Raytheon Company awarded $28.6M for IAMD IBCS, a contract with a 7-year duration

Contract Overview

Contract Amount: $28,653,266 ($28.7M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2008-09-23

End Date: 2015-10-22

Contract Duration: 2,585 days

Daily Burn Rate: $11.1K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Defense

Official Description: IAMD IBCS

Place of Performance

Location: HUNTSVILLE, MADISON County, ALABAMA, 35806

State: Alabama Government Spending

Plain-Language Summary

Department of Defense obligated $28.7 million to RAYTHEON COMPANY for work described as: IAMD IBCS Key points: 1. The contract value of $28.6 million over seven years suggests a moderate annual spend. 2. Competition dynamics for this contract are not detailed, but the award type indicates a structured procurement process. 3. Performance risk indicators are not explicitly stated but are inherent in complex defense systems. 4. The contract spans a significant period, allowing for phased development and integration. 5. This contract falls within the defense sector, specifically focusing on missile defense systems. 6. The award to Raytheon Company places it within a key defense contractor landscape.

Value Assessment

Rating: fair

Benchmarking the value of this $28.6 million contract is challenging without specific performance metrics or comparable systems. The Cost Plus Incentive Fee (CPIF) structure suggests that cost savings and performance targets were incentivized, which can lead to better value if managed effectively. However, CPIF contracts can also lead to cost overruns if not closely monitored. The duration of the contract (over 7 years) implies a long-term investment in a critical capability.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple bidders were likely considered. The presence of two bids suggests a competitive environment, though the exact number of proposals received is not specified. Full and open competition generally promotes price discovery and can lead to more favorable pricing for the government.

Taxpayer Impact: Taxpayers benefit from full and open competition as it typically drives down costs and ensures the government receives the best possible value through a wider pool of potential suppliers.

Public Impact

The primary beneficiaries are the Department of Defense, specifically units requiring advanced integrated air and missile defense capabilities. The contract delivers parts and auxiliary equipment for guided missiles and space vehicles, crucial for national security. The geographic impact is national, supporting defense infrastructure and readiness across the United States. Workforce implications include employment for engineers, technicians, and manufacturing personnel involved in defense systems production.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns inherent in Cost Plus Incentive Fee contracts if performance targets are not met or scope creeps.
Long contract duration increases the risk of technological obsolescence or shifts in defense priorities.
Dependence on a single contractor (Raytheon) for critical components could pose supply chain risks.

Positive Signals

Awarded through full and open competition, suggesting a robust selection process.
Cost Plus Incentive Fee structure incentivizes contractor performance and cost efficiency.
Long-term contract provides stability and predictability for a critical defense capability.

Sector Analysis

This contract falls within the defense industry, specifically the segment focused on advanced missile defense systems. The Integrated Air and Missile Defense (IAMD) Battle Command System (IBCS) is a critical component of modern air defense. The market for such systems is dominated by a few large defense contractors, with significant R&D investment required. Comparable spending benchmarks would involve looking at other major defense system development and procurement contracts.

Small Business Impact

The contract does not indicate any specific small business set-aside provisions (ss: false, sb: false). This suggests that the primary award was made to a large prime contractor. Subcontracting opportunities for small businesses may exist, but they are not explicitly detailed in this award information. The impact on the small business ecosystem would depend on Raytheon's subcontracting strategy.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor compliance with terms and conditions. Accountability measures are built into the CPIF contract type, incentivizing performance and cost control. Transparency is generally maintained through contract award databases and reporting requirements, though specific operational details may be classified.

Related Government Programs

Missile Defense Systems
Command and Control Systems
Guided Missile Manufacturing
Aerospace Defense

Risk Flags

Long contract duration
Cost Plus Incentive Fee structure
Potential for sole-source follow-on work

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $28.7 million to RAYTHEON COMPANY. IAMD IBCS

Who is the contractor on this award?

The obligated recipient is RAYTHEON COMPANY.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $28.7 million.

What is the period of performance?

Start: 2008-09-23. End: 2015-10-22.

What is the historical spending trend for IAMD IBCS contracts awarded to Raytheon Company?

Analyzing historical spending for the IAMD IBCS program awarded to Raytheon Company requires access to detailed contract databases beyond this single award. This specific contract, valued at approximately $28.6 million, spans from September 2008 to October 2015. To understand the trend, one would need to aggregate all awarded contracts for IAMD IBCS to Raytheon, noting their values, durations, and any modifications. This would reveal if spending has been consistent, increasing, or decreasing over time. Factors influencing trends could include program maturity, evolving threat assessments, budget allocations, and the introduction of new technologies or system upgrades. Without a broader dataset, it's impossible to definitively state a historical spending trend beyond this single contract's lifecycle.

How does the Cost Plus Incentive Fee (CPIF) structure typically impact contractor performance and cost control for defense systems?

The Cost Plus Incentive Fee (CPIF) contract structure is designed to incentivize the contractor to perform efficiently and meet specific cost and performance targets. Under CPIF, the final profit is adjusted based on the contractor's ability to achieve or exceed predetermined cost and performance objectives. If the contractor comes in under budget and meets performance goals, they earn a higher profit margin. Conversely, if costs exceed targets or performance suffers, their profit is reduced. This structure encourages proactive cost management and innovation from the contractor. For defense systems like IAMD IBCS, where technical complexity and evolving requirements are common, CPIF aims to balance the government's need for a capable system with the contractor's motivation to control costs, thereby potentially achieving better value for taxpayer money compared to fixed-price contracts in high-uncertainty environments.

What are the key performance metrics associated with the IAMD IBCS program that would be subject to incentive fees?

Key performance metrics for the Integrated Air and Missile Defense (IAMD) Battle Command System (IBCS) program, which would likely be tied to incentive fees in a CPIF contract, typically revolve around system effectiveness, reliability, and integration capabilities. These could include metrics such as target engagement success rates, system response time, accuracy in threat identification and tracking, reliability (e.g., Mean Time Between Failures - MTBF), availability of the system, and successful integration with other defense assets and sensors. For a system like IBCS, which acts as a central node for various sensors and effectors, performance in data fusion, command and control latency, and interoperability with diverse platforms would be critical. The specific metrics would be detailed in the contract's Performance Work Statement (PWS) and would be quantifiable to allow for objective assessment and incentive fee calculation.

What is Raytheon Company's track record in delivering complex defense systems similar to IAMD IBCS?

Raytheon Company, now part of RTX Corporation, has a long and extensive track record in developing and delivering complex defense systems, including advanced radar, missile systems, and command and control platforms. They are a major player in the air and missile defense sector, with programs like the Patriot missile system, THAAD (Terminal High Altitude Area Defense) components, and various radar technologies. Their experience with integrating disparate systems and providing networked solutions is substantial. While specific performance details for every contract are not publicly available, Raytheon's consistent role as a prime contractor on numerous high-value, technologically sophisticated defense programs indicates a demonstrated capability. However, like any large defense contractor, they have also faced scrutiny and challenges on certain programs regarding cost, schedule, and performance, underscoring the importance of robust government oversight.

How does the $28.6 million contract value compare to the overall estimated cost or lifecycle cost of the IAMD IBCS program?

The $28.6 million contract value represents a specific procurement action for parts and auxiliary equipment for the IAMD IBCS program, awarded between 2008 and 2015. It is unlikely to represent the total program cost or lifecycle cost. The IAMD IBCS is a major defense acquisition program involving significant research, development, testing, and procurement of hardware, software, and integration services. Total program costs for such systems often run into billions of dollars over their operational lifespan. This $28.6 million award should be viewed as one component within a much larger, multi-year acquisition effort. To assess its relative size, one would need to compare it against the program's total budget authorizations, other major contract awards (e.g., for system development, prime integration, or large-scale production), and projected lifecycle expenditures.

What are the potential risks associated with relying on a single contractor, Raytheon Company, for critical components of the IAMD IBCS?

Relying on a single contractor like Raytheon Company for critical components of the IAMD IBCS program introduces several potential risks. Firstly, there's a risk of supply chain disruption; if Raytheon faces production issues, labor strikes, or financial difficulties, the delivery of essential parts could be jeopardized, impacting the entire program's schedule. Secondly, a lack of competition for follow-on procurements or sustainment could lead to reduced price pressure, potentially resulting in higher costs for the government over the system's lifecycle. Thirdly, there's a risk of vendor lock-in, where the government becomes heavily dependent on Raytheon's proprietary technology and expertise, making it difficult and costly to switch suppliers or integrate alternative solutions in the future. Finally, sole-source reliance can sometimes reduce the incentive for the contractor to innovate aggressively if they perceive less competitive pressure.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Other Guided Missile and Space Vehicle Parts and Auxiliary Equipment Manufacturing

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

Solicitation ID: W31P4Q06R0275

Offers Received: 2

Pricing Type: COST PLUS INCENTIVE FEE (V)

Evaluated Preference: NONE

Contractor Details

Parent Company: Rockwell Collins Australia PTY Limited

Address: 401 JAN DAVIS DR NW, HUNTSVILLE, AL, 35806

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: $50,117,982

Exercised Options: $28,755,163

Current Obligation: $28,653,266

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline