Raytheon Company awarded $79.9M contract for missile and space systems, with a significant portion for R&D

Contract Overview

Contract Amount: $24,969,162 ($25.0M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2005-02-23

End Date: 2008-09-30

Contract Duration: 1,315 days

Daily Burn Rate: $19.0K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 200505!001686!2100!W31P4Q!USA AVIATION AND MISSILE COMMAND!W31P4Q05C0066 !A!N! !N! ! !20050223!20091231!799855812!001339159!001339159!N!RAYTHEON COMPANY !2501 W UNIVERSITY DRIVE M!MC KINNEY !TX!75070!45744!085!48!MCKINNEY !COLLIN !TEXAS !+000011427346!N!N!000000000000!AD92!RDTE/OTHER DEFENSE-APPLIED RESEARCH !A2 !MISSILE AND SPACE SYSTEMS !000 !* !333314!E! !3! ! ! ! ! !20200930!B! ! !A! !D!U!J!1!001!N!1G!Z!Y!A! ! !N!C!N! ! ! !A!A!A!A!000!A!C!N! ! ! ! ! ! !0001! !

Place of Performance

Location: MCKINNEY, COLLIN County, TEXAS, 75071

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $25.0 million to RAYTHEON COMPANY for work described as: 200505!001686!2100!W31P4Q!USA AVIATION AND MISSILE COMMAND!W31P4Q05C0066 !A!N! !N! ! !20050223!20091231!799855812!001339159!001339159!N!RAYTHEON COMPANY !2501 W UNIVERSITY DRIVE M!MC KINNEY !TX!75070!45744!085!48!MCKINNEY !COLL… Key points: 1. Contract focuses on research, development, testing, and evaluation (RDT&E) for missile and space systems. 2. Awarded on a non-competitive basis, raising questions about price discovery and potential cost savings. 3. The contract duration of over 3 years suggests a long-term need for these specialized defense capabilities. 4. Geographic concentration in Texas for the contractor may indicate regional economic impact. 5. The specific Product Service Code (PSC) points to a niche area within defense R&D. 6. Firm Fixed Price contract type aims to control costs, but competition level is key to realizing savings.

Value Assessment

Rating: fair

The contract value of $79.9 million for missile and space systems R&D appears substantial. Without direct comparable contracts for the exact same scope and technology, it's difficult to definitively benchmark value. However, the non-competitive award necessitates scrutiny of the pricing structure to ensure it aligns with market rates for similar research and development efforts. The firm fixed-price nature provides some cost certainty, but the absence of competition could lead to less favorable pricing than if multiple vendors had vied for the contract.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, Raytheon Company, was solicited. The data indicates no competition was sought for this requirement. While sole-source awards can be justified for unique capabilities or urgent needs, the lack of competition limits the government's ability to explore alternative solutions or secure the most cost-effective pricing through a bidding process. This approach may result in higher costs for taxpayers compared to a competitively awarded contract.

Taxpayer Impact: The absence of competition means taxpayers may not benefit from the cost reductions typically achieved through a bidding process. The government may have paid a premium due to the lack of alternative offers.

Public Impact

The primary beneficiaries are the Department of Defense and potentially the U.S. military, receiving advanced missile and space system capabilities. Services delivered include research, development, testing, and evaluation, crucial for maintaining technological superiority. The geographic impact is concentrated in McKinney, Texas, where Raytheon Company is located, potentially supporting local jobs and the regional economy. Workforce implications include highly skilled engineers, scientists, and technicians involved in advanced defense R&D.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition for a significant R&D contract raises concerns about potential overpricing and missed opportunities for cost savings.
The sole-source nature limits transparency into the justification for selecting Raytheon Company over other potential providers.
Reliance on a single contractor for critical defense systems could pose long-term supply chain or innovation risks.

Positive Signals

The firm fixed-price contract type provides cost certainty for the government, mitigating the risk of cost overruns.
Raytheon Company is a major defense contractor with a known track record, suggesting a level of established capability.
The contract supports critical research and development in missile and space systems, vital for national security.

Sector Analysis

This contract falls within the Defense sector, specifically focusing on Research, Development, Testing, and Evaluation (RDT&E) for missile and space systems. The industry segment is characterized by high technological barriers to entry and significant government investment. Comparable spending benchmarks are difficult to establish without knowing the specific technological advancements sought, but the overall defense R&D market is substantial, with major players like Raytheon Company consistently securing large contracts for advanced capabilities.

Small Business Impact

There is no indication that this contract included a small business set-aside. As a sole-source award to a large prime contractor, it is unlikely that significant subcontracting opportunities for small businesses were mandated or explored as part of the competition. This contract does not appear to directly benefit the small business ecosystem.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Army and the Department of Defense's contracting and program management offices. Accountability measures would include performance reviews, milestone tracking, and financial audits. Transparency is limited due to the sole-source nature, but contract modifications and performance reports would be subject to internal review and potentially Inspector General oversight if issues arise.

Related Government Programs

Missile Defense Systems
Space Systems Development
Advanced Weapons Research
Department of Defense R&D Programs
Army Aviation and Missile Command Contracts

Risk Flags

Sole-source award
Lack of competition
Potential for cost overruns if scope is not well-defined
Reliance on a single contractor for critical technology

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $25.0 million to RAYTHEON COMPANY. 200505!001686!2100!W31P4Q!USA AVIATION AND MISSILE COMMAND!W31P4Q05C0066 !A!N! !N! ! !20050223!20091231!799855812!001339159!001339159!N!RAYTHEON COMPANY !2501 W UNIVERSITY DRIVE M!MC KINNEY !TX!75070!45744!085!48!MCKINNEY !COLLIN !TEXAS !+000011427346!N!N!000000000000!AD92!RDTE/OTHER DEFENSE-APPLIED RESEARCH !A2 !MISSILE AND SPACE SYSTEMS !000 !* !333314!E! !3! ! ! ! ! !202

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 $25.0 million.

What is the period of performance?

Start: 2005-02-23. End: 2008-09-30.

What is Raytheon Company's track record with similar sole-source R&D contracts for missile and space systems?

Raytheon Company, now part of RTX, has a long history of securing large, complex contracts with the Department of Defense, including those involving sole-source R&D for missile and space systems. Their extensive experience in areas like guided missiles, air defense, and space technology suggests a deep understanding of the technical requirements and program management necessary for such endeavors. However, the specific details of past sole-source awards, including their justifications and performance outcomes, would require further investigation into historical contract data and performance reviews. While their established presence indicates capability, the absence of competition in any sole-source award warrants careful examination of pricing and value.

How does the $79.9 million value compare to other missile and space systems R&D contracts awarded by the DoD?

The $79.9 million value for this contract is substantial but falls within the typical range for significant R&D efforts in the missile and space systems domain. Major defense contractors frequently receive contracts in the tens to hundreds of millions of dollars for advanced research, development, and prototyping. For instance, contracts for developing new missile platforms, upgrading existing systems, or advancing space-based defense technologies often reach these figures. Without knowing the specific technological scope of this particular contract, a precise comparison is challenging. However, it is not an outlier and represents a significant investment in a critical defense capability area.

What are the primary risks associated with a sole-source award for advanced defense R&D?

The primary risks associated with a sole-source award for advanced defense R&D include potential overpricing due to the lack of competitive pressure, limited innovation stemming from the absence of alternative approaches, and a reduced incentive for the contractor to achieve maximum efficiency. Taxpayers may bear a higher cost for the technology developed. Furthermore, over-reliance on a single contractor can create vulnerabilities in the supply chain and program execution. There's also a risk that the government might not be aware of or benefit from potentially superior or more cost-effective solutions that could have emerged from a competitive bidding process.

How effective are firm fixed-price contracts in controlling costs for R&D efforts like this?

Firm Fixed Price (FFP) contracts are generally considered effective in controlling costs because the contractor assumes most of the risk for cost overruns. The price is set at the outset, and the contractor is obligated to complete the work for that amount. This provides cost certainty for the government. However, for R&D, where the scope and technical challenges can be highly uncertain, FFP contracts can sometimes lead to contractors being overly conservative in their approach to avoid unexpected costs, potentially stifling innovation. Alternatively, if the initial price is set too high due to the uncertainty or lack of competition, the government may still overpay. The effectiveness is maximized when the scope is well-defined and competition exists.

What is the historical spending trend for missile and space systems R&D by the Department of the Army?

Historical spending by the Department of the Army on missile and space systems R&D has consistently been significant, reflecting the critical nature of these capabilities for national defense. While specific annual figures fluctuate based on strategic priorities, technological advancements, and budget allocations, the Army invests billions of dollars annually in this area. This includes funding for research into next-generation missile technologies, upgrades to existing platforms, counter-missile systems, and space-based intelligence, surveillance, and reconnaissance (ISR) assets. Contracts like the one awarded to Raytheon Company are part of this ongoing, substantial investment aimed at maintaining technological superiority.

What does the Product Service Code (PSC) AD92 indicate about the nature of this contract?

The Product Service Code (PSC) AD92, 'R&D/Other Defense-Applied Research,' indicates that this contract is primarily for research and development activities that are foundational and exploratory in nature, rather than for the direct procurement of a finished product or system. 'Applied Research' focuses on discovering and applying scientific knowledge to achieve specific military objectives. This suggests that the work under this contract involves investigating new concepts, technologies, or approaches related to missile and space systems, with the goal of developing future capabilities. It implies a higher degree of technical uncertainty and innovation compared to contracts for production or sustainment.

Industry Classification

NAICS: Manufacturing › Commercial and Service Industry Machinery Manufacturing › Optical Instrument and Lens Manufacturing

Product/Service Code: RESEARCH AND DEVELOPMENT › DEFENSE (OTHER) R&D

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 2501 W UNIVERSITY DRIVE M, MC KINNEY, TX, 03

Business Categories: Category Business, Not Designated a Small Business

Timeline