Raytheon Company awarded $1.67B contract for enhanced data rights, with 3 bidders competing

Contract Overview

Contract Amount: $1,671,263,972 ($1.7B)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2013-10-10

End Date: 2026-01-30

Contract Duration: 4,495 days

Daily Burn Rate: $371.8K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Defense

Official Description: AMDR BASIC CONTRACT AWARD FOR EMD AND EXERCISE OF ENHANCED DATA RIGHTS CLIN

Place of Performance

Location: MARLBOROUGH, MIDDLESEX County, MASSACHUSETTS, 01752

State: Massachusetts Government Spending

Plain-Language Summary

Department of Defense obligated $1.67 billion to RAYTHEON COMPANY for work described as: AMDR BASIC CONTRACT AWARD FOR EMD AND EXERCISE OF ENHANCED DATA RIGHTS CLIN Key points: 1. Contract awarded to Raytheon Company for enhanced data rights, indicating a significant investment in advanced capabilities. 2. The contract utilizes a Cost Plus Incentive Fee (CPIF) structure, which aims to align contractor performance with government objectives. 3. With 3 bidders, the competition level suggests a moderately contested procurement, potentially leading to reasonable price discovery. 4. The contract duration of approximately 12 years (4495 days) points to a long-term strategic commitment by the Department of the Navy. 5. The North American Industry Classification System (NAICS) code 334511 categorizes this as a product within the Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing sector. 6. The contract's value of over $1.67 billion signifies a substantial allocation of resources towards this specific defense capability.

Value Assessment

Rating: good

The contract's pricing structure, Cost Plus Incentive Fee (CPIF), allows for adjustments based on performance, which can be beneficial for managing costs on complex, long-term projects. Benchmarking against similar contracts for enhanced data rights or system upgrades is challenging without more specific details on the scope of 'enhanced data rights.' However, the competitive nature of the award suggests that pricing was likely scrutinized. The total award value of $1.67 billion over nearly 12 years indicates a significant investment, and the CPIF structure aims to ensure value for money by incentivizing cost control and performance.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, with three distinct bidders participating. This level of competition is generally favorable for the government, as it encourages multiple companies to offer their best pricing and technical solutions. The presence of three bidders suggests a healthy market for the services or products being procured, allowing the Department of the Navy to select the most advantageous offer based on a combination of cost and performance.

Taxpayer Impact: A competitive process with multiple bidders helps ensure that taxpayer dollars are used efficiently by driving down prices and encouraging innovation. This reduces the risk of overpaying for goods or services.

Public Impact

The primary beneficiaries are the Department of the Navy and potentially other branches of the Department of Defense, gaining access to enhanced data capabilities for critical systems. The services delivered likely involve the development, integration, and maintenance of advanced data processing and analysis tools for defense applications. The geographic impact is primarily within the United States, supporting defense operations and potentially involving contractors located in Massachusetts, where Raytheon is based. Workforce implications include the potential for highly skilled jobs in engineering, software development, data science, and program management within the defense industry.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus incentive fee contracts can sometimes lead to cost overruns if not managed meticulously, as the government bears a significant portion of the costs.
The long duration of the contract (nearly 12 years) increases the risk of scope creep or evolving technological requirements that may not be fully captured in the initial award.
Reliance on a single contractor for critical 'enhanced data rights' could create long-term dependencies and potential vulnerabilities if not managed with robust oversight.

Positive Signals

The use of a competitive bidding process mitigates risks associated with sole-sourcing and promotes a fair market approach.
The incentive fee structure within the CPIF contract is designed to motivate the contractor to achieve specific performance targets and cost efficiencies.
The award to a well-established defense contractor like Raytheon suggests a degree of confidence in their technical capabilities and past performance.
The contract's focus on 'enhanced data rights' indicates a forward-looking investment in modernizing defense capabilities.

Sector Analysis

This contract falls within the defense sector, specifically focusing on advanced systems and instrumentation manufacturing. The market for such specialized defense technology is characterized by high barriers to entry, significant R&D investment, and long procurement cycles. Comparable spending benchmarks would typically involve other major defense system development contracts, often running into hundreds of millions or billions of dollars, reflecting the complexity and strategic importance of these acquisitions. The industry is dominated by a few large prime contractors capable of handling such extensive programs.

Small Business Impact

This contract does not appear to have a specific small business set-aside component, as indicated by 'sb': false. However, as a large prime contract awarded to Raytheon Company, there is a potential for significant subcontracting opportunities. Large defense contractors are often required to meet certain subcontracting goals with small businesses as part of their overall contract performance. The extent to which small businesses will benefit will depend on Raytheon's subcontracting plan and the specific needs for specialized components or services within this program.

Oversight & Accountability

Oversight for this contract will primarily reside with the Department of the Navy's contracting and program management offices. Accountability measures are embedded within the Cost Plus Incentive Fee (CPIF) structure, which links contractor payment to performance metrics and cost targets. Transparency is generally maintained through contract award databases and reporting requirements, though specific details of performance and cost may be sensitive. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse related to the contract.

Related Government Programs

Advanced Weapons Systems Development
Naval Aviation Technology Procurement
Defense Data Analytics Programs
Search and Detection Systems
Guidance and Navigation Systems Manufacturing

Risk Flags

Long contract duration may increase risk of technological obsolescence.
Cost-plus contracts require diligent oversight to manage potential cost overruns.
Definition of 'enhanced data rights' requires careful monitoring for scope creep.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $1.67 billion to RAYTHEON COMPANY. AMDR BASIC CONTRACT AWARD FOR EMD AND EXERCISE OF ENHANCED DATA RIGHTS CLIN

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 $1.67 billion.

What is the period of performance?

Start: 2013-10-10. End: 2026-01-30.

What is the specific nature of the 'enhanced data rights' being procured, and how do they differ from standard data rights?

The term 'enhanced data rights' typically refers to a more comprehensive set of permissions granted to the government beyond basic usage rights. This can include rights to modify, adapt, decompile, reverse engineer, or use the data in ways that go beyond the initial intended purpose. For this specific contract, it likely pertains to gaining deeper access and control over the data generated by or associated with advanced defense systems, enabling more sophisticated analysis, integration with other platforms, or future development. The exact scope would be detailed in the contract's Statement of Work (SOW) and data rights clauses, which are often sensitive. Without access to these specifics, it's difficult to quantify the precise value or implications beyond a general understanding of increased government control and flexibility over critical information assets.

How does the Cost Plus Incentive Fee (CPIF) structure compare to other contract types for R&D-heavy defense procurements?

CPIF contracts are a type of cost-reimbursement contract where the contractor is reimbursed for allowable costs and receives a fee that is adjusted based on performance against pre-determined targets. This is often favored for research and development (R&D) or complex system development where the final costs and performance outcomes are uncertain at the outset. Compared to Fixed Price contracts, CPIF offers more flexibility for the government to adapt to changing requirements and share in cost savings or overruns. It differs from Cost Plus Fixed Fee (CPFF) by introducing incentives for performance, encouraging the contractor to exceed minimum requirements or control costs more effectively. While it provides flexibility, it requires robust government oversight to manage costs and ensure the contractor is motivated appropriately by the incentives.

What is Raytheon Company's track record with similar large-scale defense data system contracts?

Raytheon Company (now RTX) has a long and extensive track record of delivering complex defense systems and technologies to the U.S. Department of Defense and allied nations. They are a major player in areas such as radar, sensors, command and control systems, and integrated air and missile defense. Their history includes numerous large-scale development and production contracts, many of which involve sophisticated data processing and management capabilities. While specific contract details are often proprietary, Raytheon's consistent presence as a prime contractor on major defense programs suggests a demonstrated ability to manage large budgets, complex technical challenges, and long program durations. Their performance on previous, similar contracts would have been a key factor in the Department of the Navy's decision-making process for this award.

What are the potential risks associated with a contract of this duration (nearly 12 years)?

Contracts spanning nearly 12 years carry inherent risks related to technological obsolescence, evolving threat landscapes, and potential shifts in strategic priorities. The technology landscape can change dramatically over such a period, potentially rendering the procured capabilities less effective or requiring significant, costly modifications. Furthermore, long-term contracts can sometimes lead to complacency or reduced agility on the part of the contractor if not managed with rigorous oversight and performance management. There's also the risk of 'scope creep,' where requirements expand beyond the original intent, leading to cost overruns and delays. Ensuring that the contract includes mechanisms for periodic review, adaptation, and potential re-competition or modification is crucial to mitigate these long-term risks.

How does this contract's value compare to other major defense procurements in the Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing sector?

A contract value of $1.67 billion for enhanced data rights is substantial and aligns with the typical scale of major defense system development and integration programs. Within the NAICS code 334511 sector, which covers sophisticated navigation, guidance, and detection systems, procurements often reach into the billions of dollars. For instance, development programs for new fighter jet avionics, advanced radar systems, or integrated combat management systems frequently exceed this amount. This contract's value is indicative of a significant technological advancement or a critical upgrade to existing defense infrastructure, placing it among the larger investments within this specialized manufacturing domain.

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: COMM/DETECT/COHERENT RADIATION

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: N0002412R5315

Offers Received: 3

Pricing Type: COST PLUS INCENTIVE FEE (V)

Evaluated Preference: NONE

Contractor Details

Parent Company: RTX Corp

Address: 528 BOSTON POST RD, SUDBURY, MA, 01776

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: $2,505,055,018

Exercised Options: $1,809,278,364

Current Obligation: $1,671,263,972

Actual Outlays: $7,921,532

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline