Raytheon Company awarded $44M R&D contract for Phase 1 SAVI, with 9 bidders indicating strong competition

Contract Overview

Contract Amount: $44,057,801 ($44.1M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2007-08-28

End Date: 2012-11-30

Contract Duration: 1,921 days

Daily Burn Rate: $22.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 9

Pricing Type: COST PLUS FIXED FEE

Sector: R&D

Official Description: PHASE 1 SAVI

Place of Performance

Location: EL SEGUNDO, LOS ANGELES County, CALIFORNIA, 90245

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $44.1 million to RAYTHEON COMPANY for work described as: PHASE 1 SAVI Key points: 1. Contract awarded via full and open competition, suggesting a competitive bidding process. 2. The contract type is Cost Plus Fixed Fee, which can lead to cost overruns if not managed carefully. 3. The duration of 1921 days (over 5 years) indicates a long-term research and development effort. 4. The North American Industry Classification System (NAICS) code 541710 points to significant investment in R&D services. 5. The contract was awarded by the Department of Defense, a major federal spender in R&D. 6. The contract was managed by the Defense Contract Management Agency, indicating robust oversight.

Value Assessment

Rating: fair

Benchmarking the value of this specific R&D contract is challenging without detailed performance metrics and comparable project outcomes. However, the Cost Plus Fixed Fee (CPFF) structure, while common for R&D, carries inherent risks of cost escalation. The fixed fee component provides some incentive for the contractor to control costs, but the primary focus is often on achieving technical objectives rather than strict cost adherence. Further analysis would require understanding the specific deliverables and the success criteria against which the 'fixed fee' was determined.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under 'full and open competition,' and the presence of 9 bidders suggests a healthy level of market interest and engagement. This broad competition is generally favorable for price discovery and ensures that the government has access to a wide range of potential solutions and capabilities. The number of bidders indicates that the requirements were likely well-defined and accessible to multiple firms in the relevant R&D sector.

Taxpayer Impact: A competitive bidding process with multiple bidders typically leads to more favorable pricing for taxpayers by driving down costs through market forces.

Public Impact

The primary beneficiaries are the Department of Defense, which receives advanced research and development capabilities. The contract supports the development of technologies relevant to national security and defense applications. The geographic impact is primarily within California, where the contract was managed. The contract likely supports a specialized workforce in research and development, including scientists and engineers.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Fixed Fee contracts can incentivize cost overruns if not closely monitored.
Long contract durations (1921 days) increase the risk of scope creep or evolving requirements.
Specific performance metrics and success criteria for R&D are often difficult to define and measure, potentially impacting value assessment.

Positive Signals

Awarded under full and open competition with 9 bidders, indicating strong market interest and potential for competitive pricing.
Managed by the Defense Contract Management Agency, suggesting established oversight and accountability processes.
The contract focuses on Research and Development, aiming to advance critical defense technologies.

Sector Analysis

This contract falls within the Research and Development sector, specifically focusing on physical, engineering, and life sciences (NAICS 541710). This sector is characterized by innovation, long development cycles, and significant government investment, particularly in defense applications. The market size for defense R&D is substantial, with agencies like the Department of Defense being major clients. Comparable spending benchmarks would involve analyzing other large-scale R&D contracts awarded to prime contractors for advanced technology development.

Small Business Impact

The provided data indicates that small business participation (sb) was false and there was no small business set-aside (ss). This suggests that the contract was not specifically targeted towards small businesses, and larger, established firms were likely the primary competitors. Subcontracting opportunities for small businesses may exist but are not explicitly detailed in this summary. The impact on the small business ecosystem would depend on whether prime contractors actively engage small businesses for specialized services or components.

