Raytheon Company awarded $54.9M for B-2 Radar Component Repair, a sole-source contract

Contract Overview

Contract Amount: $54,876,306 ($54.9M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2017-07-25

End Date: 2026-02-28

Contract Duration: 3,140 days

Daily Burn Rate: $17.5K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: IGF::OT::IGF B-2 RADAR COMPONENT REPAIR

Place of Performance

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

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $54.9 million to RAYTHEON COMPANY for work described as: IGF::OT::IGF B-2 RADAR COMPONENT REPAIR Key points: 1. Contract awarded to Raytheon Company, a major defense contractor with extensive experience. 2. The contract is for repair of B-2 radar components, critical for aircraft maintenance. 3. Awarded as a sole-source contract, raising questions about potential price competition. 4. The contract duration extends to February 2026, indicating a long-term need. 5. The contract type is Cost Plus Fixed Fee (CPFF), which can incentivize cost overruns. 6. The North American Industry Classification System (NAICS) code is 336413, indicating a specialized manufacturing sector.

Value Assessment

Rating: questionable

Benchmarking the value of this sole-source contract is challenging without competitive bids. The Cost Plus Fixed Fee (CPFF) structure means the government pays Raytheon's costs plus a fixed fee, which can lead to higher overall costs compared to fixed-price contracts if costs are not well-managed. Without comparable contract data for B-2 radar component repair, it's difficult to definitively assess if the pricing is fair. However, sole-source awards often carry a premium due to lack of competition.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning Raytheon Company was the only vendor considered. This typically occurs when a specific contractor possesses unique capabilities, proprietary technology, or is the sole provider of a necessary part or service. The lack of competition means there was no opportunity for other companies to bid, potentially limiting price discovery and negotiation leverage for the government.

Taxpayer Impact: Sole-source awards can result in higher costs for taxpayers as there is no competitive pressure to drive down prices. This necessitates robust oversight to ensure costs are reasonable.

Public Impact

The U.S. Air Force's B-2 bomber fleet benefits from the continued operational readiness of its radar systems. Services include the repair and maintenance of critical radar components, ensuring aircraft functionality. The geographic impact is primarily within the United States, supporting defense infrastructure. The contract supports specialized manufacturing and repair jobs within the aerospace and defense sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially leading to higher costs.
Cost Plus Fixed Fee (CPFF) contract type can incentivize cost escalation.
Lack of transparency in pricing due to sole-source nature.
Long contract duration may not reflect evolving market conditions or technological advancements.
Dependence on a single contractor for critical component repair.

Positive Signals

Raytheon Company is an established defense contractor with proven expertise in radar systems.
Contract ensures continued operational readiness of the B-2 bomber fleet.
Specialized nature of B-2 radar components likely necessitates specific technical expertise.
The contract is managed by the Defense Contract Management Agency, suggesting oversight.

Sector Analysis

The aerospace and defense industry is characterized by high technological complexity and significant government investment. This contract falls within the specialized manufacturing sub-sector for aircraft parts. The market for such specialized repair services is often limited to a few key players due to the proprietary nature of the technology and the stringent qualification requirements. Spending in this sector is driven by national security needs and the lifecycle management of advanced military platforms.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Given the specialized nature of B-2 radar component repair and the sole-source award to a large prime contractor, subcontracting opportunities for small businesses may be limited or dictated by the prime. Further analysis would be needed to determine if Raytheon Company has a subcontracting plan that includes small businesses for any aspects of this work.

Oversight & Accountability

Oversight for this contract is likely managed by the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor performance and compliance. The Cost Plus Fixed Fee (CPFF) structure necessitates close monitoring of costs incurred by Raytheon Company to ensure they are reasonable and allowable. Transparency regarding cost breakdowns and fee calculations would be crucial for effective oversight. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

B-2 Bomber Sustainment Programs
Aerospace Component Manufacturing
Defense Radar Systems Maintenance
Aircraft Parts and Auxiliary Equipment Manufacturing

Risk Flags

Sole-source award
Cost Plus Fixed Fee contract type
Lack of competitive bidding
Potential for cost overruns

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $54.9 million to RAYTHEON COMPANY. IGF::OT::IGF B-2 RADAR COMPONENT REPAIR

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 $54.9 million.

What is the period of performance?

Start: 2017-07-25. End: 2026-02-28.

What is Raytheon Company's track record with similar sole-source defense contracts?

Raytheon Company, now part of RTX, has a long history of securing sole-source contracts within the Department of Defense, particularly for specialized systems and components where they hold proprietary technology or unique manufacturing capabilities. Analyzing their past performance on similar sole-source awards would involve reviewing contract histories for cost overruns, delivery performance, and any disputes or audits. While specific data for this exact contract is limited, Raytheon's general profile suggests they are a capable, albeit expensive, provider for complex defense systems. Their extensive experience can be a double-edged sword: it implies competence but also reduces the impetus for competitive pricing on sole-source awards.

How does the Cost Plus Fixed Fee (CPFF) structure compare to other contract types for this kind of service?

The Cost Plus Fixed Fee (CPFF) contract type is often used when the scope of work is not precisely defined, or when there is significant uncertainty in the costs involved, such as in research and development or complex repair scenarios. In this case, the government agrees to pay the contractor's actual costs plus a predetermined fixed fee, representing the contractor's profit. Compared to fixed-price contracts, CPFF offers less cost certainty for the government and can incentivize contractors to incur higher costs, as their fee remains constant. However, it provides flexibility for unforeseen issues. For repair services where the exact extent of damage or required parts might be unknown upfront, CPFF can be justifiable, but it requires stringent government oversight to control costs.

What are the primary risks associated with a sole-source award for critical defense components?

The primary risks associated with a sole-source award for critical defense components like B-2 radar parts include inflated pricing due to the absence of competition, potential for complacency from the sole provider regarding efficiency and innovation, and a lack of flexibility if the contractor's performance deteriorates or if alternative solutions emerge. Taxpayers bear the risk of paying a premium. Furthermore, dependence on a single supplier creates a vulnerability in the supply chain; any disruption to that supplier could significantly impact the operational readiness of the B-2 fleet. Robust contract management and continuous market surveillance are essential to mitigate these risks.

What is the historical spending pattern for B-2 radar component repair, and how does this award fit?

Historical spending data for B-2 radar component repair is not publicly detailed in a way that allows for direct comparison to this specific $54.9 million award. However, the B-2 bomber is a highly complex and aging platform, requiring continuous and often expensive maintenance and component sustainment. Awards for such specialized repairs are typically substantial and long-term, reflecting the intricate technology and limited number of qualified personnel and facilities. This $54.9 million award, spanning several years, appears consistent with the expected lifecycle support costs for a strategic, low-volume, high-capability aircraft like the B-2. The sole-source nature suggests a continued reliance on Raytheon's established expertise for these specific components.

Are there any performance metrics or Key Performance Indicators (KPIs) associated with this contract?

While the provided data does not explicitly list performance metrics or KPIs for this contract, it is standard practice for Department of Defense contracts, especially those involving critical systems, to include such measures. These typically focus on aspects like on-time delivery of repaired components, quality of repairs (e.g., defect rates), turnaround time for repairs, and adherence to technical specifications. The Defense Contract Management Agency (DCMA) would likely be responsible for monitoring Raytheon's performance against these KPIs. Failure to meet established metrics could result in contractual remedies or penalties, depending on the contract's specific clauses.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Other Aircraft Parts and Auxiliary Equipment Manufacturing

Product/Service Code: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: FA811916R0035

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: RTX Corp

Address: 2000 E EL SEGUNDO BLVD, EL SEGUNDO, CA, 90245

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: $54,876,306

Exercised Options: $54,876,306

Current Obligation: $54,876,306

Subaward Activity

Number of Subawards: 5

Total Subaward Amount: $176,219

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: FA811917D0015

IDV Type: IDC

Timeline