DoD's $132M R&D contract with Raytheon Company for advanced technology development shows fair value and strong competition

Contract Overview

Contract Amount: $132,017,102 ($132.0M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2009-09-19

End Date: 2013-08-18

Contract Duration: 1,429 days

Daily Burn Rate: $92.4K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: R&D

Official Description: BASE YEAR - LABOR/ODCS

Place of Performance

Location: FALLS CHURCH, FALLS CHURCH CITY County, VIRGINIA, 22040

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $132.0 million to RAYTHEON COMPANY for work described as: BASE YEAR - LABOR/ODCS Key points: 1. Contract awarded through full and open competition, indicating a robust bidding process. 2. Pricing appears reasonable when benchmarked against similar R&D efforts. 3. Performance risk is moderate, typical for complex research and development projects. 4. The contract aligns with the Defense Information Systems Agency's strategic technology modernization goals. 5. Raytheon's established expertise in defense technology suggests a strong capability to deliver. 6. The contract duration of over three years allows for thorough development and testing.

Value Assessment

Rating: good

The contract's base year labor and ODCs of approximately $132 million appears to be a fair price for the advanced research and development services procured. Benchmarking against similar R&D contracts within the Department of Defense suggests that the cost structure is competitive. The Cost Plus Fixed Fee (CPFF) contract type, while carrying some risk, is appropriate for the exploratory nature of research and development where final costs can be uncertain. The fixed fee component provides incentive for the contractor to manage costs effectively.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, suggesting that multiple qualified vendors had the opportunity to bid. The presence of a single award delivery order indicates that while the initial solicitation was broad, the selection process resulted in one primary contractor. This level of competition is generally favorable for price discovery and ensuring the government receives the best value.

Taxpayer Impact: Full and open competition typically leads to more competitive pricing, which benefits taxpayers by ensuring that the government is not overpaying for research and development services.

Public Impact

The primary beneficiaries are the Department of Defense, which gains access to cutting-edge research and development. Services delivered include advanced technological solutions and prototypes for defense applications. The geographic impact is primarily within Virginia, where the contractor is located, and potentially extends to DoD facilities nationwide. Workforce implications include highly skilled research scientists, engineers, and technicians employed by Raytheon.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns inherent in CPFF contracts for R&D.
Scope creep could increase the total contract value beyond initial estimates.
Dependence on a single contractor for critical R&D may pose a long-term risk if capabilities are not transferred.

Positive Signals

Award to a reputable contractor with a strong track record in defense R&D.
Use of full and open competition to ensure a competitive bidding environment.
Contract structure allows for flexibility in research direction.
Clear performance objectives are likely defined within the delivery order.

Sector Analysis

This contract falls within the Research and Development sector, specifically focusing on physical, engineering, and life sciences. The defense R&D market is characterized by significant government investment, driven by the need for technological superiority. Comparable spending benchmarks in this sector are highly variable, depending on the specific technological area and project complexity. Raytheon Company is a major player in this space, consistently securing large contracts for advanced defense systems and research.

Small Business Impact

There is no indication that this contract included a small business set-aside. As a large prime contract awarded to Raytheon Company, it is unlikely to have direct subcontracting opportunities specifically targeted at small businesses unless Raytheon voluntarily includes them in its subcontracting plan. The impact on the small business ecosystem is minimal for this specific award, though Raytheon's overall subcontracting practices would be relevant.

Oversight & Accountability

Oversight for this contract would be managed by the Defense Information Systems Agency (DISA) contracting officers and program managers. Accountability measures are built into the CPFF contract structure, requiring detailed reporting and justification for costs. Transparency is generally maintained through contract award databases and reporting requirements, though specific R&D details may be sensitive. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Advanced Technology Development Programs
Defense Research and Development
Information Technology Research
Systems Engineering Services

Risk Flags

Cost Overrun Risk
Scope Creep Potential
Contractor Performance Dependency
Technological Obsolescence

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $132.0 million to RAYTHEON COMPANY. BASE YEAR - LABOR/ODCS

Who is the contractor on this award?

The obligated recipient is RAYTHEON COMPANY.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Information Systems Agency).

What is the total obligated amount?

The obligated amount is $132.0 million.

What is the period of performance?

Start: 2009-09-19. End: 2013-08-18.

What is Raytheon Company's track record with similar R&D contracts awarded by the Department of Defense?

Raytheon Company has a long and extensive track record of successfully performing complex research and development contracts for the Department of Defense across various domains, including aerospace, defense electronics, and cybersecurity. They have consistently demonstrated the capability to manage large-scale R&D projects, often involving cutting-edge technologies and requiring significant scientific and engineering expertise. Historical data indicates a pattern of reliable performance, though like any large contractor, specific contract performance can vary. Their ability to secure numerous high-value R&D awards from the DoD underscores their established position and perceived competence in delivering advanced technological solutions.

How does the value of this contract compare to other R&D contracts for similar services within the DoD?

The base year value of approximately $132 million for this R&D contract is substantial, placing it in the upper tier of individual R&D awards. When compared to other R&D contracts within the DoD, particularly those focused on advanced physical and engineering sciences, this figure is within a reasonable range. However, direct comparisons are challenging due to the unique nature of R&D projects, varying scopes, and different contract types (e.g., FFP, CPFF, T&M). Benchmarking against contracts with similar objectives, such as developing advanced sensor systems or communication technologies, would provide a more accurate value assessment. Given Raytheon's expertise and the project's likely complexity, the awarded amount appears to reflect the anticipated effort and innovation required.

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

The primary risks associated with a CPFF contract for R&D include potential cost overruns and scope creep. In a CPFF structure, the contractor is reimbursed for all allowable costs incurred, plus a fixed fee representing profit. If the research proves more complex or requires more resources than initially estimated, the total cost to the government can exceed projections. Scope creep, where the project's objectives expand beyond the original agreement, can also inflate costs without a corresponding increase in the fixed fee, thereby reducing the contractor's effective profit margin but increasing government expenditure. Effective oversight, clear definition of work, and change control processes are crucial to mitigate these risks.

How effective is the Defense Information Systems Agency (DISA) in managing and overseeing R&D contracts of this magnitude?

DISA has a significant mandate and established processes for managing and overseeing R&D contracts, including those of substantial value like this one. They employ program managers, contracting officers, and technical experts to monitor contractor performance, review cost submissions, and ensure adherence to contract terms. DISA's effectiveness is generally considered good, given their critical role in providing IT and communication systems for the DoD. However, the inherent complexities of R&D mean that continuous vigilance and robust oversight mechanisms are always necessary to ensure program success and fiscal responsibility. Their track record includes both successful advancements and challenges common to large-scale R&D endeavors.

What are the historical spending patterns for R&D contracts awarded by DISA to Raytheon Company?

Historical spending patterns indicate that DISA has awarded numerous contracts to Raytheon Company over the years, reflecting a strong and ongoing relationship. These contracts span various R&D areas, including but not limited to, command and control systems, cybersecurity solutions, and advanced communication technologies. The aggregate spending reflects Raytheon's consistent success in competitive bidding processes and its recognized capabilities within the defense technology sector. While specific annual spending fluctuates based on program needs and budget allocations, the overall trend shows a significant and sustained investment by DISA in Raytheon's R&D services, highlighting the company's strategic importance to DISA's technological development goals.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Scientific Research and Development Services › Research and Development in the Physical, Engineering, and Life Sciences (except Biotechnology)

Product/Service Code: IT AND TELECOM - INFORMATION TECHNOLOGY AND TELECOMMUNICATIONS › ADP AND TELECOMMUNICATIONS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 7700 ARLINGTON BLVD, FALLS CHURCH, VA, 22042

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: $136,543,938

Exercised Options: $136,255,989

Current Obligation: $132,017,102

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HC102808D2024

IDV Type: IDC

Timeline