Raytheon Company awarded $77.5M for Intelligent Electronics Units, with no competition

Contract Overview

Contract Amount: $77,515,454 ($77.5M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2024-02-29

End Date: 2027-08-31

Contract Duration: 1,279 days

Daily Burn Rate: $60.6K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: INTELLIGENT ELECTRONICS UNIT (IEU) PRODUCTION

Place of Performance

Location: FORT WORTH, TARRANT County, TEXAS, 76102

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $77.5 million to RAYTHEON COMPANY for work described as: INTELLIGENT ELECTRONICS UNIT (IEU) PRODUCTION Key points: 1. The contract's value of $77.5 million for Intelligent Electronics Units (IEUs) represents a significant investment in specialized aircraft components. 2. The sole-source nature of this award raises questions about potential price inflation and the absence of market-driven cost efficiencies. 3. A lack of competition increases the risk of suboptimal performance or innovation, as there is no external pressure to improve. 4. This contract supports the Department of the Air Force's sustainment and modernization efforts for its aircraft fleet. 5. The award falls within the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' sector, indicating a focus on niche component production.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to its sole-source nature and the specialized 'Intelligent Electronics Unit' designation. Without competitive bids, it's difficult to ascertain if the $77.5 million represents a fair market price. Comparisons to similar, competed contracts for advanced avionics or electronic warfare components would be necessary to assess value for money. The firm fixed-price structure offers some cost certainty, but the lack of competition limits the ability to identify potential savings.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, Raytheon Company, was solicited. This approach bypasses the standard competitive bidding process, which typically involves multiple companies submitting proposals. The absence of competition means there was no opportunity for price discovery through market forces, potentially leading to higher costs for the government. It suggests either a unique capability held by Raytheon or a specific justification for avoiding a broader competition.

Taxpayer Impact: Taxpayers may be paying a premium for these IEUs due to the lack of competitive pressure. Without competing offers, the government cannot be assured it received the best possible price or value.

Public Impact

The primary beneficiaries are the Department of the Air Force and its operational readiness, through the provision of critical electronic components for aircraft. The contract delivers specialized Intelligent Electronics Units, essential for the functioning and modernization of various Air Force aircraft systems. The geographic impact is centered in Texas, where Raytheon Company's facility is located, potentially supporting local employment and the regional aerospace supply chain. Workforce implications include the need for skilled labor in advanced electronics manufacturing and integration at Raytheon's Texas facility.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potential cost savings.
Lack of transparency in the procurement process due to no-bid award.
Potential for vendor lock-in if IEU technology is proprietary and difficult to integrate with other systems.

Positive Signals

Firm fixed-price contract provides cost certainty for the government.
Award to an established defense contractor (Raytheon) suggests a degree of reliability and existing expertise.
Contract supports critical Air Force operational needs, contributing to national security.

Sector Analysis

The 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' sector is a specialized segment of the broader aerospace industry. This contract for Intelligent Electronics Units (IEUs) fits within the defense sub-sector, focusing on high-technology components critical for modern military aircraft. The market for such specialized parts is often characterized by high barriers to entry due to technological complexity and stringent quality requirements. Comparable spending benchmarks are difficult to establish without more specific details on the IEU's function, but investments in advanced avionics and electronic warfare systems can run into millions or tens of millions of dollars per system.

Small Business Impact

This contract was not set aside for small businesses, nor does it appear to have specific subcontracting requirements for small businesses mentioned in the provided data. The award to a large prime contractor like Raytheon Company suggests that the primary focus is on the prime's capabilities. This could limit opportunities for small businesses to participate directly in this specific contract, although they may be part of Raytheon's broader supply chain for other components or services.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Air Force's contracting and program management offices. As a firm fixed-price contract, the focus is on delivery of the specified goods. Transparency is limited due to the sole-source nature of the award. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse, but day-to-day oversight of performance and quality rests with the Air Force's contracting officer's representative (COR).

Related Government Programs

Air Force Avionics Modernization Programs
Defense Electronics Procurement
Aircraft Component Manufacturing
Intelligence, Surveillance, and Reconnaissance (ISR) Systems Support

Risk Flags

Sole-source procurement
Lack of competitive bidding
Potential for cost overruns without competition

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $77.5 million to RAYTHEON COMPANY. INTELLIGENT ELECTRONICS UNIT (IEU) PRODUCTION

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 $77.5 million.

What is the period of performance?

Start: 2024-02-29. End: 2027-08-31.

What is the specific function and technological sophistication of the 'Intelligent Electronics Unit' (IEU) being procured?

The provided data does not specify the exact function or technological sophistication of the 'Intelligent Electronics Unit' (IEU). However, the term 'Intelligent Electronics' suggests components that likely involve advanced processing, sensing, or control capabilities integrated into aircraft systems. These could range from advanced navigation and communication modules to components for electronic warfare suites or mission management systems. The 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' NAICS code (336413) further indicates a focus on specialized parts rather than complete aircraft. Without further details, it's presumed these IEUs are critical for enhancing the performance, survivability, or mission effectiveness of Air Force aircraft.

Why was this contract awarded on a sole-source basis instead of through full and open competition?

The data indicates this contract was 'NOT COMPETED,' signifying a sole-source award. While the specific justification is not provided, common reasons for sole-source procurements include situations where only one responsible source is available, or when there is a compelling urgency. This could be due to unique proprietary technology held by Raytheon, a requirement for seamless integration with existing proprietary systems, or a critical and time-sensitive need where initiating a full competition would cause unacceptable delays. The Department of Defense typically requires extensive justification for sole-source awards to ensure fair and reasonable pricing and to avoid limiting opportunities for other capable contractors.

How does the $77.5 million contract value compare to historical spending on similar electronic components for Air Force aircraft?

Direct historical spending comparisons for 'Intelligent Electronics Units' are difficult without more specific product definitions and historical contract data. The $77.5 million award is substantial, reflecting the potentially high cost of advanced, specialized electronic components. To assess value, one would need to analyze past contracts for similar avionics, electronic warfare systems, or mission-critical electronic modules procured by the Air Force or other branches. Factors like technological obsolescence, upgrade cycles, and the scale of the procurement (e.g., number of units) would influence historical spending patterns. The sole-source nature of this award further complicates direct benchmarking against competed programs.

What are the potential risks associated with awarding a contract of this magnitude on a sole-source basis?

The primary risks of a sole-source award for a $77.5 million contract include: 1) Inflated pricing: Without competition, Raytheon may not have been incentivized to offer the lowest possible price. 2) Lack of innovation: The absence of competing vendors reduces the pressure to innovate or offer more cost-effective solutions. 3) Performance concerns: While Raytheon is a reputable contractor, a sole-source award means the government has fewer options if performance issues arise. 4) Limited market intelligence: The government misses opportunities to understand the broader market capabilities and pricing structures for such components. These risks underscore the importance of rigorous justification for sole-source awards.

What is Raytheon Company's track record with the Department of Defense, particularly in supplying electronic components for aircraft?

Raytheon Company (now RTX) has an extensive and long-standing track record as a major defense contractor for the Department of Defense. They are a significant provider of a wide array of defense systems, including advanced sensors, electronic warfare systems, missiles, and integrated defense solutions. Within the aerospace sector, Raytheon has consistently supplied critical electronic components, avionics, and communication systems for various military aircraft platforms. Their history includes numerous large-scale contracts, indicating a deep understanding of military requirements, stringent quality standards, and complex integration challenges. While specific performance metrics for every contract are not publicly detailed, their continued success in securing major defense awards suggests a generally strong performance history and established capabilities in supplying sophisticated electronic systems to the DoD.

Industry Classification

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

Product/Service Code: COMM/DETECT/COHERENT RADIATION

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: RTX Corp

Address: 2501 W UNIVERSITY DR, MCKINNEY, TX, 75071

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: $77,515,454

Exercised Options: $77,515,454

Current Obligation: $77,515,454

Subaward Activity

Number of Subawards: 21

Total Subaward Amount: $25,975,738

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA868921D2021

IDV Type: IDC

Timeline