Oversight & Accountability

The contract was managed by the Defense Contract Management Agency (DCMA), which is responsible for overseeing contract performance and ensuring compliance. The 'Cost Plus Fixed Fee' (CPFF) contract type necessitates close financial oversight to monitor expenditures against the estimated cost and the fixed fee. Transparency in R&D contracts can be limited due to the proprietary nature of the research, but reporting requirements typically exist for milestones and expenditures. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Department of Defense Research and Development Programs
Advanced Technology Development Contracts
Defense Contract Management Agency Oversight
Cost Plus Fixed Fee Contracts
Research and Development in Physical Sciences

Risk Flags

Cost Plus Fixed Fee contract type carries inherent risk of cost escalation.
Long contract duration increases potential for scope creep and requirement changes.
R&D outcomes can be uncertain, making precise value-for-money assessment difficult without clear metrics.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $44.1 million to RAYTHEON COMPANY. PHASE 1 SAVI

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 $44.1 million.

What is the period of performance?

Start: 2007-08-28. End: 2012-11-30.

What specific technologies or capabilities was the Phase 1 SAVI contract intended to develop?

The provided data does not specify the exact technologies or capabilities of the 'Phase 1 SAVI' contract. SAVI could potentially refer to a system, algorithm, or vehicle, but without further context, its precise nature remains unknown. Research and Development contracts, especially in the defense sector, often focus on advancing capabilities in areas such as intelligence, surveillance, reconnaissance, electronic warfare, or advanced materials. The 'Phase 1' designation suggests this was an initial stage of development, likely involving feasibility studies, prototyping, or foundational research before proceeding to later phases.

How does the $44 million award amount compare to similar R&D contracts in the defense sector?

The $44 million award for a multi-year R&D effort is a significant but not exceptionally large sum within the defense sector. Large defense R&D contracts can range from tens of millions to billions of dollars, depending on the complexity, scope, and strategic importance of the technology being developed. This contract's value suggests a focused, albeit substantial, research initiative. To provide a precise comparison, one would need to analyze the specific technological domain, the phase of development (e.g., basic research vs. advanced prototyping), and the duration of comparable contracts awarded by the DoD or other agencies.

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

The primary risks associated with a Cost Plus Fixed Fee (CPFF) contract for R&D include potential cost overruns and reduced contractor incentive for efficiency. While the fixed fee provides a ceiling on the contractor's profit, the government bears the risk of cost increases up to that ceiling. If the estimated costs escalate significantly due to unforeseen technical challenges or scope creep, the total contract value can rise substantially. Furthermore, the focus in R&D is often on achieving technical breakthroughs rather than strict cost control, which can be exacerbated under a CPFF structure if not managed with rigorous oversight and clear performance metrics.

What does the number of bidders (9) imply about the market for this type of R&D service?

The presence of 9 bidders for this R&D contract indicates a competitive and relatively mature market for the services required. A higher number of bidders generally suggests that the requirements were well-defined, accessible to multiple firms, and that there is sufficient capacity and interest within the industry to pursue such contracts. This level of competition is favorable for the government, as it increases the likelihood of receiving competitive proposals, potentially leading to better pricing and innovative solutions. It also suggests that the barriers to entry for qualified R&D firms in this specific domain are not prohibitively high.

How does the contract's duration (1921 days) impact the assessment of its value and risk?

The contract's duration of 1921 days (approximately 5.25 years) signifies a long-term commitment to a research and development project. This extended timeline is typical for complex R&D efforts where innovation and technological maturation take considerable time. From a value perspective, it allows for in-depth exploration and development. However, it also introduces risks such as potential obsolescence of initial concepts, evolving threat landscapes requiring requirement changes, and the challenge of maintaining consistent oversight and performance evaluation over an extended period. Managing scope creep and ensuring continued alignment with strategic objectives are critical for realizing value over such a long duration.

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 › DEFENSE (OTHER) R&D

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 9

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 2000 EAST EL SEGUNDO BLVD., EL SEGUNDO, CA, 90245

Business Categories: Category Business, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $48,622,664

Exercised Options: $44,057,801

Current Obligation: $44,057,801

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline