Raytheon Company awarded $30M for critical function R&D, raising questions about competition and value

Contract Overview

Contract Amount: $29,963,583 ($30.0M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2015-07-30

End Date: 2017-06-30

Contract Duration: 701 days

Daily Burn Rate: $42.7K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: R&D

Official Description: IGF::CT::IGF FOR CRITICAL FUNCTIONS

Place of Performance

Location: WASHINGTON, DISTRICT OF COLUMBIA County, DISTRICT OF COLUMBIA, 20301

State: District of Columbia Government Spending

Plain-Language Summary

Department of Defense obligated $30.0 million to RAYTHEON COMPANY for work described as: IGF::CT::IGF FOR CRITICAL FUNCTIONS Key points: 1. Contract awarded on a sole-source basis, limiting price discovery and potentially increasing costs. 2. Research and Development focus suggests innovation but carries inherent performance risks. 3. Contract duration of 701 days indicates a medium-term project with ongoing resource needs. 4. Awarded by the Department of Defense, highlighting its strategic importance in national security. 5. The contract's value is significant within the R&D sector, warranting close scrutiny. 6. Lack of competition raises concerns about whether the government secured the best possible price. 7. The cost-plus-fixed-fee structure can incentivize cost overruns if not managed tightly.

Value Assessment

Rating: questionable

Benchmarking the value for this specific R&D contract is challenging due to its specialized nature and sole-source award. However, the cost-plus-fixed-fee (CPFF) pricing structure, while common for R&D, can lead to higher costs if not rigorously managed. Without competitive bids, it's difficult to ascertain if the fixed fee accurately reflects the effort required or if the government is paying a premium. The total award amount of approximately $30 million for a two-year period suggests a substantial investment, and a thorough review of the contractor's cost proposals and the reasonableness of the fee would be necessary to confirm value for money.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one contractor, Raytheon Company, was solicited. This approach bypasses the standard competitive bidding process, which typically involves soliciting proposals from multiple interested parties. While sole-source awards can be justified in specific circumstances, such as when only one vendor possesses the required unique capabilities or when urgency precludes full competition, they inherently limit the government's ability to leverage market competition to drive down prices and ensure the best value.

Taxpayer Impact: Taxpayers may not benefit from the cost savings that typically arise from a competitive bidding environment, potentially leading to higher overall spending.

Public Impact

The primary beneficiary is the Department of Defense, which receives critical R&D services for its missile defense programs. The contract supports advancements in physical, engineering, and life sciences research, excluding biotechnology. Geographic impact is primarily within the District of Columbia, where the contract is managed. Workforce implications include specialized R&D personnel employed by Raytheon Company.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure on pricing.
Cost-plus-fixed-fee contract structure may incentivize higher costs.
Lack of transparency in the sole-source justification process.
Potential for scope creep in R&D projects without strict oversight.
Difficulty in benchmarking performance and cost without comparable contracts.

Positive Signals

Award to a known contractor with established capabilities in defense R&D.
Focus on critical functions suggests high strategic importance.
Contract supports advanced research and development efforts.
Fixed fee component provides some cost certainty for the government.

Sector Analysis

The contract falls within the Research and Development (R&D) sector, specifically focusing on physical, engineering, and life sciences. This sector is characterized by high innovation, significant investment, and often long development cycles. Comparable spending benchmarks in this area are difficult to establish precisely due to the unique nature of R&D projects. However, the approximately $30 million awarded to Raytheon for a two-year period is a substantial sum, indicative of a project requiring significant expertise and resources, likely within the defense technology sub-sector.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb: false'. Furthermore, there is no explicit mention of subcontracting requirements for small businesses. This suggests that the primary awardee, Raytheon Company, is expected to perform the work directly or through its own resources. Consequently, the direct impact on the small business ecosystem for this specific contract is likely minimal, with no dedicated opportunities created for small business prime contractors or mandated subcontracting flows.

Oversight & Accountability

Oversight for this contract would typically fall under the purview of the Department of Defense's contracting officers and potentially the Missile Defense Agency's program management. Given the sole-source nature and the R&D focus, rigorous oversight of technical progress, cost expenditures, and adherence to the fixed fee is crucial. Transparency is limited by the lack of a competitive process. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Missile Defense Systems R&D
Advanced Technology Development Contracts
Department of Defense Research and Development Programs
Cost-Plus-Fixed-Fee Contracts

Risk Flags

Sole-source award
Lack of competition
Cost-plus-fixed-fee pricing
R&D inherent risks
Limited transparency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $30.0 million to RAYTHEON COMPANY. IGF::CT::IGF FOR CRITICAL FUNCTIONS

Who is the contractor on this award?

The obligated recipient is RAYTHEON COMPANY.

Which agency awarded this contract?

Awarding agency: Department of Defense (Missile Defense Agency).

What is the total obligated amount?

The obligated amount is $30.0 million.

What is the period of performance?

Start: 2015-07-30. End: 2017-06-30.

What specific R&D activities are covered under this contract, and what are the expected deliverables?

The contract data indicates 'Research and Development in the Physical, Engineering, and Life Sciences (except Biotechnology)' for 'CRITICAL FUNCTIONS'. While the specific deliverables are not detailed in the provided data, R&D contracts of this nature typically involve activities such as theoretical research, experimental design, prototype development, testing, and analysis. The 'critical functions' designation suggests the research is aimed at addressing vital operational needs or technological gaps within the Department of Defense, likely related to missile defense systems given the awarding agency. Expected deliverables could include research reports, feasibility studies, technical data packages, proof-of-concept demonstrations, or early-stage prototypes.

Why was this contract awarded on a sole-source basis, and what justifications were provided?

The provided data explicitly states the contract type as 'NOT COMPETED', indicating a sole-source award. The specific justifications for this sole-source determination are not included in the abbreviated data. However, common reasons for sole-source awards include the unique capability of a single contractor, urgent and compelling needs that preclude full and open competition, or when the R&D involves highly specialized knowledge or proprietary technology that only one entity possesses. Without the official justification documentation, it is impossible to confirm the precise rationale, but it implies that the Missile Defense Agency determined that Raytheon Company was the only viable source for the required critical R&D.

How does the Cost Plus Fixed Fee (CPFF) pricing structure impact cost control and value for money in this R&D context?

The Cost Plus Fixed Fee (CPFF) structure is common for R&D contracts where the scope of work can be uncertain and evolve. Under CPFF, the contractor is reimbursed for all allowable costs incurred, plus a predetermined fixed fee representing profit. This structure incentivizes the contractor to control costs, as the fee remains constant regardless of the final cost. However, it also shifts some risk to the government, as cost overruns directly increase the total contract price. Effective value for money depends heavily on robust government oversight to ensure costs are reasonable and allocable, and that the fixed fee is appropriate for the level of effort and risk involved. Without competitive bidding, the government has less leverage to negotiate the fee and ensure it reflects market rates.

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

Raytheon Company (now RTX) has a long and extensive track record of performing complex R&D and manufacturing for the Department of Defense, particularly in areas related to missile systems, radar, and defense electronics. They are a major defense contractor with significant experience in developing advanced technologies. While specific details of their past performance on similar sole-source R&D contracts are not provided here, their overall history suggests a capacity to undertake challenging research projects. However, past performance alone does not guarantee future value, especially in sole-source situations where competition is absent.

Are there any performance metrics or milestones associated with this contract to measure success?

The provided data does not include specific performance metrics or milestones for this contract. For R&D contracts, especially those awarded on a sole-source basis, performance is often assessed through technical progress reviews, adherence to research plans, and the achievement of specific research objectives or prototypes. The effectiveness of oversight in tracking these aspects is critical. Without explicit metrics in the contract terms, the government relies on the expertise of its program managers and contracting officers to evaluate the contractor's progress and the overall success of the R&D effort.

How does this $30 million award compare to historical spending on similar R&D initiatives by the Missile Defense Agency?

Comparing this $30 million award to historical spending requires access to detailed historical contract data for the Missile Defense Agency (MDA) and the broader R&D sector. However, $30 million for a two-year R&D effort is a significant investment. The MDA consistently invests billions annually in missile defense R&D, encompassing a wide range of projects from fundamental research to system development. This particular contract, focused on 'critical functions' and awarded sole-source, likely represents a specific, high-priority area within the MDA's broader portfolio. Without more granular data on comparable sole-source R&D awards or specific technology areas, a precise benchmark is difficult, but it falls within the substantial funding levels typical for advanced defense R&D.

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: GUIDED MISSLES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: HQ000607R0009

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 225 PRESIDENTIAL WAY, WOBURN, MA, 01801

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $62,981,849

Exercised Options: $31,613,580

Current Obligation: $29,963,583

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HQ000608D0003

IDV Type: IDC

Timeline