Raytheon Company awarded $28.3M sole-source contract for aircraft parts, raising value-for-money questions

Contract Overview

Contract Amount: $28,344,569 ($28.3M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2021-03-24

End Date: 2026-03-24

Contract Duration: 1,826 days

Daily Burn Rate: $15.5K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: TCS BASELINE DEVELOPMENT

Place of Performance

Location: STERLING, LOUDOUN County, VIRGINIA, 20166

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $28.3 million to RAYTHEON COMPANY for work described as: TCS BASELINE DEVELOPMENT Key points: 1. Contract awarded on a sole-source basis, limiting price competition and potentially increasing costs. 2. Significant duration of 1826 days suggests a long-term need for these aircraft parts. 3. The contract type (Cost Plus Fixed Fee) can incentivize cost overruns. 4. Lack of competition raises concerns about achieving optimal value for taxpayer funds. 5. The specific nature of 'Other Aircraft Parts' suggests a specialized requirement within the Navy's operations.

Value Assessment

Rating: questionable

The $28.3 million contract value for 'TCS BASELINE DEVELOPMENT' is difficult to benchmark without more specific details on the parts and services provided. However, the sole-source nature of the award is a significant red flag for value for money. Without competitive bidding, there is less pressure on the contractor to offer the most cost-effective solution. The Cost Plus Fixed Fee (CPFF) contract type, while sometimes necessary for R&D or uncertain scope, can lead to higher costs as the contractor is reimbursed for expenses plus a fixed fee, potentially disincentivizing cost control.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning the Department of the Navy did not solicit bids from multiple potential suppliers. This typically occurs when only one source is capable of meeting the requirement, or in cases of urgent need. The absence of competition means that price discovery through market forces was bypassed, potentially leading to a higher price than if multiple vendors had competed.

Taxpayer Impact: Sole-source awards mean taxpayers do not benefit from the cost savings that typically arise from a competitive bidding process. This can result in a less efficient use of public funds.

Public Impact

The primary beneficiaries are the Department of the Navy, ensuring the continued operational readiness of its aircraft fleet. Services delivered include the development and provision of critical aircraft parts, likely for specialized systems. The geographic impact is primarily within the operational areas of the U.S. Navy, with potential implications for maintenance and supply chains. Workforce implications may include specialized manufacturing and engineering roles at Raytheon Company and its subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially inflating costs.
Cost Plus Fixed Fee contract type may not strongly incentivize cost efficiency.
Lack of transparency in the justification for sole-source award.
Long contract duration could mask inefficiencies over time.
Limited public information on the specific 'TCS BASELINE DEVELOPMENT' requirements.

Positive Signals

Award to a known defense contractor (Raytheon) suggests established capabilities.
Contract supports critical Department of Defense operational needs.
Fixed fee component provides some cost predictability compared to pure cost-reimbursement.
Contract duration allows for stable planning and execution of development.

Sector Analysis

The aerospace and defense sector is characterized by high barriers to entry, complex supply chains, and significant government procurement. Contracts for aircraft parts and auxiliary equipment are crucial for maintaining military readiness. Raytheon Company is a major player in this sector, known for its advanced defense systems. The market for specialized aircraft components is often dominated by a few key suppliers due to proprietary technology and stringent quality requirements. Benchmarking this contract's value is challenging without detailed specifications, but the overall spending in defense procurement for aircraft components runs into billions annually.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Furthermore, the 'ss' (small business subcontracting) field is also false. This suggests that small businesses are unlikely to be directly involved as prime contractors or have mandated subcontracting opportunities within this specific award. The focus is on a large, established prime contractor, potentially limiting the direct economic benefit to the small business ecosystem for this particular contract.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. The Inspector General for the Department of Defense would have jurisdiction to investigate potential fraud, waste, or abuse. Transparency is limited due to the sole-source nature and the proprietary details of 'TCS BASELINE DEVELOPMENT'. Accountability relies on the contractual terms and the Navy's program oversight to ensure deliverables meet specifications and budget.

Related Government Programs

Department of Defense Aircraft Procurement
Navy Aviation Maintenance and Sustainment
Aerospace Component Manufacturing
Defense Contractor Services

Risk Flags

Sole-source award
Cost-reimbursable elements in contract type
Lack of competitive bidding justification
Potential for cost overruns

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $28.3 million to RAYTHEON COMPANY. TCS BASELINE DEVELOPMENT

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 $28.3 million.

What is the period of performance?

Start: 2021-03-24. End: 2026-03-24.

What specific components or systems does 'TCS BASELINE DEVELOPMENT' refer to, and why is Raytheon the sole provider?

The provided data does not specify the exact nature of 'TCS BASELINE DEVELOPMENT'. This designation likely refers to a proprietary system or a critical component for which Raytheon Company holds the intellectual property, unique manufacturing capability, or has been previously established as the sole source through prior development contracts. Justification for sole-source procurement typically requires detailed documentation from the agency explaining why competition is not feasible, such as unique technical requirements, lack of alternatives, or urgent and compelling needs. Without this documentation, it is difficult to ascertain the precise technical reasons and validate the necessity of a sole-source award.

How does the Cost Plus Fixed Fee (CPFF) contract structure compare to other contract types for similar aircraft parts development?

Cost Plus Fixed Fee (CPFF) contracts reimburse the contractor for allowable costs incurred, plus a predetermined fixed fee representing profit. This structure is often used when the scope of work is not well-defined or involves significant uncertainty, such as research and development. Compared to Firm-Fixed-Price (FFP) contracts, CPFF offers less cost certainty for the government but can be more appropriate for innovative or complex projects where defining the final scope and cost upfront is impractical. However, CPFF contracts can incentivize contractors to incur more costs to increase the base upon which the fixed fee is calculated, potentially leading to higher overall expenditures than FFP contracts, where the contractor bears the risk of cost overruns.

What is the historical spending trend for 'TCS BASELINE DEVELOPMENT' or similar aircraft parts by the Department of the Navy?

The provided data only includes information for this specific contract awarded on March 24, 2021. There is no historical spending data presented for 'TCS BASELINE DEVELOPMENT' or comparable aircraft parts within this dataset. To analyze historical spending trends, one would need access to historical contract databases (e.g., FPDS-NG) and perform searches based on the Product Service Code (PSC), the specific contractor (Raytheon Company), and the procuring agency (Department of the Navy) over multiple fiscal years. This would reveal patterns in contract values, award types, and competition levels for similar procurements.

What are the key performance indicators (KPIs) and deliverables expected under this contract?

The provided data summary does not detail the specific Key Performance Indicators (KPIs) or deliverables for the 'TCS BASELINE DEVELOPMENT' contract. Typically, for a contract of this nature, KPIs would relate to the technical performance of the developed components, adherence to specifications, reliability, and potentially delivery schedules. Deliverables would likely include technical data packages, prototypes, test results, and the final production-ready aircraft parts. The Cost Plus Fixed Fee structure implies that the government will closely monitor the contractor's progress and costs against the defined scope and milestones to ensure successful completion and value.

Are there any known performance issues or past contract disputes with Raytheon Company on similar defense contracts?

This data summary does not contain information regarding past performance issues or contract disputes involving Raytheon Company for similar defense contracts. A comprehensive assessment of contractor track record would require accessing performance evaluation reports (e.g., Contractor Performance Assessment Reporting System - CPARS), past performance questionnaires, and potentially legal or dispute resolution databases. While Raytheon is a major defense contractor with a long history, specific issues on individual contracts can arise. Without access to such detailed performance data, it's impossible to definitively assess their track record for this specific type of development.

Industry Classification

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

Product/Service Code: RESEARCH AND DEVELOPMENT › C – National Defense R&D Services

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0001920R0069

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Rockwell Collins Australia PTY Limited

Address: 22260 PACIFIC BLVD, DULLES, VA, 20166

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: $45,027,442

Exercised Options: $41,038,684

Current Obligation: $28,344,569

Subaward Activity

Number of Subawards: 17

Total Subaward Amount: $3,883,777

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline