Raytheon Company awarded over $409M for aircraft parts, with a significant portion awarded through non-competitive means

Contract Overview

Contract Amount: $409,181,921 ($409.2M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2005-12-27

End Date: 2013-01-31

Contract Duration: 2,592 days

Daily Burn Rate: $157.9K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Place of Performance

Location: EL SEGUNDO, LOS ANGELES County, CALIFORNIA, 90245

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $409.2 million to RAYTHEON COMPANY for work described as: Key points: 1. The contract's value of over $409 million represents a substantial investment in aircraft parts and auxiliary equipment. 2. A significant portion of this contract was awarded without full and open competition, raising questions about potential price efficiencies. 3. The long duration of the contract (2005-2013) suggests a sustained need for these aircraft components. 4. The firm fixed-price contract type indicates that the price was set at the outset, shifting cost risk to the contractor. 5. The primary agency involved is the Department of Defense, highlighting the strategic importance of these parts for national security. 6. The contract's focus on 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' points to a specialized segment of the aerospace supply chain.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without more specific details on the exact parts and services procured. However, the substantial dollar amount suggests a significant procurement. The firm fixed-price nature, while offering cost certainty, can sometimes lead to higher initial prices if competition is limited. Further analysis would require comparing unit costs for specific components against market rates or similar government procurements to assess true value for money.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded as 'NOT COMPETED,' indicating a sole-source or limited competition procurement. This approach is typically used when only one responsible source can provide the required goods or services, or in cases of urgent need. The lack of a competitive bidding process means that the government did not benefit from the price discovery mechanisms inherent in a broader competition, potentially leading to less favorable pricing.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive pressure to drive down costs. Without a competitive process, there is a reduced incentive for the contractor to offer the lowest possible price.

Public Impact

The Department of Defense is the primary beneficiary, receiving critical aircraft parts and auxiliary equipment necessary for military operations. This contract supports the maintenance and operational readiness of various aircraft platforms within the U.S. military. The geographic impact is primarily centered around the contractor's operations in California, where the contract was awarded. The contract likely supports a workforce involved in the manufacturing and supply chain of specialized aerospace components.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of full and open competition may have resulted in higher costs for taxpayers.
The long contract duration could mask potential inefficiencies or price escalations over time.
Limited transparency into the sole-source justification makes it difficult to assess the necessity of this procurement method.
The specific nature of 'Other Aircraft Parts' makes it hard to benchmark pricing without detailed specifications.

Positive Signals

The firm fixed-price contract type provides cost certainty to the government.
The contract addresses a critical need for aircraft parts within the Department of Defense.
The contractor, Raytheon Company, is a well-established entity in the defense sector, suggesting a degree of reliability.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on aircraft parts and auxiliary equipment. The market for such components is characterized by high technical requirements, stringent quality control, and often long production cycles. Spending in this area is driven by military readiness requirements and the lifecycle of defense platforms. Comparable spending benchmarks would typically involve analyzing other large-scale procurements of similar aircraft components by defense agencies.

Small Business Impact

There is no indication from the provided data that this contract involved small business set-asides or significant subcontracting opportunities for small businesses. The award to a large prime contractor like Raytheon Company suggests that the primary focus was on direct procurement from the awardee, potentially limiting direct benefits to the small business ecosystem unless Raytheon actively engaged them as subcontractors.

Oversight & Accountability

Oversight for this contract would have been managed by the Department of Defense, likely through the Defense Contract Management Agency (DCMA), given the 'sa' field. Accountability measures would stem from the contract terms, including delivery schedules and quality specifications. Transparency is limited by the sole-source nature of the award, making detailed public scrutiny of the procurement process challenging.

Related Government Programs

Defense Procurement
Aircraft Component Manufacturing
Aerospace Supply Chain
Department of Defense Contracts
Sole-Source Procurements

Risk Flags

Sole-source award
Lack of competition
Potential for inflated pricing
Long contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $409.2 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 $409.2 million.

What is the period of performance?

Start: 2005-12-27. End: 2013-01-31.

What specific types of aircraft parts and auxiliary equipment were procured under this contract?

The provided data indicates the contract falls under NAICS code 336413, 'Other Aircraft Parts and Auxiliary Equipment Manufacturing.' However, it does not specify the exact nature of these parts. This could range from engine components, structural elements, avionics hardware, to various auxiliary systems. Without access to the contract details or delivery orders, it is impossible to list the specific items. Understanding the precise nature of these parts is crucial for a more granular assessment of their necessity, cost, and potential for alternative sourcing.

How does the $409 million contract value compare to similar procurements for aircraft parts by the DoD?

Comparing the $409 million contract value requires context regarding the specific types of parts procured and the contract duration. For large, complex aircraft systems or long-term sustainment contracts, this figure might be within a typical range. However, if this amount represents a relatively short period or for less complex components, it could be considered high. Benchmarking would necessitate identifying contracts for similar components (e.g., engine parts, avionics, structural components) awarded over comparable timeframes to entities like Raytheon or its competitors. Without such comparative data, it's difficult to definitively state if this value is high or low relative to the market.

What were the specific justifications for awarding this contract on a sole-source basis?

The data explicitly states the contract was 'NOT COMPETED,' implying a sole-source or limited competition award. Typical justifications for such awards include: a critical need where only one source can fulfill the requirement, a lack of adequate competition, or urgent and compelling circumstances that preclude a competitive process. For a large defense contractor like Raytheon, sole-source awards often stem from proprietary technology, unique manufacturing capabilities, or the need for seamless integration with existing platforms where only the original equipment manufacturer can provide necessary parts or services. The specific justification would be documented in the contract file.

What is Raytheon Company's track record with similar sole-source defense contracts?

Raytheon Company (now RTX) has a long history of receiving significant defense contracts, including those awarded through sole-source or limited competition. As a major defense contractor, it possesses extensive capabilities and often holds sole rights or unique expertise for specific systems and components. While sole-source awards can raise concerns about price and competition, they are often necessary for specialized defense procurements. Raytheon's track record in fulfilling such contracts generally involves delivering complex systems and components critical to military operations, though like any large contractor, it has faced scrutiny over pricing and contract management in various instances.

How has spending on 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' (NAICS 336413) trended within the Department of Defense over the contract's lifespan (2005-2013)?

Spending within NAICS 336413 by the Department of Defense during the 2005-2013 period likely saw fluctuations influenced by global military engagements, defense budget allocations, and modernization programs. This era encompassed the height of operations in Iraq and Afghanistan, which would have driven demand for aircraft parts and sustainment. As military priorities shifted and budgets faced constraints towards the end of this period, spending may have stabilized or decreased. Analyzing historical spending data from sources like USASpending.gov or agency budget reports would provide a clearer picture of the overall trend for this specific manufacturing sector during those years.

What are the potential risks associated with a firm fixed-price contract awarded non-competitively for aircraft parts?

The primary risks associated with a firm fixed-price (FFP) contract awarded non-competitively for aircraft parts are twofold. Firstly, the non-competitive nature means the government may not achieve the lowest possible price, as the usual market forces driving down costs are absent. The contractor has less incentive to be highly efficient or offer aggressive pricing. Secondly, while FFP shifts cost overrun risk to the contractor, if the initial price was inflated due to lack of competition, the government still bears the burden of paying that higher price. There's also a risk of the contractor prioritizing profit over quality or timely delivery if oversight is insufficient, although FFP generally incentivizes meeting specifications to avoid non-payment.

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: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

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

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline