DoD's $718M R&D contract with Raytheon Company awarded without competition

Contract Overview

Contract Amount: $718,249,326 ($718.2M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2004-09-03

End Date: 2011-09-30

Contract Duration: 2,583 days

Daily Burn Rate: $278.1K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS AWARD FEE

Sector: R&D

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $718.2 million to RAYTHEON COMPANY for work described as: Key points: 1. Contract awarded on a cost-plus-award-fee basis, allowing for flexibility but potentially higher costs. 2. Significant duration of over 7 years suggests a long-term R&D effort. 3. The contract's sole-source nature raises questions about price discovery and potential overpayment. 4. Research and Development in Physical, Engineering, and Life Sciences is a critical but often complex area for oversight. 5. Awarded to a major defense contractor, indicating a focus on established capabilities. 6. The contract's value of over $700 million represents a substantial investment in R&D.

Value Assessment

Rating: questionable

Benchmarking the value of this $718 million R&D contract is challenging due to its sole-source nature and cost-plus-award-fee structure. Without competitive bids, it's difficult to ascertain if the pricing reflects fair market value. The cost-plus-award-fee (CPAF) structure incentivizes performance but can lead to costs exceeding initial estimates if not tightly managed. Comparing it to similar sole-source R&D contracts would be necessary for a more precise value assessment, but the lack of competition inherently limits the ability to guarantee optimal value for taxpayers.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed. This typically occurs when only one responsible source can provide the required goods or services. For R&D efforts, this might be due to unique intellectual property, specialized expertise, or national security considerations. However, the absence of competition means there were no other bidders, and therefore no direct price comparison or negotiation leverage was exercised through a bidding process.

Taxpayer Impact: Sole-source awards limit opportunities for other businesses to compete for government contracts and can potentially lead to higher costs for taxpayers due to the lack of competitive pressure.

Public Impact

The primary beneficiaries are the Department of Defense and potentially the advancement of physical, engineering, and life sciences research. The contract supports advanced research and development activities, the specific outcomes of which are not detailed. Geographic impact is centered in Arizona, where Raytheon Company is located. Workforce implications include employment for researchers, engineers, and support staff at Raytheon.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may result in suboptimal pricing.
Cost-plus-award-fee contracts require rigorous oversight to control costs.
Long contract duration increases the risk of scope creep or evolving requirements not being adequately addressed.

Positive Signals

Awarded to a large, established defense contractor with a track record.
Focus on R&D indicates investment in future capabilities.
Cost-plus-award-fee structure can incentivize meeting or exceeding performance targets.

Sector Analysis

This contract falls within the Research and Development sector, specifically focusing on physical, engineering, and life sciences. This is a critical area for defense innovation, often involving significant investment in cutting-edge technologies. The market for defense R&D is dominated by large, specialized contractors like Raytheon. Comparable spending benchmarks are difficult to establish for sole-source R&D due to its unique nature, but the overall defense R&D budget runs into 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. Given the sole-source nature and the prime contractor being Raytheon Company, a large defense firm, the likelihood of significant subcontracting opportunities for small businesses is uncertain without further details on the contract's statement of work and subcontracting plans. Large sole-source contracts often have less emphasis on small business participation compared to competed efforts.

Oversight & Accountability

Oversight for this contract would primarily fall under the Defense Contract Management Agency (DCMA) and the awarding agency (Department of Defense). The cost-plus-award-fee structure necessitates close monitoring of costs, performance, and adherence to the contract's objectives. Transparency is limited by the sole-source nature, but contract awards and basic details are typically reported. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Department of Defense Research and Development Programs
Advanced Technology Development Contracts
Raytheon Company Contracts
Cost-Plus-Award-Fee Contracts

Risk Flags

Sole-source award
Cost-plus-award-fee contract type
Lack of detailed performance metrics in public data

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $718.2 million to RAYTHEON COMPANY. See the official description on USAspending.

Who is the contractor on this award?

The obligated recipient is RAYTHEON COMPANY.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $718.2 million.

What is the period of performance?

Start: 2004-09-03. End: 2011-09-30.

What specific research and development activities were undertaken under this contract?

The provided data indicates the contract number and basic details but does not specify the exact nature of the research and development activities. The North American Industry Classification System (NAICS) code 541710 covers 'Research and Development in the Physical, Engineering, and Life Sciences.' This broad category could encompass a wide range of projects, from materials science and aerospace engineering to biotechnology and advanced computing. Without access to the contract's statement of work or associated documentation, the precise R&D focus remains unknown. Further investigation would be required to identify the specific technological advancements or scientific inquiries pursued.

How does the $718 million contract value compare to similar sole-source R&D contracts awarded by the DoD?

Directly comparing this $718 million sole-source R&D contract to similar ones is challenging due to the inherent variability in R&D projects and the limited public data on sole-source awards. However, the value is substantial, placing it among significant investments in defense technology. Sole-source R&D contracts are often awarded for highly specialized or classified projects where competition is not feasible. While the total DoD R&D budget is in the tens of billions, individual sole-source awards of this magnitude suggest a critical, long-term research effort. A more precise comparison would require analyzing the specific technical domain and the duration of comparable sole-source contracts.

What are the potential risks associated with a sole-source, cost-plus-award-fee contract of this magnitude?

Sole-source contracts carry the inherent risk of suboptimal pricing due to the absence of competitive pressure, potentially leading to higher costs for the government. The cost-plus-award-fee (CPAF) structure, while designed to incentivize performance, also introduces risks. If oversight is insufficient, costs can escalate beyond initial projections as the contractor is reimbursed for allowable expenses plus an award fee based on performance. For a $718 million contract spanning over seven years, risks include scope creep, contractor inefficiencies going undetected, and the potential for the award fee to be paid even if performance is merely adequate rather than exceptional, especially if performance metrics are not rigorously defined and monitored.

What is Raytheon Company's track record with similar DoD R&D contracts?

Raytheon Company, now part of RTX, has a long and extensive history of performing research and development contracts for the Department of Defense. As a major defense contractor, it has been involved in numerous high-value R&D efforts across various domains, including missile defense, aerospace, and advanced electronics. While specific performance metrics for past R&D contracts are not publicly detailed in this dataset, Raytheon's continued selection for significant government contracts suggests a generally satisfactory performance record and established capabilities. However, like any large contractor, it may have faced scrutiny or challenges on specific projects over its history.

How has spending on R&D in physical, engineering, and life sciences evolved within the DoD over the contract's duration?

The contract was awarded in September 2004 and ended in September 2011. During this period, the Department of Defense's R&D spending generally saw fluctuations influenced by global security priorities and budget cycles. Post-9/11, there was a significant emphasis on developing technologies for counter-terrorism and asymmetric warfare. R&D in areas like advanced materials, sensor technology, and information systems would have been prioritized. While specific year-over-year figures for NAICS code 541710 are not provided, overall DoD R&D budgets remained substantial, reflecting a continuous need for technological superiority. Budgetary pressures and shifting strategic needs likely influenced the allocation and focus of R&D funds throughout this timeframe.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Scientific Research and Development Services › Research and Development in the Physical, Engineering, and Life Sciences

Product/Service Code: GUIDED MISSLES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS AWARD FEE (R)

Evaluated Preference: NONE

Contractor Details

Address: 1151 EAST HERMANS ROAD, TUCSON, AZ, 85706

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline