Raytheon Company awarded $2.45M for aircraft parts repair, a sole-source contract with potential cost risks

Contract Overview

Contract Amount: $2,454,436 ($2.5M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2024-08-01

End Date: 2026-10-16

Contract Duration: 806 days

Daily Burn Rate: $3.0K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: AUR REPAIR OF REPAIRABLES

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $2.5 million to RAYTHEON COMPANY for work described as: AUR REPAIR OF REPAIRABLES Key points: 1. The contract's cost-plus-fixed-fee structure may lead to higher final costs than anticipated. 2. Limited competition suggests potential for suboptimal pricing and reduced value for taxpayer funds. 3. The duration of the contract (806 days) indicates a long-term need for these repair services. 4. Performance will be assessed based on delivery orders, requiring close monitoring of execution. 5. This contract falls within the 'Other Aircraft Parts' manufacturing sector, a critical component of defense logistics. 6. The sole-source nature raises questions about the availability of alternative providers and market competition.

Value Assessment

Rating: questionable

The contract's cost-plus-fixed-fee (CPFF) pricing type presents a risk for cost overruns, as the government pays the contractor's actual costs plus a fixed fee. Without strong oversight, this can lead to less incentive for cost control compared to fixed-price contracts. Benchmarking CPFF contracts for similar aircraft part repairs is challenging due to the specific nature of 'AUR REPAIR OF REPAIRABLES,' but the lack of competition inherently limits the ability to secure the best possible price. The total award amount of $2.45M for 806 days suggests a moderate expenditure, but the final cost is uncertain.

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 contractors. This typically occurs when only one contractor possesses the necessary capabilities, proprietary technology, or when urgency dictates a rapid award. The lack of competition means that price discovery through market forces was bypassed, potentially leading to higher costs than if multiple firms had competed.

Taxpayer Impact: The sole-source award limits the government's ability to leverage competitive bidding to secure the most cost-effective solution for taxpayers. This necessitates robust internal justification and oversight to ensure the price is fair and reasonable.

Public Impact

The primary beneficiaries are the Department of the Navy, ensuring the operational readiness of aircraft through timely repair of critical components. Services delivered include the repair and refurbishment of 'repairable' aircraft parts, maintaining the serviceability of the fleet. The geographic impact is primarily within Arizona (ST: AZ, SN: ARIZONA), where the contractor is located, though the ultimate impact is on naval aviation operations nationwide. Workforce implications include the employment of skilled technicians and support staff at Raytheon Company for performing these specialized repairs.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus-fixed-fee contract type increases risk of cost overruns.
Sole-source award limits price competition and potential for better value.
Lack of detailed performance metrics in provided data makes outcome assessment difficult.
Contract duration of over two years requires sustained oversight.

Positive Signals

Award to an established contractor (Raytheon Company) suggests a degree of reliability.
Focus on repairables supports sustainment and potentially reduces the need for new part procurement.
Contract is for aircraft parts repair, a critical function for military readiness.

Sector Analysis

The contract falls under the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' (NAICS 336413) sector. This sector is a vital component of the aerospace and defense industry, focusing on the maintenance, repair, and overhaul (MRO) of aircraft systems. Spending in this area is crucial for maintaining fleet readiness and operational availability. Comparable spending benchmarks are difficult to establish without more specific details on the types of parts being repaired, but the overall defense MRO market represents billions of dollars annually.

Small Business Impact

The provided data indicates that this contract was not set aside for small businesses (SS: false, SB: false). As a sole-source award to a large prime contractor, Raytheon Company, there is a low likelihood of significant subcontracting opportunities flowing down to small businesses unless explicitly mandated or pursued by the prime. This contract does not appear to directly support the small business ecosystem.

Oversight & Accountability

Oversight for this contract will primarily reside with the Department of the Navy contracting officers and program managers. Given the cost-plus-fixed-fee structure, rigorous monitoring of incurred costs, labor hours, and material expenses will be essential to ensure the fixed fee remains appropriate and that the total cost does not exceed reasonable limits. Transparency is dependent on the Navy's reporting practices and any available Inspector General (IG) oversight related to contractor performance and cost accounting.

Related Government Programs

Aircraft Maintenance and Repair Services
Defense Logistics Agency (DLA) Repair Contracts
Naval Air Systems Command (NAVAIR) Contracts
Aerospace Parts Manufacturing
Cost-Plus-Fixed-Fee Contracts

Risk Flags

Cost-Plus-Fixed-Fee contract type
Sole-source award mechanism
Lack of competitive bidding
Potential for cost overruns
Limited transparency on specific repair details

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $2.5 million to RAYTHEON COMPANY. AUR REPAIR OF REPAIRABLES

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 $2.5 million.

What is the period of performance?

Start: 2024-08-01. End: 2026-10-16.

What is the historical spending pattern for 'AUR REPAIR OF REPAIRABLES' with the Department of the Navy?

Without access to historical contract databases beyond this single award, it is impossible to determine the specific historical spending pattern for 'AUR REPAIR OF REPAIRABLES' with the Department of the Navy. This data point represents a single delivery order valued at $2.45 million. To establish a pattern, one would need to analyze all prior contracts, delivery orders, and task orders issued under this or similar contract vehicles for this specific service over several fiscal years. Factors such as the frequency of awards, average award values, and the number of unique contractors involved would be crucial for identifying trends and understanding the Navy's sustained investment in this area.

How does the pricing structure (Cost Plus Fixed Fee) compare to other contracts for similar aircraft part repairs?

Cost-Plus-Fixed-Fee (CPFF) contracts are common in defense and aerospace for services where the scope of work is not precisely defined or involves significant uncertainty, such as complex repairs. Compared to fixed-price contracts, CPFF offers flexibility but carries a higher risk of cost escalation for the government, as the contractor is reimbursed for actual costs incurred plus a predetermined fee. For aircraft part repairs, if the nature of the 'repairables' is highly variable or requires extensive diagnostics, CPFF might be justified. However, if the repairs are more standardized, fixed-price contracts often yield better value. Benchmarking requires comparing the fixed fee and estimated costs against similar repair scopes under different contract types, which is difficult without more detailed service descriptions.

What are the specific risks associated with Raytheon Company's performance on this contract?

The primary risks associated with Raytheon Company's performance on this contract stem from the nature of the award and the contract type. As a sole-source award, there's less external pressure to perform efficiently. The CPFF structure means that cost control is a key performance indicator; failure to manage costs effectively could lead to budget overruns. Specific performance risks could include delays in turnaround times for repairs, quality issues resulting in repeat failures, or inadequate documentation of repair processes. The long contract duration (806 days) also increases the potential for performance degradation over time if not actively managed and monitored by the government.

What is the estimated value or market size for 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' within the Department of Defense?

Estimating the precise market size for 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' (NAICS 336413) specifically within the Department of Defense (DoD) is complex, as spending is distributed across various agencies, branches, and contract types. However, the broader aerospace MRO (Maintenance, Repair, and Overhaul) market, which includes parts manufacturing and repair, is substantial. Defense spending on aircraft sustainment alone runs into tens of billions of dollars annually. Contracts like this one, focused on specific repairables, contribute to the overall sustainment budget. While this $2.45 million award is modest in the context of the entire DoD, it represents a critical niche within the larger defense industrial base supporting aviation readiness.

Are there any known issues with Raytheon Company's track record on similar sole-source or CPFF contracts?

Assessing Raytheon Company's track record on similar sole-source or CPFF contracts requires access to comprehensive contract performance databases and past performance reviews, which are not publicly available in detail. Raytheon is a major defense contractor with extensive experience across various contract types. While large contractors generally have robust quality and management systems, specific issues can arise on individual contracts. Without specific data on past performance issues related to cost control, schedule adherence, or quality on sole-source or CPFF contracts for aircraft part repairs, it's difficult to identify concrete risks unique to Raytheon in this instance. General diligence would involve reviewing any publicly reported contract disputes or performance criticisms.

Industry Classification

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

Product/Service Code: GUIDED MISSLES

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

Parent Company: RTX Corp

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: $2,454,436

Exercised Options: $2,454,436

Current Obligation: $2,454,436

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