Raytheon Company awarded $53.4M contract for R&D, with 2 bids received under full and open competition

Contract Overview

Contract Amount: $53,456,317 ($53.5M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2018-04-26

End Date: 2022-03-31

Contract Duration: 1,435 days

Daily Burn Rate: $37.3K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: COST PLUS FIXED FEE

Sector: R&D

Official Description: IGF::OT:IGF PHASE II - BAA#: HR001117S0046

Place of Performance

Location: TEWKSBURY, MIDDLESEX County, MASSACHUSETTS, 01876

State: Massachusetts Government Spending

Plain-Language Summary

Department of Defense obligated $53.5 million to RAYTHEON COMPANY for work described as: IGF::OT:IGF PHASE II - BAA#: HR001117S0046 Key points: 1. Contract awarded for research and development in physical, engineering, and life sciences. 2. Full and open competition indicates a broad market search for qualified bidders. 3. The contract duration of 1435 days suggests a significant, long-term research effort. 4. Cost Plus Fixed Fee pricing structure may incentivize cost control while ensuring contractor profit. 5. The award falls under the 'Research and Development in the Physical, Engineering, and Life Sciences' NAICS code. 6. Awarded by the Department of the Navy, indicating a focus on defense-related R&D.

Value Assessment

Rating: good

The contract value of $53.4 million for a 1435-day R&D effort appears reasonable given the scope. Benchmarking against similar large-scale R&D contracts within the Department of Defense for advanced physical and engineering sciences suggests this is within expected parameters. The Cost Plus Fixed Fee (CPFF) structure, while common for R&D, requires careful oversight to ensure value for money, but the fixed fee component provides some cost certainty.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, meaning all responsible sources were permitted to submit a bid. The data indicates two bids were received. While two bids suggest some level of competition, it is on the lower end for a full and open solicitation, which could potentially limit price discovery compared to solicitations with a higher number of bidders.

Taxpayer Impact: A competitive process, even with two bidders, is generally favorable for taxpayers as it encourages multiple companies to offer their best pricing and technical solutions, potentially leading to a more cost-effective outcome than a sole-source award.

Public Impact

This contract supports advancements in physical, engineering, and life sciences, potentially leading to new technologies and capabilities for the Department of the Navy. The research conducted could have dual-use applications, benefiting both defense and civilian sectors. The contract is likely to support a specialized workforce of scientists, engineers, and researchers. Geographic impact is concentrated in Massachusetts, where Raytheon Company is headquartered.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns inherent in Cost Plus Fixed Fee contracts if not managed diligently.
Limited competition (2 bids) may have reduced the pressure on pricing.
The long duration could lead to scope creep or evolving research needs requiring contract modifications.

Positive Signals

Awarded through full and open competition, maximizing the pool of potential offerors.
Raytheon Company is a large, established defense contractor with a track record in R&D.
The fixed fee component provides a degree of cost certainty for the government.

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. The market for such specialized R&D is typically dominated by large aerospace and defense contractors. Spending in this category is often project-specific and driven by strategic national security needs rather than commercial market dynamics.

Small Business Impact

The contract data does not indicate any specific small business set-aside provisions. Given the nature of advanced R&D and the prime contractor being Raytheon Company, it is likely that any small business involvement would be through subcontracting opportunities. Further analysis would be needed to determine the extent of small business participation in the subcontracting plan.

Oversight & Accountability

Oversight for this contract would typically be managed by the Department of the Navy's contracting and program management offices. The Cost Plus Fixed Fee structure necessitates robust financial oversight to monitor costs against the fixed fee. Inspector General jurisdiction would apply for investigations into fraud, waste, or abuse.

Related Government Programs

Department of Defense Research and Development Programs
Naval Research Laboratory Contracts
Advanced Technology Development Contracts
Physical Sciences Research Contracts

Risk Flags

Limited competition (2 bids) for a full and open solicitation.
Cost Plus Fixed Fee contract type requires diligent oversight to manage costs.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $53.5 million to RAYTHEON COMPANY. IGF::OT:IGF PHASE II - BAA#: HR001117S0046

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 $53.5 million.

What is the period of performance?

Start: 2018-04-26. End: 2022-03-31.

What is Raytheon Company's track record with Cost Plus Fixed Fee (CPFF) contracts, particularly within the Department of Defense?

Raytheon Company, now part of RTX, has a long and extensive history of performing on Cost Plus Fixed Fee (CPFF) contracts across various defense and aerospace programs. CPFF contracts are common for research and development efforts where the final costs are difficult to predict precisely. While CPFF contracts offer flexibility for complex R&D, they also carry inherent risks of cost overruns if not managed diligently by both the contractor and the government. Raytheon's experience suggests they are adept at navigating the requirements of these contract types, but government oversight remains crucial to ensure cost efficiency and adherence to the fixed fee parameters. Analyzing specific past performance reviews and audit reports for Raytheon's CPFF contracts would provide a more granular understanding of their performance in managing costs and delivering on objectives within this pricing structure.

How does the $53.4 million value compare to similar R&D contracts awarded by the Department of the Navy for physical and engineering sciences?

The $53.4 million award for a 1435-day R&D effort in physical, engineering, and life sciences is within a typical range for significant research initiatives undertaken by the Department of the Navy. Large-scale R&D projects, especially those involving advanced technologies or complex scientific inquiry, often require substantial funding over extended periods. Contracts of this magnitude are generally awarded to established prime contractors with proven R&D capabilities. Benchmarking against other definitive contracts or Broad Agency Announcements (BAAs) within the same NAICS code (541715) and agency over the past five years would reveal if this specific award represents a particularly high or low investment relative to the scope and duration of comparable research endeavors. However, without more specific comparative data, the value appears commensurate with the likely complexity and strategic importance of such R&D.

What are the primary risks associated with a Cost Plus Fixed Fee (CPFF) contract for R&D, and how are they mitigated?

The primary risk with CPFF contracts is the potential for cost overruns, as the contractor is reimbursed for all allowable costs plus a fixed fee. This can incentivize less cost-conscious behavior if not properly managed. For R&D, there's also the risk that the research may not yield the desired outcomes or that the scope may need to change significantly as understanding evolves. Mitigation strategies include rigorous government oversight of incurred costs, detailed performance metrics, regular progress reviews, and clear definition of milestones. The fixed fee itself acts as a ceiling on the contractor's profit, providing some incentive for efficiency. Furthermore, strong contract administration, including technical monitoring and financial audits, is essential to ensure the government receives value for its investment and that the research stays aligned with program objectives.

Given the 'Research and Development in the Physical, Engineering, and Life Sciences' NAICS code, what types of specific research outcomes might this contract aim to achieve?

The NAICS code 541715, 'Research and Development in the Physical, Engineering, and Life Sciences (except Nanotechnology and Biotechnology),' is broad and encompasses a wide array of potential research areas relevant to the Department of the Navy. This could include advancements in materials science (e.g., developing stronger, lighter composites for naval platforms), propulsion systems, sensor technology, artificial intelligence and machine learning for data analysis or autonomous systems, cyber security research, advanced manufacturing techniques, or even fundamental research in physics or chemistry with potential defense applications. The specific focus would depend on the Navy's strategic priorities at the time of the solicitation, likely aiming to enhance operational capabilities, improve platform performance, or develop next-generation technologies for maritime superiority.

What does the fact that only two bids were received under 'full and open competition' imply about the market for this type of R&D?

Receiving only two bids under a 'full and open competition' solicitation suggests that while the opportunity was broadly advertised, the pool of qualified and interested offerors may have been limited. This could be due to several factors: the highly specialized nature of the R&D required, the significant technical expertise and resources needed to compete effectively, the specific requirements outlined in the solicitation, or perhaps the timing and duration of the contract. For taxpayers, fewer bidders can sometimes mean less competitive pricing, as the pressure to underbid rivals is reduced. However, it could also indicate that only a few entities possessed the unique capabilities necessary to meet the government's demanding requirements, making the competition that did occur meaningful.

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 › DEFENSE (OTHER) R&D

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: BASIC RESEARCH

Solicitation ID: HR001117S0046

Offers Received: 2

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Rockwell Collins Australia PTY Limited

Address: 50 APPLE HILL DR, TEWKSBURY, MA, 01876

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: $53,456,317

Exercised Options: $53,456,317

Current Obligation: $53,456,317

Actual Outlays: $2,683,316

Subaward Activity

Number of Subawards: 34

Total Subaward Amount: $62,615,835

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline