Raytheon Company awarded $53.3M contract for aircraft parts, highlighting potential for sole-source awards in specialized manufacturing

Contract Overview

Contract Amount: $53,354,665 ($53.4M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2004-12-01

End Date: 2013-05-27

Contract Duration: 3,099 days

Daily Burn Rate: $17.2K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Place of Performance

Location: PORTSMOUTH, NEWPORT County, RHODE ISLAND, 02871

State: Rhode Island Government Spending

Plain-Language Summary

Department of Defense obligated $53.4 million to RAYTHEON COMPANY for work described as: Key points: 1. Contract awarded on a sole-source basis, raising questions about price discovery and potential for overpayment. 2. Long contract duration of 3099 days suggests a need for sustained supply of critical aircraft components. 3. The contract's value, while substantial, needs benchmarking against similar sole-source awards for aircraft parts. 4. Performance is rated 'satisfactory' (ST: RI), indicating a baseline level of execution but not exceptional performance. 5. The absence of small business set-asides or subcontracting plans warrants scrutiny for broader economic impact. 6. This award falls within the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' NAICS code, a specialized sector.

Value Assessment

Rating: questionable

The contract value of $53.3 million over its extended period requires careful benchmarking against comparable sole-source awards for specialized aircraft parts. Without competitive bidding, it is difficult to definitively assess value for money. The 'satisfactory' performance rating suggests the contractor is meeting basic requirements, but does not indicate exceptional value or efficiency. Further analysis would involve comparing unit costs for specific parts, if available, to market rates or historical pricing for similar items.

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. This typically occurs when only one responsible source is available or when a compelling justification for other-than-full-and-open competition exists. The lack of competition limits price discovery and may result in higher costs for the government compared to a competitively awarded contract. The specific reasons for the sole-source determination are not detailed here but are crucial for understanding the procurement strategy.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as the government lacks the leverage of multiple bidders driving down prices. This necessitates robust oversight to ensure fair pricing.

Public Impact

The Department of the Navy benefits from a sustained supply of critical aircraft parts, ensuring operational readiness. The contract supports the manufacturing and supply chain for specialized aircraft components, potentially impacting aviation readiness. The primary beneficiary is the contractor, Raytheon Company, through a significant sole-source award. The geographic impact is primarily linked to Raytheon's facilities, with potential indirect effects on its supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially leading to suboptimal pricing for taxpayers.
Lack of transparency regarding the justification for sole-source procurement hinders full accountability.
Extended contract duration without clear performance incentives could reduce contractor motivation for cost savings.
Absence of small business participation requirements may limit opportunities for smaller firms in the supply chain.

Positive Signals

Award to a known entity, Raytheon Company, suggests a level of established capability and reliability.
The 'satisfactory' performance rating indicates the contractor is meeting contractual obligations.
The contract addresses a specific need for aircraft parts, contributing to defense capabilities.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on aircraft parts and auxiliary equipment. This sector is characterized by high technological demands, stringent quality requirements, and often involves long-term production cycles. The market size for aircraft parts is substantial, driven by both military and commercial aviation needs. Benchmarking this contract's value would involve comparing it to other sole-source or competitively awarded contracts for similar specialized components within the defense industrial base.

Small Business Impact

The data indicates no small business set-aside (SB: false) and no indication of subcontracting plans (SS: false). This suggests that the contract was not specifically structured to benefit small businesses. Consequently, opportunities for small businesses to participate in this contract, either as prime contractors or subcontractors, appear limited. This could represent a missed opportunity to foster small business growth within the defense supply chain.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. The 'satisfactory' performance rating suggests ongoing monitoring. However, the sole-source nature of the award necessitates particularly diligent oversight to ensure fair pricing and prevent potential abuses. Transparency regarding the justification for sole-source procurement and any subsequent modifications would be key accountability measures. Inspector General jurisdiction would apply if fraud, waste, or abuse were suspected.

Related Government Programs

Department of Defense Aircraft Parts Procurement
Navy Aviation Sustainment Contracts
Sole-Source Defense Contracts
Aerospace Manufacturing Support

Risk Flags

Sole-source award may indicate lack of competition, potentially leading to higher costs.
Long contract duration requires sustained oversight to ensure continued value.
Lack of small business participation limits broader economic benefits.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $53.4 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 (Department of the Navy).

What is the total obligated amount?

The obligated amount is $53.4 million.

What is the period of performance?

Start: 2004-12-01. End: 2013-05-27.

What is the specific justification for this contract being awarded on a sole-source basis?

The provided data indicates the contract was 'NOT COMPETED' and awarded on a sole-source basis. Typically, sole-source awards are justified under specific circumstances outlined in federal acquisition regulations, such as when only one responsible source is available, or in cases of urgent need or national security implications where competition is not feasible or practical. Without further documentation from the awarding agency (Department of the Navy), the precise justification remains unknown. This lack of competition means the government did not explore potential alternative suppliers or negotiate prices based on multiple bids, which could impact overall value for money.

How does the 'satisfactory' performance rating (ST: RI) compare to typical performance metrics for similar defense contracts?

A 'satisfactory' performance rating generally indicates that the contractor is meeting the minimum requirements of the contract but is not exceeding expectations. In the context of defense contracts, 'satisfactory' is a common rating, suggesting the contractor is fulfilling its obligations regarding delivery schedules, quality standards, and technical specifications. However, it does not imply exceptional performance, innovation, or proactive problem-solving. Compared to ratings like 'highly successful' or 'exceptional,' 'satisfactory' suggests a baseline level of execution. For a long-term, sole-source contract, a consistently 'satisfactory' rating might warrant closer examination to ensure the government is receiving the best possible value and to identify opportunities for performance improvement.

What are the potential risks associated with a sole-source award of this magnitude and duration?

The primary risks associated with a sole-source award of $53.3 million over approximately 8.5 years (3099 days) include inflated pricing due to the lack of competitive pressure, potential for complacency from the contractor regarding cost control and efficiency, and reduced transparency in the procurement process. Without competition, the government has less leverage to negotiate favorable terms or ensure the most cost-effective solution. Furthermore, the long duration increases the risk of the contractor becoming indispensable, making future renegotiations or transitions more challenging. There's also a risk that the government might miss out on innovative solutions or technological advancements that could have emerged from a competitive bidding process.

Can the value of this contract be benchmarked against other federal spending in the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' sector?

Benchmarking this $53.3 million contract requires access to detailed data on comparable contracts within the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' (NAICS 336413) sector. Ideally, comparisons would be made against contracts with similar scope, complexity, and duration, particularly those awarded competitively. However, since this contract is sole-source, direct value-for-money comparisons are inherently difficult. Analyzing unit prices for specific components, if available, against market rates or historical government pricing for similar items would be a more granular approach. Publicly available contract databases can provide aggregate spending figures for the sector, but detailed cost breakdowns for benchmarking are often not readily accessible, especially for sole-source awards.

What are the implications of the contract having no small business set-aside or subcontracting requirements?

The absence of small business set-aside (SB: false) and subcontracting requirements (SS: false) means that this large contract did not explicitly mandate or encourage the participation of small businesses. This can have several implications: 1) It limits opportunities for small businesses to gain experience and revenue within the defense supply chain for this specific contract. 2) It may reduce the overall economic impact on the small business ecosystem, as subcontracting dollars are a significant source of revenue for many small firms. 3) It suggests that the primary focus of the procurement was on securing the required aircraft parts from the selected contractor, potentially overlooking broader socioeconomic goals related to small business utilization.

Industry Classification

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

Product/Service Code: AEROSPACE CRAFT AND STRUCTURAL COMPONENTS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 1847 W MAIN RD, PORTSMOUTH, RI, 01

Business Categories: Category Business, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Contract Characteristics

Cost or Pricing Data: NO

Timeline