Navy Awards Raytheon $31.9M for Aircraft Parts, Lacking Competition

Contract Overview

Contract Amount: $31,923,060 ($31.9M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2023-10-31

End Date: 2027-06-30

Contract Duration: 1,338 days

Daily Burn Rate: $23.9K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: SUPPLY BASE CAPACITY - PHASE I

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85734

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $31.9 million to RAYTHEON COMPANY for work described as: SUPPLY BASE CAPACITY - PHASE I Key points: 1. Significant contract value of $31.9 million awarded to a single large business. 2. Lack of competition raises concerns about potential overpricing and reduced value. 3. The contract is for 'Other Aircraft Parts and Auxiliary Equipment Manufacturing', a critical defense sector. 4. Long contract duration (over 3 years) may limit future opportunities for competitive pricing.

Value Assessment

Rating: questionable

The contract value of $31.9 million is substantial. Without competitive bidding, it's difficult to assess if this price is fair compared to market rates for similar aircraft parts. The lack of competition is a primary driver for this rating.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award. This method bypasses the competitive process, potentially leading to higher prices and reduced innovation as there is no market pressure to offer the best value.

Taxpayer Impact: Taxpayers may be overpaying due to the absence of competitive bidding, as the government did not explore alternative, potentially lower-cost options.

Public Impact

Defense spending on aircraft parts impacts military readiness and operational capabilities. The award to a single large contractor may limit opportunities for small businesses in the supply chain. Long-term contracts can tie up significant federal funds, potentially affecting budget flexibility for other priorities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award
Lack of competition
High contract value
Long contract duration

Positive Signals

Award to established contractor
Supports critical defense needs

Sector Analysis

This contract falls under the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' sector, a key component of the defense industrial base. Spending in this area is crucial for maintaining military aircraft, but competitive procurement is vital to ensure cost-effectiveness.

Small Business Impact

The contract was awarded to Raytheon Company, a large business, and there is no indication of small business participation. This sole-source award likely bypasses opportunities for small businesses to compete for this significant contract.

Oversight & Accountability

The lack of competition for this substantial contract warrants closer oversight to ensure the government is receiving fair value. Future solicitations should prioritize competitive strategies where feasible.

Related Government Programs

Other Aircraft Parts and Auxiliary Equipment Manufacturing
Department of Defense Contracting
Department of the Navy Programs

Risk Flags

Sole-source award limits competition.
Potential for overpricing due to lack of competitive pressure.
Dependency on a single contractor creates supply chain risk.
Lack of small business participation.
Long contract duration may not reflect current market conditions.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $31.9 million to RAYTHEON COMPANY. SUPPLY BASE CAPACITY - PHASE I

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 $31.9 million.

What is the period of performance?

Start: 2023-10-31. End: 2027-06-30.

What is the justification for awarding this contract sole-source, and what steps were taken to ensure fair and reasonable pricing without competition?

The justification for a sole-source award typically involves unique capabilities or urgent needs. Without competitive bidding, the Department of Defense must conduct thorough market research and price analysis to ensure the awarded price is fair and reasonable. This often involves comparing proposed costs to historical data, commercial prices, or independent cost estimates to mitigate the risks associated with a lack of competition.

What are the potential risks to national security or operational readiness if the sole-source supplier faces disruptions or fails to deliver quality parts?

A sole-source award creates a critical dependency on a single supplier. Disruptions at Raytheon, such as production issues, financial instability, or quality control failures, could directly impact the availability of essential aircraft parts, potentially leading to significant delays in aircraft maintenance and deployment. This dependency increases the risk to national security and operational readiness.

How does this sole-source award align with the Department of Defense's stated goals for promoting competition and supporting small businesses?

Sole-source awards inherently contradict the goal of promoting competition. While sometimes necessary, they should be exceptions rather than the norm. This award, being to a large business and lacking competition, also misses an opportunity to engage small businesses, which are often a focus for DoD contracting initiatives aimed at fostering innovation and economic growth within the defense industrial base.

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: 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: $38,146,240

Exercised Options: $38,146,240

Current Obligation: $31,923,060

Subaward Activity

Number of Subawards: 8

Total Subaward Amount: $7,110,640

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