DoD's $11.5M Radiator Replacement Contract Awarded to Raytheon Company Under Sole Source Justification

Contract Overview

Contract Amount: $11,470,994 ($11.5M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2021-08-23

End Date: 2027-09-30

Contract Duration: 2,229 days

Daily Burn Rate: $5.1K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: RADIATOR REPLACEMENT

Place of Performance

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

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $11.5 million to RAYTHEON COMPANY for work described as: RADIATOR REPLACEMENT Key points: 1. Contract awarded for radiator replacement, a critical component for aircraft. 2. Sole source award to Raytheon Company suggests a lack of readily available alternatives or specialized expertise. 3. The contract duration of over 5 years indicates a long-term need for these components. 4. Fixed-price contract type aims to control costs, but sole-source nature limits competitive pressure. 5. Geographic location in California may impact logistics and local economic benefits. 6. The contract falls under 'Other Aircraft Parts and Auxiliary Equipment Manufacturing', a specialized sector.

Value Assessment

Rating: questionable

Benchmarking the value of this $11.5 million contract for radiator replacement is challenging without specific technical details or comparable sole-source awards. The firm-fixed-price structure is a positive sign for cost control. However, the absence of competition inherently limits the government's ability to ensure the best possible price. Without market research or competitive bids, it's difficult to definitively assess if this represents excellent value for money compared to what could have been achieved through an open competition.

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 is typically justified when a unique product or service is required, or when only one responsible source is available. The lack of competition means that price discovery through market forces was bypassed, potentially leading to higher costs for the government than if multiple bidders had competed.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive bidding. The government did not benefit from the cost-saving pressures that typically arise when multiple companies vie for a contract.

Public Impact

The primary beneficiaries are the Department of the Navy and potentially the broader Department of Defense, ensuring operational readiness of aircraft. The service delivered is the provision of replacement radiators, essential for maintaining aircraft functionality and safety. The geographic impact is primarily within California, where the contract is managed or fulfilled. Workforce implications may include specialized manufacturing and technical roles within Raytheon Company and its supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potential for cost savings.
Long contract duration (over 5 years) could lock in potentially suboptimal pricing if market conditions change.
Lack of transparency on the specific technical requirements makes it hard to assess necessity and uniqueness.
Reliance on a single contractor for critical aircraft parts could pose supply chain risks.

Positive Signals

Firm-fixed-price contract type provides cost certainty for the government.
Award to a known entity like Raytheon Company suggests a level of established capability and reliability.
The contract addresses a specific need for radiator replacement, indicating proactive maintenance and operational support.

Sector Analysis

The aerospace and defense sector is characterized by high barriers to entry, complex supply chains, and significant government investment. Contracts for aircraft parts, like radiators, fall under the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' category. This segment often involves specialized engineering and manufacturing processes. Spending in this area is critical for maintaining military readiness. Comparable spending benchmarks would typically involve analyzing other sole-source or competitively awarded contracts for similar aircraft components within the DoD.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Furthermore, the prime contractor, Raytheon Company, is a large defense contractor. While large prime contractors are often required to subcontract a portion of their work to small businesses, the specific subcontracting plan for this contract is not detailed here. The absence of a direct set-aside means small businesses were not specifically targeted for this prime contract opportunity.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. As a delivery order under a larger contract vehicle, specific oversight details might be embedded within the parent contract's terms. Transparency is limited by the sole-source nature and the proprietary aspects of defense manufacturing. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Aircraft Component Procurement
Defense Logistics and Sustainment
Sole-Source Defense Contracts
Naval Aviation Support Equipment

Risk Flags

Sole-source award lacks competitive pricing.
Long contract duration may not reflect current market value.
Limited public information on specific technical requirements and justification.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $11.5 million to RAYTHEON COMPANY. RADIATOR REPLACEMENT

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 $11.5 million.

What is the period of performance?

Start: 2021-08-23. End: 2027-09-30.

What is the specific justification for awarding this radiator replacement contract on a sole-source basis to Raytheon Company?

The provided data indicates the contract was 'NOT COMPETED' and awarded under a 'sole-source' basis. Typically, sole-source justifications are required when only one responsible source is capable of providing the required supplies or services. This could be due to proprietary technology, unique capabilities, urgent and compelling needs where competition is not feasible, or if the item is a follow-on to a previously competed contract where only the original contractor can provide necessary compatibility. Without further documentation (like a Justification and Approval document), the precise reason remains unstated, but it implies a lack of readily available alternatives or specialized expertise from other vendors for these specific radiators.

How does the firm-fixed-price contract type mitigate risks associated with a sole-source award?

A firm-fixed-price (FFP) contract type is generally advantageous for the government as it shifts the risk of cost overruns to the contractor. This means Raytheon Company is obligated to complete the work for the agreed-upon price, regardless of their actual costs. While this provides cost certainty for the Department of the Navy, it does not inherently address the potential for an inflated price due to the lack of competition. In a sole-source scenario, the FFP structure primarily protects against unexpected increases in the contractor's expenses rather than ensuring the initial price was the most competitive possible. The government still relies on negotiation and contractor good faith to establish a fair initial price.

What are the potential implications of a 5-year contract duration for radiator replacements?

A contract duration of 2,229 days (approximately 6.1 years, from Aug 2021 to Sep 2027) for radiator replacements suggests a long-term, ongoing need for these components. This extended period provides stability for both the government and the contractor, ensuring a consistent supply chain for critical aircraft parts. For the government, it guarantees availability over a significant period. For Raytheon, it offers predictable revenue. However, a long duration also means the government is locked into the negotiated price for an extended time. If market prices for materials or manufacturing decrease, or if more efficient technologies emerge, the government might miss out on potential savings that could have been realized through shorter-term contracts or re-competition.

What does the contract classification '336413 - Other Aircraft Parts and Auxiliary Equipment Manufacturing' signify?

NAICS code 336413 classifies establishments primarily engaged in manufacturing aircraft parts and auxiliary equipment, not elsewhere classified. This includes components like engines, propellers, landing gear, and, relevantly, radiators. This classification indicates that Raytheon Company is producing specialized components integral to aircraft operation and maintenance. The sector is highly technical, often requiring significant research and development, stringent quality control, and adherence to aerospace industry standards. Contracts within this NAICS code are crucial for maintaining the operational readiness and safety of military aviation assets.

Are there any indicators of potential performance risks or concerns based on the provided data?

The provided data does not explicitly detail performance risks. However, certain aspects warrant consideration. The sole-source nature, while potentially justified, can sometimes be associated with less stringent performance pressures compared to a competitive environment. The long duration of the contract (over 5 years) means that performance issues, if they arise, could persist for an extended period before a new contract is awarded or the current one is renegotiated. Furthermore, the reliance on a single supplier for critical components like radiators could introduce supply chain vulnerabilities. Robust government oversight and clear performance metrics within the contract are essential to mitigate these potential risks.

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

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Rockwell Collins Australia PTY Limited

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

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: $11,470,994

Exercised Options: $11,470,994

Current Obligation: $11,470,994

Subaward Activity

Number of Subawards: 5

Total Subaward Amount: $418,845

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0001920G0007

IDV Type: BOA

Timeline