DoD's $194.5M MK 15 Phalanx System R&D contract awarded to Raytheon Company, highlighting significant investment in defense technology

Contract Overview

Contract Amount: $194,519,008 ($194.5M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2007-11-07

End Date: 2012-08-31

Contract Duration: 1,759 days

Daily Burn Rate: $110.6K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: MK 15 PHALANX CLOSE-IN WEAPON SYSTEM RESEARCH AND DEVELOPMENT PROGRAMS

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $194.5 million to RAYTHEON COMPANY for work described as: MK 15 PHALANX CLOSE-IN WEAPON SYSTEM RESEARCH AND DEVELOPMENT PROGRAMS Key points: 1. Contract awarded for research and development of the MK 15 Phalanx Close-In Weapon System, a critical defense asset. 2. Significant investment in R&D suggests a focus on enhancing or maintaining advanced defensive capabilities. 3. Sole-source award to Raytheon Company indicates a reliance on specialized expertise or existing system knowledge. 4. Contract duration of nearly 5 years points to a complex and potentially evolving research scope. 5. The award falls under Guided Missile and Space Vehicle Manufacturing, a specialized and high-tech sector. 6. Geographic location in Arizona may indicate a concentration of defense R&D activities in the region.

Value Assessment

Rating: fair

Benchmarking the value of this R&D contract is challenging without specific deliverables or comparable R&D efforts. The $194.5 million awarded over nearly five years suggests a substantial investment, but the value-for-money depends heavily on the technological advancements achieved. Without detailed performance metrics or comparisons to similar R&D programs for weapon systems, it's difficult to definitively assess if this represents excellent or questionable value. The cost-plus-fixed-fee structure implies that costs were estimated and a fixed fee was added, which can sometimes lead to cost overruns if not managed tightly.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis to Raytheon Company. This typically occurs when a specific contractor possesses unique capabilities, proprietary technology, or is the sole provider of a necessary component or service. For R&D, it often means the contractor has existing expertise or intellectual property related to the system being developed. The lack of competition means that pricing and innovation were not tested against other potential providers, which could potentially lead to higher costs than a competitive bid process.

Taxpayer Impact: Sole-source awards can mean taxpayers may not benefit from the cost savings that competition typically drives. The government relies on negotiation and oversight to ensure fair pricing in such cases.

Public Impact

The primary beneficiaries are the U.S. Department of Defense, which receives advanced weapon system research and development. The contract supports the development and enhancement of the MK 15 Phalanx Close-In Weapon System, crucial for naval defense. Geographic impact is concentrated in Arizona, where Raytheon Company's facilities are located, potentially supporting local employment in the defense sector. Workforce implications include specialized engineers, scientists, and technicians involved in advanced defense R&D.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially impacting cost-effectiveness.
Cost-plus-fixed-fee contracts can incentivize cost increases if not rigorously monitored.
R&D contracts inherently carry risk of not achieving desired technological outcomes within budget or timeline.

Positive Signals

Award to Raytheon, a known defense contractor, suggests access to established expertise and infrastructure.
Focus on R&D for a critical weapon system indicates a commitment to maintaining and improving national security capabilities.
The contract duration suggests a comprehensive and potentially long-term development effort.

Sector Analysis

The defense industry, particularly the Guided Missile and Space Vehicle Manufacturing sector, is characterized by high R&D investment and specialized technological requirements. Contracts like this are essential for maintaining a technological edge in defense. Raytheon Company is a major player in this sector, known for developing and producing advanced defense systems. Spending in this area is often driven by evolving threats and the need for sophisticated countermeasures. Comparable spending benchmarks would typically involve other major R&D programs for advanced weapon systems, which are often classified or highly specific.

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 specialized R&D focus, it's unlikely that subcontracting opportunities for small businesses were a primary consideration in the contract's structure. However, Raytheon, as a large prime contractor, may engage small businesses for specific components or services as part of its broader supply chain, though this is not explicitly detailed in the provided data.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contract management agencies, such as the Defense Contract Management Agency (DCMA), which is listed as the 'sa'. Accountability measures would be tied to the terms of the cost-plus-fixed-fee agreement, requiring Raytheon to report on progress, expenditures, and adherence to research objectives. Transparency in sole-source R&D contracts can be limited due to the proprietary nature of the work and national security considerations, but regular reporting and audits are standard oversight mechanisms.

Related Government Programs

Phalanx CIWS Program
Naval Surface Warfare
Missile Defense Systems R&D
Advanced Weapon Systems Development
Department of Defense Research and Development

Risk Flags

Sole-source award may limit cost competition.
Cost-plus-fixed-fee contracts require diligent oversight to manage cost risks.
R&D programs inherently carry technical and schedule risks.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $194.5 million to RAYTHEON COMPANY. MK 15 PHALANX CLOSE-IN WEAPON SYSTEM RESEARCH AND DEVELOPMENT PROGRAMS

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 $194.5 million.

What is the period of performance?

Start: 2007-11-07. End: 2012-08-31.

What is the historical spending trend for the MK 15 Phalanx Close-In Weapon System program, and how does this $194.5M R&D contract fit within that trend?

Analyzing historical spending for the MK 15 Phalanx Close-In Weapon System requires access to detailed procurement and R&D data over its lifecycle. The Phalanx system has been in service for decades, undergoing various upgrades and modifications. This $194.5 million R&D contract, awarded in 2007 and ending in 2012, represents a significant investment during that specific period for research and development purposes. Without a broader historical dataset, it's difficult to definitively place this contract within a long-term trend. However, R&D funding for such critical defense systems is often cyclical, driven by technological obsolescence, emerging threats, and strategic defense reviews. This contract likely aimed to address specific technological advancements or sustainment needs for the system during its operational life.

What specific technological advancements or research objectives were pursued under this $194.5M R&D contract with Raytheon?

The provided data indicates the contract was for 'RESEARCH AND DEVELOPMENT PROGRAMS' related to the 'MK 15 PHALANX CLOSE-IN WEAPON SYSTEM'. Specific technological advancements are not detailed in the summary data. However, R&D for the Phalanx system typically focuses on areas such as improving target detection and tracking capabilities, enhancing engagement effectiveness against modern threats (like anti-ship missiles and aircraft), increasing system reliability, reducing maintenance requirements, and potentially integrating new sensor or effector technologies. Given the contract's duration (nearly 5 years), it likely encompassed a substantial research effort, possibly involving simulation, prototyping, testing, and evaluation of new system components or software.

How does the cost-plus-fixed-fee (CPFF) contract type potentially impact the final cost and oversight requirements for this R&D program?

The Cost-Plus-Fixed-Fee (CPFF) contract type means that Raytheon was reimbursed for all allowable costs incurred during the R&D program, plus a predetermined fixed fee representing profit. For R&D, CPFF can be advantageous when the scope of work is uncertain or subject to change, as it allows flexibility to explore different research avenues. However, it also shifts some of the cost risk to the government. The fixed fee provides a profit incentive, but the government bears the risk of cost overruns if actual costs exceed estimates. This necessitates robust oversight from the Defense Contract Management Agency (DCMA) to ensure that all costs claimed are allowable, reasonable, and allocable to the contract, and that the contractor is making diligent progress towards the R&D objectives.

What is Raytheon Company's track record in developing and producing close-in weapon systems, particularly the Phalanx CIWS?

Raytheon Company has a long and established track record in developing and producing advanced defense systems, including the Phalanx Close-In Weapon System (CIWS). Raytheon has been the prime contractor responsible for the design, development, manufacturing, and sustainment of the Phalanx system for many years. The system is a vital component of naval defense for numerous U.S. Navy ships and allied navies worldwide. Raytheon's continuous involvement suggests deep expertise and a strong understanding of the system's requirements and evolution. Their history with the Phalanx program indicates a capability to manage complex R&D efforts and deliver reliable weapon systems, making them a logical sole-source provider for related research and development initiatives.

Given this was a sole-source award, what mechanisms were likely in place to ensure fair and reasonable pricing for the government?

Even in sole-source procurements, the government is obligated to ensure fair and reasonable pricing. For this contract, mechanisms likely included: 1) Price negotiation based on historical pricing data for similar R&D efforts or previous Phalanx system contracts. 2) Contractor cost and pricing data submission requirements, where Raytheon would have to provide detailed cost breakdowns and justifications for their proposed costs and fee. 3) Technical and management reviews by government personnel (e.g., engineers, program managers) to assess the realism of the proposed effort and costs. 4) Independent government cost estimates (IGCE) to serve as a benchmark during negotiations. 5) Audit by the Defense Contract Audit Agency (DCAA) to verify the allowability and reasonableness of costs claimed by the contractor.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Guided Missile and Space Vehicle Manufacturing

Product/Service Code: GUIDED MISSLES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: RTX Corp

Address: 1151 E HERMANS RD, TUCSON, AZ, 85706

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $197,548,604

Exercised Options: $197,548,604

Current Obligation: $194,519,008

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline