DoD's $261.7M Raytheon Contract for R&D: Full and Open Competition, Cost Plus Incentive Fee
Contract Overview
Contract Amount: $261,713,830 ($261.7M)
Contractor: Raytheon Company
Awarding Agency: Department of Defense
Start Date: 2004-02-26
End Date: 2012-09-30
Contract Duration: 3,139 days
Daily Burn Rate: $83.4K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 2
Pricing Type: COST PLUS INCENTIVE FEE
Sector: R&D
Place of Performance
Location: TEWKSBURY, MIDDLESEX County, MASSACHUSETTS, 01876
Plain-Language Summary
Department of Defense obligated $261.7 million to RAYTHEON COMPANY for work described as: Key points: 1. Significant investment in Research and Development within the Physical, Engineering, and Life Sciences sector. 2. Awarded to Raytheon Company, a major defense contractor, indicating potential for specialized expertise. 3. Full and open competition suggests a robust price discovery process, though the CPIF structure warrants scrutiny. 4. Long contract duration (3139 days) may reflect complex project scope or phased development.
Value Assessment
Rating: fair
The Cost Plus Incentive Fee (CPIF) structure allows for shared savings and cost overruns, which can incentivize efficiency but also carries risk if not managed closely. Benchmarking against similar R&D contracts is difficult without detailed scope and performance metrics.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, which is generally positive for price discovery. However, the CPIF pricing structure means the final cost is variable and dependent on performance outcomes, making direct price comparisons challenging.
Taxpayer Impact: Taxpayer funds are utilized for advanced R&D. While competition aims for value, the CPIF model's cost variability requires careful oversight to ensure optimal use of taxpayer dollars.
Public Impact
Advancement of physical, engineering, and life sciences through significant federal investment. Potential for technological breakthroughs with broad applications in defense and civilian sectors. Supports high-skilled jobs in research and development within the contracting company. Long-term commitment to a specific R&D area, indicating strategic national priorities.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- CPIF pricing model can lead to cost overruns if not tightly managed.
- Long contract duration increases exposure to changing technological landscapes and economic conditions.
- Lack of specific performance metrics makes it hard to assess true value for money.
- Sole contractor (Raytheon) for this specific award, though competition was initially open.
Positive Signals
- Awarded through full and open competition.
- Focus on critical R&D areas.
- Potential for significant technological advancements.
Sector Analysis
This contract falls under Research and Development in the Physical, Engineering, and Life Sciences (NAICS 541710). Spending in this sector is crucial for innovation and maintaining technological superiority, often involving long-term, high-risk, high-reward projects.
Small Business Impact
The contract was awarded to Raytheon Company, a large business. There is no explicit indication of small business subcontracting goals or participation in the provided data.
Oversight & Accountability
The contract's CPIF structure necessitates robust oversight from the Department of the Army to monitor performance, control costs, and ensure alignment with R&D objectives. Regular reviews and audits would be critical for accountability.
Related Government Programs
- Research and Development in the Physical, Engineering, and Life Sciences
- Department of Defense Contracting
- Department of the Army Programs
Risk Flags
- Cost overrun potential due to CPIF structure.
- Risk of technological obsolescence over the long contract duration.
- Difficulty in benchmarking value due to R&D complexity and CPIF.
- Potential for contractor lock-in despite initial open competition.
Tags
research-and-development-in-the-physical, department-of-defense, ma, definitive-contract, 100m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $261.7 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 (Department of the Army).
What is the total obligated amount?
The obligated amount is $261.7 million.
What is the period of performance?
Start: 2004-02-26. End: 2012-09-30.
How effectively did the CPIF structure incentivize Raytheon to achieve R&D milestones within projected cost parameters, and what was the final cost variance?
The effectiveness of the CPIF structure hinges on the specific incentive targets and sharing ratios defined in the contract. Without detailed performance data and final cost reports, it's difficult to quantify the precise incentive impact. However, CPIF aims to balance contractor risk and reward, encouraging efficiency while allowing for flexibility in complex R&D projects where outcomes are uncertain.
What were the key technological advancements or research outcomes achieved under this contract, and how do they align with the Department of Defense's strategic goals?
The provided data does not detail the specific research outcomes or technological advancements. Assessing alignment with strategic goals would require reviewing the contract's statement of work and subsequent program reviews. Typically, R&D contracts in this domain aim to enhance national security capabilities, improve existing systems, or explore novel technologies with potential military applications.
Given the long duration and CPIF nature, what measures were in place to mitigate risks associated with scope creep, technological obsolescence, and cost overruns?
Mitigation strategies likely included phased funding, regular technical reviews, stringent change control processes, and defined performance metrics within the CPIF framework. The Department of the Army's program management would be responsible for continuous monitoring, risk assessment, and adaptive management to address potential obsolescence or cost escalations throughout the contract's lifecycle.
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: RESEARCH AND DEVELOPMENT › C – National Defense R&D Services
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION
Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE
Offers Received: 2
Pricing Type: COST PLUS INCENTIVE FEE (V)
Evaluated Preference: NONE
Contractor Details
Address: 50 APPLE HILL DR, TEWKSBURY, MA, 01876
Business Categories: Category Business, Not Designated a Small Business
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2004-02-26
Current End Date: 2012-09-30
Potential End Date: 2017-06-08 00:00:00
Last Modified: 2016-06-08
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