applications.

Small Business Impact

The contract does not indicate any specific small business set-asides. Given the nature of advanced R&D and the prime contractor (Raytheon Company), it is likely that small businesses may participate as subcontractors. Further investigation into subcontracting plans would be necessary to assess the impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would typically be managed by the Department of the Navy's contracting and program management offices. Accountability measures would be embedded in the contract's terms, including performance milestones and reporting requirements. Transparency is often limited in defense R&D contracts due to national security considerations, but contract awards and basic details are publicly available.

Related Government Programs

Naval Warfare Systems
Defense Research and Development
Surveillance and Reconnaissance Technology
Information Technology Services
Advanced Engineering Services

Risk Flags

Cost Plus Fixed Fee contract type carries inherent risk of cost escalation.
Long performance period (over 5 years) increases risk of technological obsolescence or scope creep.
Lack of specific details on application functionality limits assessment of performance risks.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $23.3 million to RAYTHEON COMPANY. NAVAL SURVEILLANCE APPLICATION UPGRADE

Who is the contractor on this award?

The obligated recipient is RAYTHEON COMPANY.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Navy).

What is the total obligated amount?

The obligated amount is $23.3 million.

What is the period of performance?

Start: 2020-02-27. End: 2026-03-26.

What is the specific nature of the 'Naval Surveillance Application' being upgraded, and what are the key performance improvements expected?

The specific details of the 'Naval Surveillance Application' are not publicly disclosed due to its sensitive nature related to national security and defense operations. However, upgrades in this domain typically aim to enhance capabilities such as target detection, tracking, identification, and data processing. Expected performance improvements could include increased accuracy, reduced false alarm rates, expanded operational range, improved real-time data analysis, enhanced integration with other naval systems, and greater resilience against electronic warfare. The R&D focus suggests the development of novel algorithms, sensor fusion techniques, or advanced user interfaces to achieve these improvements.

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

Cost Plus Fixed Fee (CPFF) contracts are common for R&D projects where the scope is not fully defined or is expected to evolve. In a CPFF contract, the government reimburses the contractor for allowable costs and pays a fixed fee representing profit. This structure incentivizes the contractor to control costs, as the fee is fixed regardless of the final cost. However, it can also lead to cost overruns if initial estimates are inaccurate or if the project scope expands significantly. Compared to Firm-Fixed-Price (FFP) contracts, CPFF offers more flexibility for evolving R&D but less cost certainty for the government. Compared to Cost Plus Incentive Fee (CPIF) contracts, the profit is fixed rather than variable based on performance targets.

What are the potential risks associated with a 5-year performance period for an R&D contract in a rapidly evolving technological field?

A 5-year performance period for an R&D contract in a rapidly evolving technological field presents several risks. Firstly, technological obsolescence is a significant concern; the technology developed at the beginning of the contract might be outdated by the time it is fully implemented or by the end of the performance period. Secondly, the scope of work may need to adapt to unforeseen technological breakthroughs or changes in strategic requirements, potentially leading to contract modifications and cost increases. Thirdly, maintaining contractor focus and motivation over such a long duration can be challenging. Finally, the initial assumptions and requirements might become misaligned with current needs, necessitating substantial re-scoping or even project termination, which can be costly.

Given the high number of bidders (99), what does this indicate about the market competitiveness for naval surveillance application R&D?

The exceptionally high number of bidders (99) for this naval surveillance application R&D contract strongly indicates a highly competitive market. This suggests that there are numerous companies with the capability and interest in developing advanced surveillance technologies for the Department of the Navy. Such robust competition is generally favorable for the government, as it increases the likelihood of receiving innovative proposals, achieving better pricing, and selecting the most capable contractor. It also implies that the barriers to entry for qualified R&D firms in this specific niche might be relatively low, or that the contract's potential value and strategic importance are widely recognized.

What is Raytheon Company's track record with similar R&D contracts for the Department of Defense, particularly in surveillance technologies?

Raytheon Company (now RTX) has a long and extensive track record of developing and delivering advanced technologies, including surveillance and sensor systems, for the Department of Defense and other government agencies. They are a major defense contractor with significant expertise in areas like radar, electro-optical/infrared systems, and command and control. While specific details on all their R&D contracts are not always public, their history includes numerous large-scale programs involving complex system development and integration. Their performance on similar contracts would generally be assessed based on factors like on-time delivery, adherence to budget, technical success, and overall system effectiveness, which can be reviewed through contract performance databases and historical award data.

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: RESEARCH AND DEVELOPMENT › DEFENSE (OTHER) R&D

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: BASIC RESEARCH

Solicitation ID: N0001419SB001

Offers Received: 99

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: RTX Corp

Address: 2501 W UNIVERSITY DR, MCKINNEY, TX, 75071

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: $23,287,384

Exercised Options: $23,287,384

Current Obligation: $23,287,384

Subaward Activity

Number of Subawards: 41

Total Subaward Amount: $6,891,945

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline