Raytheon Company awarded $27M for F-16 Center Display Units, a sole-source contract

Contract Overview

Contract Amount: $26,977,621 ($27.0M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2019-04-08

End Date: 2024-12-31

Contract Duration: 2,094 days

Daily Burn Rate: $12.9K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: F-16 CENTER DISPLAY UNIT (CDU)

Place of Performance

Location: INDIANAPOLIS, MARION County, INDIANA, 46219

State: Indiana Government Spending

Plain-Language Summary

Department of Defense obligated $27.0 million to RAYTHEON COMPANY for work described as: F-16 CENTER DISPLAY UNIT (CDU) Key points: 1. Contract awarded to a single supplier suggests potential for higher pricing due to lack of competition. 2. The fixed-price contract type shifts cost risk to the contractor, but the sole-source nature may limit upside for the government. 3. Performance period extends over five years, indicating a long-term need for these critical aircraft components. 4. The contract is for navigation and guidance systems, essential for F-16 operational effectiveness. 5. No small business set-aside was utilized, potentially limiting opportunities for smaller firms in this specialized manufacturing sector.

Value Assessment

Rating: fair

The contract value of $26.98 million for F-16 Center Display Units (CDUs) appears to be a significant investment. Without a competitive bidding process, it is difficult to benchmark the value for money. The fixed-price nature of the contract provides some cost certainty, but the lack of competition raises concerns about whether the government is obtaining the best possible price. Further analysis would require comparing this unit cost to historical data for similar CDUs or to prices for comparable systems on other aircraft platforms.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award. This typically occurs when only one vendor can provide the required goods or services, often due to proprietary technology, unique capabilities, or existing system integration. The lack of competition means the government did not benefit from a bidding process that could drive down prices through market forces. The absence of multiple bidders limits the government's leverage in price negotiation and may result in a higher overall cost.

Taxpayer Impact: Taxpayers may be paying a premium for these critical components due to the absence of competitive pressure. The sole-source nature prevents the government from exploring potentially more cost-effective solutions that might have emerged from a competitive solicitation.

Public Impact

The primary beneficiaries are the U.S. Air Force and potentially allied nations operating F-16 fighter jets, ensuring the continued operational readiness of these aircraft. The contract delivers essential electronic components, specifically center display units, which are crucial for pilot navigation, situational awareness, and system control. The geographic impact is primarily within the United States, with the contractor's facility in Indiana likely being the hub for production and delivery. This contract supports specialized manufacturing jobs within the aerospace and defense sector, contributing to the skilled workforce required for advanced avionics production.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price discovery and potentially increases costs for taxpayers.
Lack of competition may stifle innovation from other potential suppliers.
Long contract duration could lead to price increases if market conditions change unfavorably.
Reliance on a single supplier creates a potential supply chain risk.

Positive Signals

Fixed-price contract type provides cost certainty for the government.
Contract supports critical defense systems, ensuring national security capabilities.
Long-term contract indicates a stable demand and potential for sustained production.

Sector Analysis

The contract falls within the aerospace and defense manufacturing sector, specifically focusing on avionics and electronic systems for military aircraft. The market for such specialized components is often characterized by high barriers to entry due to complex engineering requirements, stringent quality standards, and long development cycles. Spending in this area is driven by defense modernization efforts and the sustainment of existing fleets. Comparable spending benchmarks would involve analyzing other contracts for similar avionics components across various military platforms.

Small Business Impact

This contract was not awarded as a small business set-aside, and there is no indication of subcontracting requirements for small businesses. This means that opportunities for small businesses to participate in the production or supply of these F-16 center display units are limited. The specialized nature of avionics manufacturing often favors larger, established defense contractors, potentially excluding smaller, innovative firms from contributing to this segment of the defense industrial base.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Air Force's contracting and program management offices. Accountability measures are embedded in the fixed-price contract terms, requiring delivery of specified units. Transparency is limited due to the sole-source nature, with less public information available compared to competed contracts. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

F-16 Sustainment Programs
Avionics Modernization Contracts
Defense Production Act Investments
Aerospace Manufacturing Support
Military Aircraft Component Procurement

Risk Flags

Sole-source award
Lack of competition
Potential for cost overruns
Supply chain dependency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $27.0 million to RAYTHEON COMPANY. F-16 CENTER DISPLAY UNIT (CDU)

Who is the contractor on this award?

