Raytheon Company's $113M RAID/EAGLE EYE contract for R&D in physical sciences shows a high cost per unit

Contract Overview

Contract Amount: $113,051,545 ($113.1M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2006-10-03

End Date: 2009-12-31

Contract Duration: 1,185 days

Daily Burn Rate: $95.4K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: R&D

Official Description: RAID/EAGLE EYE TOWER SYSTEMS

Place of Performance

Location: ANDOVER, ESSEX County, MASSACHUSETTS, 01810

State: Massachusetts Government Spending

Plain-Language Summary

Department of Defense obligated $113.1 million to RAYTHEON COMPANY for work described as: RAID/EAGLE EYE TOWER SYSTEMS Key points: 1. The contract's cost-plus-fixed-fee structure may incentivize cost overruns. 2. Limited competition due to exclusion of sources could impact price. 3. The contract duration of 1185 days suggests a complex, long-term project. 4. Performance context is limited without specific deliverables or milestones. 5. This contract falls within the Defense sector's research and development spending. 6. The contractor, Raytheon Company, is a major defense industry player.

Value Assessment

Rating: fair

Benchmarking the value of this R&D contract is challenging without detailed performance metrics. The cost-plus-fixed-fee (CPFF) pricing structure, while common for R&D, can lead to higher final costs than fixed-price contracts if not managed tightly. Comparing it to similar R&D efforts in advanced sensor technology would provide better context for value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

This contract was awarded under 'Full and Open Competition After Exclusion of Sources,' indicating that while competition was sought, certain sources were excluded. This suggests a specific technical requirement or a pre-existing relationship that narrowed the competitive pool. The limited number of bidders, likely one given the 'no' field, means less price discovery and potentially higher costs for the government.

Taxpayer Impact: The limited competition means taxpayers may not have received the most cost-effective solution available on the market.

Public Impact

The Department of Defense benefits from advancements in surveillance and reconnaissance technology. The contract supports research and development in physical, engineering, and life sciences. The geographic impact is primarily within Massachusetts, where the contract is managed. Workforce implications include highly skilled R&D personnel within Raytheon.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus-fixed-fee contract type can lead to cost overruns if not closely monitored.
Limited competition may result in a higher price than a fully open competition.
Lack of specific performance metrics makes value assessment difficult.
Long contract duration increases the risk of scope creep or changing requirements.

Positive Signals

Contract awarded to a reputable defense contractor with extensive R&D experience.
Focus on research and development aligns with strategic defense needs.
Contract managed by the Defense Contract Management Agency, suggesting oversight.

Sector Analysis

This contract falls within the broader Research and Development sector, specifically focusing on physical, engineering, and life sciences. The defense industry heavily invests in R&D for advanced technologies like surveillance and reconnaissance systems. Comparable spending benchmarks would involve looking at other large-scale R&D contracts for similar defense systems, which often run into tens or hundreds of millions of dollars.

Small Business Impact

There is no indication of small business set-asides for this contract, and the prime contractor is Raytheon Company, a large corporation. Subcontracting opportunities for small businesses are possible but not explicitly detailed in the provided data. The overall impact on the small business ecosystem is likely minimal for this specific contract, as it appears to be a direct award to a major prime.

Oversight & Accountability

Oversight is provided by the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor performance and compliance. Accountability measures are inherent in the contract's cost-plus-fixed-fee structure, requiring detailed reporting and justification of costs. Transparency is facilitated through contract reporting mechanisms, though specific details of R&D progress may be sensitive.

Related Government Programs

Defense Advanced Research Projects Agency (DARPA) Contracts
Intelligence, Surveillance, and Reconnaissance (ISR) Systems
Advanced Technology Development Programs
Department of Defense Research and Development Spending

Risk Flags

Cost Overrun Risk
Limited Competition Impact
Lack of Performance Metrics
Potential for Scope Creep

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $113.1 million to RAYTHEON COMPANY. RAID/EAGLE EYE TOWER SYSTEMS

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 $113.1 million.

What is the period of performance?

Start: 2006-10-03. End: 2009-12-31.

What specific technological advancements were achieved under the RAID/EAGLE EYE TOWER SYSTEMS contract?

The provided data does not specify the exact technological advancements achieved under the RAID/EAGLE EYE TOWER SYSTEMS contract. As a research and development contract, its primary goal was likely to explore, develop, and test new capabilities for surveillance and reconnaissance. Without access to detailed project reports or technical documentation, it's impossible to quantify the specific breakthroughs. However, given the 'EAGLE EYE' designation, it likely pertains to advanced aerial or tower-based sensor systems, potentially involving improved imaging, signal processing, or data fusion capabilities for intelligence gathering.

How does the $113 million total award amount compare to similar R&D contracts for surveillance systems?

The $113 million total award for the RAID/EAGLE EYE TOWER SYSTEMS contract is substantial, placing it in the upper tier of R&D contracts for specialized defense systems. Comparable contracts for developing advanced surveillance and reconnaissance technologies, particularly those involving complex sensor suites and data analysis, often range from tens to hundreds of millions of dollars. For instance, contracts for developing next-generation radar systems, electronic warfare capabilities, or advanced drone-based intelligence platforms can easily exceed this amount. The specific nature of 'tower systems' might imply a niche application, but the overall R&D investment is consistent with the high costs associated with cutting-edge defense technology development.

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 Research and Development (R&D) revolve around cost control and potential overruns. While the fixed fee provides the contractor with a guaranteed profit margin, the government bears the risk of all allowable costs exceeding the initial estimate. This can incentivize contractors to incur higher costs, as their fee remains constant regardless of the total expenditure. For R&D, where the scope and technical challenges are often uncertain, CPFF contracts can lead to significant cost escalations if not meticulously managed and monitored by the government. This necessitates robust oversight to ensure costs are reasonable and allocable to the contract objectives.

What does 'Full and Open Competition After Exclusion of Sources' imply about the procurement process?

'Full and Open Competition After Exclusion of Sources' implies a procurement process that initially aimed for broad competition but ultimately restricted the pool of eligible bidders. This typically occurs when specific technical requirements, proprietary data, or unique capabilities are necessary, leading the agency to exclude certain potential sources deemed unqualified or unable to meet the stringent criteria. While it starts with an intent for open competition, the exclusion narrows the field, potentially reducing the number of offers received. This can impact price discovery and may indicate that only a limited number of contractors possess the specialized knowledge or technology required for the project.

What is the significance of the contract being managed by the Defense Contract Management Agency (DCMA)?

The significance of the contract being managed by the Defense Contract Management Agency (DCMA) lies in the specialized oversight and support it provides to the Department of Defense and other federal agencies. DCMA's role includes ensuring that contractors meet their contractual obligations in terms of quality, cost, and schedule. For a complex R&D contract like RAID/EAGLE EYE TOWER SYSTEMS, DCMA's involvement suggests a focus on monitoring contractor performance, verifying costs, ensuring compliance with regulations, and facilitating communication between the contractor and the contracting officer. This oversight is crucial for mitigating risks inherent in R&D projects and ensuring taxpayer funds are used effectively.

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 AFTER EXCLUSION OF SOURCES

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Rockwell Collins Australia PTY Limited

Address: 350 LOWELL ST, ANDOVER, MA, 01810

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: $125,978,918

Exercised Options: $125,978,918

Current Obligation: $113,051,545

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline