Raytheon Company awarded $28.3M for F-16 Center Display Units, a sole-source contract

Contract Overview

Contract Amount: $28,331,727 ($28.3M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2019-09-12

End Date: 2023-06-30

Contract Duration: 1,387 days

Daily Burn Rate: $20.4K/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 $28.3 million to RAYTHEON COMPANY for work described as: F-16 CENTER DISPLAY UNIT (CDU) Key points: 1. Contract awarded on a sole-source basis, limiting price competition. 2. The contract duration of 1387 days suggests a long-term need for these components. 3. The firm-fixed-price type indicates that the price is set regardless of the contractor's actual costs. 4. The absence of small business set-aside flags suggests this contract was not specifically targeted for small business participation. 5. The contract's value of over $28 million warrants scrutiny regarding cost-effectiveness. 6. The North American Industry Classification System (NAICS) code 334511 points to a specialized manufacturing sector.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without comparable sole-source awards for F-16 Center Display Units. The firm-fixed-price structure provides some cost certainty, but the lack of competition inherently limits the opportunity for aggressive pricing. The total award amount of $28.3 million for a specialized component over nearly four years suggests a significant investment. Further analysis would require understanding the unit cost and comparing it to any historical pricing or internal cost estimates by the Air Force.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. This approach typically occurs when only one vendor possesses the necessary capabilities, technology, or proprietary rights to fulfill the requirement. The lack of competition means that the Department of the Air Force did not benefit from a competitive bidding process, which could potentially lead to higher prices than if multiple vendors had vied for the contract.

Taxpayer Impact: Taxpayers may face higher costs due to the absence of competitive bidding. Without competing offers, there is less pressure on the contractor to offer the lowest possible price.

Public Impact

The primary beneficiaries are the U.S. Air Force and its F-16 fighter jet fleet, ensuring operational readiness. The contract delivers critical components (Center Display Units) essential for pilot navigation and situational awareness. The geographic impact is primarily within the defense industrial base, supporting specialized manufacturing. Workforce implications include employment for skilled manufacturing and engineering personnel at Raytheon Company.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing, potentially increasing costs for taxpayers.
Lack of transparency in pricing due to non-competitive nature.
Dependence on a single supplier for critical F-16 components.

Positive Signals

Ensures availability of critical components for a key military asset (F-16).
Firm-fixed-price contract provides budget certainty.
Award to an established defense contractor with likely experience in this area.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on aircraft systems and instrumentation. The market for specialized avionics components like F-16 Center Display Units is often characterized by high barriers to entry due to complex technology, stringent quality requirements, and long development cycles. Spending in this area is driven by military modernization, sustainment, and upgrade programs. Comparable spending benchmarks would involve analyzing other sole-source or competitively awarded contracts for similar avionics systems across different military aircraft platforms.

Small Business Impact

The contract data indicates that this was not a small business set-aside, nor does it appear to involve significant subcontracting opportunities for small businesses based on the information provided. The award to Raytheon Company, a large defense contractor, suggests that the primary focus was on fulfilling the requirement with an established prime contractor rather than promoting small business participation. This contract does not appear to directly contribute to the small business ecosystem in terms of set-asides or prime contracting opportunities.

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 inherent in the firm-fixed-price contract type, which obligates the contractor to deliver the specified goods at the agreed-upon price. Transparency is limited due to the sole-source nature of the award. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse related to the contract.

Related Government Programs

F-16 Sustainment Programs
Avionics Modernization Contracts
Defense Manufacturing Industrial Base Support
Air Force Aircraft Component Procurement

Risk Flags

Sole-source award
Potential for cost overruns due to lack of competition
Long contract duration increases exposure to market volatility

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $28.3 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 $28.3 million.

What is the period of performance?

Start: 2019-09-12. End: 2023-06-30.

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

Analyzing historical spending for F-16 Center Display Units (CDUs) with Raytheon Company requires access to detailed contract databases beyond the provided summary. Typically, such analysis would involve querying contract awards over several fiscal years to identify trends in contract values, quantities, and pricing. Given this is a sole-source award, it's possible that previous awards for these specific units were also sole-source or part of larger sole-source airframe contracts. Understanding if the $28.3 million award represents an increase or decrease in per-unit cost compared to prior periods, or if the quantity ordered has changed significantly, would be crucial. Without prior award data, it's difficult to establish a definitive spending pattern, but the current award suggests a sustained need for these components within the F-16 program.

How does the unit cost of these F-16 Center Display Units compare to similar avionics components on other aircraft?

Directly comparing the unit cost of these F-16 Center Display Units (CDUs) to similar avionics components on other aircraft is challenging without specific unit cost data and detailed specifications for comparable components. Avionics systems vary significantly in complexity, functionality, and technological sophistication across different aircraft platforms. For instance, CDUs on newer, more advanced fighter jets or bombers might incorporate more sophisticated displays, processing power, and integration capabilities, leading to higher unit costs. Conversely, components for older or simpler aircraft might be less expensive. To perform a meaningful comparison, one would need to identify aircraft with comparable mission profiles and technological generations, then source data on their respective CDU or equivalent display system costs, ideally from competitively awarded contracts to establish a market baseline. The sole-source nature of this award further complicates establishing a true market-based comparison.

What are the specific 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 primary risk is reduced price competition, which can lead to inflated costs for the government and, consequently, taxpayers. Without competing bids, there is less incentive for the contractor to offer the most cost-effective solution. Another significant risk is vendor lock-in; the government becomes dependent on a single supplier, potentially limiting flexibility in future upgrades or sourcing. This dependence can also create supply chain vulnerabilities if the sole-source provider experiences production issues, financial instability, or decides to discontinue the product line. Furthermore, the lack of competitive pressure might reduce the contractor's motivation to innovate or improve product quality over time, although established relationships and performance history can mitigate this to some extent.

What is Raytheon Company's track record with F-16 program components?

Raytheon Company, now part of RTX, has a long-standing and extensive track record as a major defense contractor involved in various aspects of the F-16 program and other military aircraft systems. Their involvement typically spans the development, manufacturing, and sustainment of complex avionics, sensors, and weapons systems. For F-16 specific components, Raytheon (and its predecessor companies) has historically supplied critical systems. Their deep integration into the F-16 ecosystem suggests a strong understanding of the platform's requirements and a proven capability to deliver. While specific details on their performance for every single component can vary, their overall presence indicates a substantial history of fulfilling contracts for the U.S. Air Force and international F-16 operators, often involving sophisticated electronic systems.

How does the duration of this contract (1387 days) impact its overall value and risk?

The contract duration of 1387 days (approximately 3.8 years) for F-16 Center Display Units (CDUs) suggests a long-term sustainment or upgrade requirement rather than a one-time procurement. This extended period allows for potential economies of scale in production and reduces the administrative burden of frequent re-solicitations. However, it also increases the risk associated with price stability over time, especially if the contract doesn't include robust escalation clauses or if market conditions for raw materials or labor change significantly. From a risk perspective, a longer duration amplifies the impact of any potential performance issues or quality defects by the contractor, as it affects operational readiness for a longer period. Conversely, it provides the contractor with greater certainty, potentially encouraging investment in dedicated production lines or specialized tooling.

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: INSTRUMENTS AND LABORATORY EQPT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: FA823217R3034

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: RTX Corp

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: $28,331,727

Exercised Options: $28,331,727

Current Obligation: $28,331,727

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