DoD's $26.4M Raytheon Contract for Critical Design Review Tasking: A Cost Plus Incentive Fee Analysis

Contract Overview

Contract Amount: $26,410,707 ($26.4M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2013-09-27

End Date: 2020-12-31

Contract Duration: 2,652 days

Daily Burn Rate: $10.0K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 5

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Defense

Official Description: CEC CAB FOA CRITICAL DESIGN REVIEW (CDR) TASKING

Place of Performance

Location: SEMINOLE, PINELLAS County, FLORIDA, 33777

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $26.4 million to RAYTHEON COMPANY for work described as: CEC CAB FOA CRITICAL DESIGN REVIEW (CDR) TASKING Key points: 1. The contract awarded to Raytheon Company for $26.4M focuses on critical design review tasking for naval systems. 2. Competition was full and open, suggesting a potentially competitive pricing environment. 3. The Cost Plus Incentive Fee (CPIF) structure introduces performance-based incentives but also carries inherent cost escalation risks. 4. The sector is IT/Defense, specifically related to Search, Detection, Navigation, Guidance, Aeronautical, and Nautical systems.

Value Assessment

Rating: fair

The contract's Cost Plus Incentive Fee (CPIF) structure can lead to costs exceeding initial estimates if incentives are not carefully managed. Benchmarking against similar CDR tasking contracts is difficult without more granular cost data.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

Full and open competition was utilized, which typically fosters competitive pricing. However, the CPIF contract type means the final price is subject to performance and cost outcomes, impacting precise price discovery.

Taxpayer Impact: Taxpayer funds are utilized for this critical design review. The CPIF structure aims for efficiency, but potential cost overruns could increase the overall taxpayer burden.

Public Impact

Enhances national security through advanced naval system design. Supports technological advancement in defense systems. Potential for job creation within the defense industry. Ensures critical components of naval operations meet rigorous design standards.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

CPIF contract type risk of cost overruns.
Lack of specific performance metrics for incentive calculation.
Long contract duration (2013-2020) may obscure current market relevance.

Positive Signals

Full and open competition.
Focus on critical design review ensures foundational quality.
Awarded to a major defense contractor with proven capabilities.

Sector Analysis

This contract falls within the Defense sector, specifically focusing on advanced navigation and guidance systems. Spending in this area is crucial for maintaining technological superiority in naval operations, with benchmarks varying widely based on system complexity and technological innovation.

Small Business Impact

The data indicates the award went to Raytheon Company, a large business. There is no explicit indication of small business subcontracting in the provided data, which could be an area for further review.

Oversight & Accountability

The contract's duration and CPIF structure warrant oversight to ensure cost control and adherence to design specifications. Regular reviews of performance against incentive targets are essential for accountability.

Related Government Programs

Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing
Department of Defense Contracting
Department of the Navy Programs

Risk Flags

Cost overrun potential due to CPIF structure.
Lack of transparency on specific incentive metrics.
Long contract duration may impact relevance of final outcomes.
No explicit mention of small business participation.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $26.4 million to RAYTHEON COMPANY. CEC CAB FOA CRITICAL DESIGN REVIEW (CDR) TASKING

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 $26.4 million.

What is the period of performance?

Start: 2013-09-27. End: 2020-12-31.

What specific performance metrics were used to determine the incentive fee payouts for this contract, and how did Raytheon perform against them?

The provided data does not detail the specific performance metrics tied to the incentive fee structure of this CPIF contract. Understanding these metrics is crucial for assessing whether the incentive mechanism effectively drove desired outcomes and delivered value for money. Without this information, it's difficult to fully evaluate the contract's effectiveness in achieving its objectives beyond the basic CDR tasking.

Given the CPIF structure and the contract's duration, what was the final cost compared to the initial target cost, and how does this compare to industry benchmarks for similar CDRs?

The data does not provide the final cost or target cost, only the award amount ($26.4M). CPIF contracts inherently carry the risk of cost escalation if performance incentives are not perfectly aligned with cost control. Benchmarking is challenging without knowing the specific system complexity and the final negotiated costs. A significant variance from initial estimates could indicate potential inefficiencies or unforeseen challenges.

How effectively did the full and open competition process ensure competitive pricing for this critical design review tasking, considering the CPIF nature of the award?

While full and open competition is a positive indicator for competitive pricing, the CPIF structure complicates a direct assessment. The initial bid likely reflected competitive pressures, but the final price is contingent on performance and cost outcomes. The effectiveness of the competition lies in establishing a baseline price and contractor selection, but the CPIF element means the ultimate value realized by the government depends on ongoing management and incentive alignment.

Industry Classification

NAICS: Manufacturing › Navigational, Measuring, Electromedical, and Control Instruments Manufacturing › Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing

Product/Service Code: FIRE CONTROL EQPT.

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 5

Pricing Type: COST PLUS INCENTIVE FEE (V)

Evaluated Preference: NONE

Contractor Details

Parent Company: Rockwell Collins Australia PTY Limited

Address: 7887 BRYAN DAIRY RD, LARGO, FL, 33777

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: $35,951,500

Exercised Options: $28,665,724

Current Obligation: $26,410,707

Actual Outlays: $3,458,869

Subaward Activity

Number of Subawards: 84

Total Subaward Amount: $19,807,872

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline