DoD awards Raytheon $29.9M for Other Aircraft Parts, raising concerns about competition and value

Contract Overview

Contract Amount: $29,896,612 ($29.9M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2006-02-03

End Date: 2009-03-22

Contract Duration: 1,143 days

Daily Burn Rate: $26.2K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Place of Performance

Location: EL SEGUNDO, LOS ANGELES County, CALIFORNIA, 90245, UNITED STATES OF AMERICA

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $29.9 million to RAYTHEON COMPANY for work described as: Key points: 1. Significant contract value of $29.9 million awarded to a single large business. 2. Lack of competition raises questions about price discovery and potential overspending. 3. Contract type (Cost Plus Fixed Fee) can incentivize cost overruns. 4. Long duration of 1143 days suggests a complex or ongoing need.

Value Assessment

Rating: questionable

The contract's Cost Plus Fixed Fee structure, coupled with a lack of competition, makes it difficult to assess value. Without benchmarks or competitive bids, it's hard to determine if the $29.9 million represents a fair price for the aircraft parts and auxiliary equipment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source or limited competition award. This significantly limits price discovery and may lead to higher costs for taxpayers as there was no market pressure to offer the best price.

Taxpayer Impact: The absence of competition likely resulted in a higher price than a competed contract, directly impacting taxpayer funds negatively.

Public Impact

Taxpayers may have overpaid due to the lack of competitive bidding. The Department of Defense's procurement process for this item could be improved to ensure better value. The long contract duration suggests a sustained need for these aircraft parts.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition
Cost Plus Fixed Fee contract type
Long contract duration
Award to large business

Positive Signals

Specific need for aircraft parts
Awarded to established contractor

Sector Analysis

This contract falls within the Defense sector, specifically for aircraft parts. Spending in this area is critical for military readiness, but competitive procurement is essential to manage costs effectively.

Small Business Impact

The contract was awarded to Raytheon Company, a large business. There is no indication that small businesses were involved in this specific procurement, missing an opportunity for their participation.

Oversight & Accountability

The 'NOT COMPETED' status suggests potential weaknesses in oversight regarding competitive sourcing. Further review is needed to understand why this contract was not opened to broader competition.

Related Government Programs

Other Aircraft Parts and Auxiliary Equipment Manufacturing
Department of Defense Contracting
Defense Contract Management Agency Programs

Risk Flags

Lack of competition
Cost Plus Fixed Fee contract type
Potential for cost overruns
Limited transparency on pricing
No small business participation noted

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $29.9 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 (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $29.9 million.

What is the period of performance?

Start: 2006-02-03. End: 2009-03-22.

What was the justification for not competing this contract, and were alternative solutions explored?

The justification for not competing this contract is not provided in the data. Typically, sole-source awards require a strong justification, such as unique capabilities or urgent needs. Without this information, it's impossible to assess if alternative solutions were explored or if the government received the best possible value under the circumstances.

What is the typical per-unit cost for similar aircraft parts, and how does this contract's pricing compare?

Without specific item details or competitive benchmarks, a direct per-unit cost comparison is not feasible. However, the 'Cost Plus Fixed Fee' structure and lack of competition inherently suggest a higher risk of inflated costs compared to fixed-price, competed contracts. A detailed audit of incurred costs would be necessary for a precise comparison.

How effectively did the Cost Plus Fixed Fee structure incentivize Raytheon to control costs over the contract's duration?

Cost Plus Fixed Fee contracts can sometimes disincentivize cost control as the contractor is reimbursed for costs plus a fixed fee. This structure might not have strongly motivated Raytheon to minimize expenses, especially given the absence of competitive pressure. The long duration further complicates assessing cost-efficiency without detailed performance data.

Industry Classification

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

Product/Service Code: AEROSPACE CRAFT COMPONENTS AND ACCESSORIES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

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

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

Contract Characteristics

Cost or Pricing Data: YES

Timeline