The obligated recipient is RAYTHEON COMPANY.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Air Force).

What is the total obligated amount?

The obligated amount is $27.0 million.

What is the period of performance?

Start: 2019-04-08. End: 2024-12-31.

What is the historical spending trend for F-16 Center Display Units with Raytheon Company?

Analyzing historical spending data for F-16 Center Display Units (CDUs) with Raytheon Company is crucial for understanding cost trends and value over time. While this specific contract is for $26.98 million, prior awards for similar components would provide context. Without access to historical contract databases or specific procurement histories for this item, it's challenging to establish a precise trend. However, generally, sustained demand for aging aircraft like the F-16 can lead to consistent, albeit potentially increasing, procurement costs due to inflation, material cost fluctuations, and the contractor's established market position. A detailed analysis would involve examining contract awards over the past decade or more to identify any significant price escalations or cost efficiencies.

How does the unit cost of these F-16 CDUs compare to similar systems on other aircraft?

Benchmarking the unit cost of these F-16 Center Display Units (CDUs) against similar systems on other aircraft is essential for assessing value for money, especially given the sole-source nature of this award. However, direct comparisons are often difficult due to variations in complexity, technology, size, and specific functionalities across different aircraft platforms and their respective avionics suites. For instance, CDUs on newer, more advanced fighter jets might be significantly more expensive due to integrated touchscreens, higher resolution displays, or advanced processing capabilities. Conversely, simpler displays on older or less complex aircraft might be cheaper. To perform a meaningful comparison, one would need to identify aircraft with comparable mission profiles and technological sophistication to the F-16 and then research the procurement costs of their primary display units, adjusting for any known technological differences.

What are the potential risks associated with a sole-source award for critical aircraft components?

Sole-source awards for critical aircraft components like F-16 Center Display Units (CDUs) present several risks. The most prominent is the lack of price competition, which can lead to inflated costs for the government and taxpayers, as the contractor faces no pressure to offer the lowest possible price. There's also a risk of reduced innovation, as potential competitors are excluded from the market, limiting the introduction of new technologies or more efficient manufacturing processes. Furthermore, reliance on a single supplier creates a significant supply chain vulnerability; any disruption at the contractor's facility, such as production issues, labor disputes, or financial instability, could directly impact the operational readiness of the F-16 fleet. Finally, the government may have less leverage in negotiating contract modifications or addressing performance issues when dealing with a sole provider.

What is Raytheon Company's track record in delivering avionics systems for military aircraft?

Raytheon Company, now part of RTX, has a long and extensive track record in delivering a wide array of avionics systems and electronic warfare solutions for numerous military aircraft platforms, including the F-16. They are a major defense contractor known for producing radar systems, communication equipment, navigation systems, and other critical electronic components. Their experience spans decades, and they have consistently been a key supplier to the U.S. Department of Defense and allied nations. While specific performance metrics for every contract are not publicly available, their continued success in securing large defense contracts suggests a generally reliable performance history. However, as with any large contractor, there can be instances of contract disputes, performance issues, or cost overruns on specific programs, necessitating ongoing oversight.

How does the duration of this contract (2019-2024) impact the overall value proposition?

The contract duration of approximately five years (April 2019 to December 2024) for the F-16 Center Display Units (CDUs) has a mixed impact on the value proposition. On the positive side, a longer duration provides stability and predictability for both the government and the contractor. It allows for potential economies of scale in production and can reduce the administrative burden associated with frequent contract renewals. For the government, it ensures a consistent supply of critical components for the F-16 fleet over an extended period. However, a long duration, especially in a sole-source context, also carries risks. Market prices for raw materials or manufacturing processes could fluctuate significantly over five years, potentially leading to unfavorable cost adjustments if not adequately managed within the contract terms. Furthermore, it locks the government into a single supplier for an extended period, potentially missing out on cost savings or technological advancements that might emerge from a more competitive environment if the contract were shorter or re-competed.

Industry Classification

NAICS: Manufacturing › Navigational, Measuring, Electromedical, and Control Instruments Manufacturing › Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing

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

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Rockwell Collins Australia PTY Limited

Address: 6125 E 21ST ST, INDIANAPOLIS, IN, 46219

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: $26,997,983

Exercised Options: $26,990,995

Current Obligation: $26,977,621

Actual Outlays: $1,906,861

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA823219D0005

IDV Type: IDC

Timeline