Raytheon's $130M DoD contract for advanced strike capability faces scrutiny over value and competition

Contract Overview

Contract Amount: $129,943,422 ($129.9M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2023-05-25

End Date: 2026-03-15

Contract Duration: 1,025 days

Daily Burn Rate: $126.8K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 999

Pricing Type: COST PLUS FIXED FEE

Sector: R&D

Official Description: THE OBJECTIVE OF FUTURE ADVANCED STRIKE (FAST) IS TO ENABLE THE CUSTOMERS INTENDED CONCEPT OF OPERATIONS (CONOP) TO PROVIDE INTELLIGENCE, SURVEILLANCE AND RECONNAISSANCE (ISR) AND PRECISION STRIKE CAPABILITY.

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $129.9 million to RAYTHEON COMPANY for work described as: THE OBJECTIVE OF FUTURE ADVANCED STRIKE (FAST) IS TO ENABLE THE CUSTOMERS INTENDED CONCEPT OF OPERATIONS (CONOP) TO PROVIDE INTELLIGENCE, SURVEILLANCE AND RECONNAISSANCE (ISR) AND PRECISION STRIKE CAPABILITY. Key points: 1. Contract aims to enhance ISR and precision strike capabilities. 2. Significant investment in R&D for advanced defense technologies. 3. Competition level may impact price discovery and taxpayer value. 4. Contract duration extends over two years, indicating a substantial project. 5. Performance metrics and oversight mechanisms are critical for success. 6. Geographic focus on Arizona suggests potential regional economic impact.

Value Assessment

Rating: fair

The contract's value of $129.9 million for R&D in advanced strike capabilities requires careful benchmarking against similar defense research initiatives. While the specific deliverables are not detailed, the cost-plus-fixed-fee structure necessitates close monitoring of expenditures to ensure efficiency. Without comparable contract data for similar advanced strike R&D, assessing the precise value for money is challenging, but the scale suggests a significant investment in cutting-edge technology.

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 foster price discovery and encourage innovation among contractors. The number of bidders and the specific evaluation criteria would provide further insight into the robustness of the competition and its potential impact on the final price.

Taxpayer Impact: A competitive award process is beneficial for taxpayers as it increases the likelihood of securing the best possible price and innovative solutions for advanced defense capabilities.

Public Impact

The Department of the Navy benefits from advancements in intelligence, surveillance, reconnaissance, and precision strike capabilities. The contract supports the development of next-generation defense technologies. The primary geographic impact is in Arizona, where the contractor is located. The contract may stimulate employment in specialized R&D fields within the defense sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns inherent in cost-plus-fixed-fee R&D contracts.
Ensuring the developed technology meets the evolving CONOPs of the customer.
Assessing the long-term viability and integration of the developed capabilities.

Positive Signals

Awarded through full and open competition, suggesting a robust selection process.
Focus on critical defense capabilities (ISR and precision strike) aligns with national security priorities.
Contractor's established presence in defense contracting may indicate relevant expertise.

Sector Analysis

This contract falls within the Research and Development sector, specifically focusing on physical, engineering, and life sciences, excluding nanotechnology and biotechnology. The defense R&D market is characterized by significant government investment aimed at maintaining technological superiority. Comparable spending benchmarks would typically involve other major defense contracts for advanced systems development, where innovation and specialized expertise are paramount.

Small Business Impact

The contract data indicates that small business participation (ss: false, sb: false) was not a primary set-aside consideration for this specific award. This suggests that the primary focus was on securing specialized capabilities from larger, established entities. Subcontracting opportunities for small businesses may exist but are not explicitly detailed in the provided information. The impact on the small business ecosystem is likely indirect, potentially through innovation spillover or future technology adoption.

Oversight & Accountability

Oversight for this contract will likely be managed by the Department of the Navy, with specific mechanisms for monitoring cost, schedule, and performance. The cost-plus-fixed-fee structure necessitates rigorous financial oversight to prevent cost overruns. Transparency will depend on the reporting requirements stipulated in the contract and the agency's commitment to public disclosure of relevant program information. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Future Vertical Lift
Advanced Persistent Threats
Next Generation Air Dominance
Hypersonic Weapons Development
Joint All-Domain Command and Control (JADC2)

Risk Flags

Cost-plus-fixed-fee contracts can lead to cost overruns if not closely monitored.
R&D projects inherently carry technical and schedule risks.
The long contract duration increases exposure to changing technological landscapes and requirements.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $129.9 million to RAYTHEON COMPANY. THE OBJECTIVE OF FUTURE ADVANCED STRIKE (FAST) IS TO ENABLE THE CUSTOMERS INTENDED CONCEPT OF OPERATIONS (CONOP) TO PROVIDE INTELLIGENCE, SURVEILLANCE AND RECONNAISSANCE (ISR) AND PRECISION STRIKE CAPABILITY.

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 $129.9 million.

What is the period of performance?

Start: 2023-05-25. End: 2026-03-15.

What is the specific technological advancement Raytheon is expected to deliver under the FAST program?

The provided data indicates the objective of the Future Advanced Strike (FAST) program is to enable the customer's intended Concept of Operations (CONOP) for Intelligence, Surveillance, and Reconnaissance (ISR) and precision strike capability. While the exact technological advancements are not detailed, this suggests a focus on enhancing sensor capabilities, data processing, targeting systems, or weapon delivery platforms. The contract's R&D nature implies that the specific technologies may still be in development or early integration phases. Further details would likely be found in the contract's Statement of Work (SOW) or technical exhibits, which are not publicly available in this data snippet. The goal is to improve the military's ability to gather intelligence, monitor adversaries, and execute precise attacks.

How does the $129.9 million contract value compare to similar R&D investments in advanced strike capabilities by the DoD?

Benchmarking the $129.9 million contract value against similar R&D investments requires access to historical data on defense contracts for advanced strike technologies. However, this figure represents a substantial investment, typical for programs aiming to develop cutting-edge military capabilities. The DoD consistently invests billions annually in R&D across various domains, including aerospace, cyber, and electronic warfare, to maintain a technological edge. Contracts of this magnitude often involve multiple years of research and development, complex system integration, and rigorous testing. Without specific comparable contract details, it's difficult to definitively state if this represents high or low value, but it aligns with the significant financial commitment required for advanced defense R&D.

What are the key performance indicators (KPIs) or milestones associated with this contract?

The provided data does not explicitly list the Key Performance Indicators (KPIs) or milestones for this contract. However, given the nature of the contract (Cost Plus Fixed Fee, R&D for ISR and precision strike), typical KPIs would likely revolve around technological readiness levels (TRLs), successful demonstration of specific functionalities (e.g., target acquisition accuracy, data transmission rates), adherence to development schedules, and effective cost management. Milestones would probably include phases like preliminary design review, critical design review, prototype development, system integration, and final testing and evaluation. The Department of the Navy would establish these KPIs and milestones to ensure the contractor progresses effectively towards the program's objectives.

What is Raytheon's track record with similar advanced strike or ISR contracts?

Raytheon, now part of RTX, has a long and extensive track record in developing and producing advanced defense systems, including those related to Intelligence, Surveillance, and Reconnaissance (ISR) and precision strike capabilities. The company has been a major contractor for the U.S. Department of Defense across various platforms, including aircraft, missiles, and sensor systems. Examples of their relevant work include developing radar systems, electro-optical/infrared (EO/IR) sensors, electronic warfare systems, and various guided munitions. Their experience in integrating complex systems and delivering sophisticated defense technologies suggests a strong capability to undertake the FAST program. However, specific performance details on past contracts, including any challenges or successes, would require a deeper dive into contract performance reports and historical data.

What are the potential risks associated with the 'Research and Development in the Physical, Engineering, and Life Sciences' classification for this contract?

The classification 'Research and Development in the Physical, Engineering, and Life Sciences' (NAICS 541715) for this contract implies inherent risks associated with the exploratory and innovative nature of the work. R&D projects often face technical uncertainties, where the desired outcomes may prove difficult or impossible to achieve within the planned scope, budget, or timeline. There's a risk of unforeseen scientific or engineering challenges, requiring significant adjustments to the research approach. Furthermore, the rapid evolution of technology means that the developed solution might become obsolete before or shortly after deployment. Ensuring the technology remains relevant and meets future operational needs is a key R&D risk. The cost-plus-fixed-fee structure, while allowing flexibility, also carries a risk of cost escalation if not managed tightly.

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 › C – National Defense R&D Services

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: BASIC RESEARCH

Solicitation ID: N0001422SB001

Offers Received: 999

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: RTX Corp

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: $146,664,212

Exercised Options: $146,664,212

Current Obligation: $129,943,422

Subaward Activity

Number of Subawards: 51

Total Subaward Amount: $12,199,536

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline