Raytheon Company awarded $60.3M for R&D services, with a significant portion allocated to cost-plus-fixed-fee contracts

Contract Overview

Contract Amount: $60,321,030 ($60.3M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2004-01-07

End Date: 2013-09-16

Contract Duration: 3,540 days

Daily Burn Rate: $17.0K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: COST PLUS FIXED FEE

Sector: R&D

Place of Performance

Location: ABERDEEN PROVING GROUND, HARFORD County, MARYLAND, 21005

State: Maryland Government Spending

Plain-Language Summary

Department of Defense obligated $60.3 million to RAYTHEON COMPANY for work described as: Key points: 1. Contract value of $60.3M over its duration indicates substantial investment in research and development. 2. The use of Cost Plus Fixed Fee (CPFF) pricing suggests a focus on complex R&D where costs are less predictable. 3. A duration of 3540 days (over 9 years) points to a long-term strategic objective for the research. 4. The contract was awarded by the Department of Defense, highlighting its alignment with national security priorities. 5. The North American Industry Classification System (NAICS) code 541710 signifies a focus on physical, engineering, and life sciences research. 6. The absence of small business set-asides suggests the scope of work may not have been tailored for smaller entities. 7. The contract's performance period spans a significant historical timeframe, offering insights into past R&D investment patterns.

Value Assessment

Rating: fair

The contract's Cost Plus Fixed Fee (CPFF) structure can lead to cost overruns if not managed diligently. Benchmarking CPFF contracts in R&D is challenging due to inherent cost uncertainties. However, the fixed fee component provides some predictability for the contractor's profit. Without specific performance metrics or comparable contract data, a definitive value-for-money assessment is difficult, but the long duration and substantial total value suggest a significant undertaking.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. This approach generally fosters a competitive environment, potentially leading to better pricing and innovation. The presence of 3 bids suggests a moderate level of competition for this specific R&D requirement.

Taxpayer Impact: Full and open competition is generally favorable for taxpayers as it encourages multiple companies to vie for the contract, potentially driving down costs and improving the quality of services.

Public Impact

The primary beneficiaries are likely the Department of Defense and its associated research arms, gaining access to advanced R&D capabilities. The services delivered are in the realm of physical, engineering, and life sciences research, contributing to technological advancements. The geographic impact is primarily within Maryland (MD), where the contract was managed, but the R&D outcomes could have national implications. The contract supports a highly skilled workforce in research and development, particularly in specialized scientific and engineering fields.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus-fixed-fee contracts can incentivize cost escalation if not rigorously monitored.
Long contract durations (over 9 years) may reduce flexibility to adapt to rapidly changing technological landscapes.
Lack of specific details on deliverables makes it hard to assess the tangible outcomes of the R&D investment.
The absence of small business participation might limit opportunities for innovative smaller firms in this R&D area.

Positive Signals

Awarded through full and open competition, suggesting a robust selection process.
The significant investment indicates a commitment to advancing critical research areas for national security.
The fixed fee component in the CPFF structure provides a degree of cost control for the government.
The contract's long duration allows for sustained focus and development in complex research fields.

Sector Analysis

This contract falls within the Research and Development sector, specifically focusing on physical, engineering, and life sciences. The Department of Defense is a major investor in R&D, seeking technological superiority. Comparable spending benchmarks in this sector are difficult to establish precisely due to the bespoke nature of R&D contracts, but the $60.3M value over nearly a decade represents a significant, long-term commitment to a specific research objective.

Small Business Impact

This contract does not appear to have a small business set-aside component (ss=false, sb=false). The nature of advanced R&D, particularly for the Department of Defense, often involves large, complex projects that may be beyond the capacity or scope of many small businesses. There is no explicit information on subcontracting plans for small businesses, which could represent a missed opportunity to engage the small business innovation ecosystem.

Oversight & Accountability

The contract is managed by the Defense Contract Management Agency (DCMA), which provides program management and oversight. The Cost Plus Fixed Fee (CPFF) structure necessitates close monitoring of costs and progress to ensure value for money. Transparency regarding specific R&D milestones and outcomes would enhance accountability. Inspector General jurisdiction would typically apply to investigations of fraud, waste, or abuse related to federal contracts.

Related Government Programs

Department of Defense Research and Development Programs
Advanced Technology Development Contracts
Engineering and Scientific Services Contracts
Life Sciences Research Grants
Physical Sciences Research Initiatives

Risk Flags

Cost Overrun Risk (CPFF)
Technological Obsolescence Risk (Long Duration)
Oversight Fatigue Risk (Long Duration)

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $60.3 million to RAYTHEON COMPANY. See the official description on USAspending.

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 $60.3 million.

What is the period of performance?

Start: 2004-01-07. End: 2013-09-16.

What specific research areas were prioritized under this $60.3M contract awarded to Raytheon Company?

The contract falls under NAICS code 541710, 'Research and Development in the Physical, Engineering, and Life Sciences.' While the specific research areas are not detailed in the provided data, this classification suggests the work likely encompassed advancements in areas such as materials science, aerospace engineering, electronics, biotechnology, or other scientific fields critical to defense applications. The Department of Defense typically funds R&D to enhance national security, which could include projects related to advanced weaponry, surveillance systems, communication technologies, or protective equipment. The long duration of the contract (over 9 years) implies a focus on foundational or complex research objectives rather than short-term applied projects.

How does the Cost Plus Fixed Fee (CPFF) structure impact the value for money in this contract?

The Cost Plus Fixed Fee (CPFF) structure means the government reimburses the contractor for allowable costs incurred, plus a predetermined fixed fee representing profit. This structure is often used for R&D where the scope and costs are uncertain. While the fixed fee provides some predictability for the contractor's profit, it can incentivize cost escalation if not managed rigorously, as the contractor is reimbursed for costs. Value for money is therefore highly dependent on effective government oversight, clear definition of allowable costs, and robust negotiation of the fixed fee. Without detailed performance metrics and cost tracking data, it's challenging to definitively assess the value derived from this specific CPFF contract compared to alternative pricing models.

What are the potential risks associated with a contract duration of over 9 years for R&D services?

A contract duration of over 9 years for R&D services presents several potential risks. Firstly, technology can evolve rapidly, meaning the initial research objectives or methodologies might become outdated before the contract concludes. This can lead to diminished relevance or the need for costly pivots. Secondly, long-term contracts can reduce flexibility for the contracting agency to adapt to changing strategic priorities or budget constraints. Thirdly, maintaining consistent oversight and engagement over such an extended period can be challenging, potentially leading to a decline in vigilance. Finally, the longer the duration, the greater the cumulative financial commitment, increasing the exposure to potential cost overruns or underperformance over time.

Given the 'full and open competition' award, what does the number of bids (3) suggest about the market for these R&D services?

The fact that this contract was awarded under 'full and open competition' and received 3 bids suggests a moderately competitive market for these specific R&D services. 'Full and open competition' is the preferred method, aiming to maximize the pool of potential offerors. Three bids indicate that multiple entities were interested and capable of undertaking the work, which is generally positive for price discovery and innovation. However, it also implies that the market may not be saturated with providers for this particular niche, or that the requirements were highly specialized, potentially limiting the number of qualified bidders. A higher number of bids would typically indicate a more robustly competitive landscape.

What is the historical spending context for Raytheon Company with the Department of Defense in R&D?

While the provided data focuses on a single contract, Raytheon Company (now RTX) has a long and substantial history of contracting with the Department of Defense across various domains, including significant investments in Research and Development. This $60.3M contract, spanning from 2004 to 2013, represents a portion of their historical engagement. Raytheon is a major defense contractor known for its work in areas like missile systems, radar, avionics, and command and control systems, all of which heavily rely on R&D. Analyzing broader historical spending patterns would reveal Raytheon's consistent role as a key R&D partner for the DoD, undertaking numerous large-scale projects over decades, reflecting its strategic importance and extensive capabilities in defense innovation.

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

Solicitation Procedures: BASIC RESEARCH

Offers Received: 3

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 1300 E JOPPA RD, BALTIMORE, MD, 21286

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline