DoD awards $52.2M for FLIR spares to Raytheon Company, impacting international FMS customers

Contract Overview

Contract Amount: $52,200,000 ($52.2M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2025-02-07

End Date: 2028-02-29

Contract Duration: 1,117 days

Daily Burn Rate: $46.7K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: THE PURPOSE OF THIS ORDER IS TO PROCURE FLIR SPARES FOR THE FOLLOWING FMS CUSTOMERS: SPAIN, INDIA, NORWAY, SOUTH KOREA, SAUDI ARABIA.

Place of Performance

Location: MCKINNEY, COLLIN County, TEXAS, 75071

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $52.2 million to RAYTHEON COMPANY for work described as: THE PURPOSE OF THIS ORDER IS TO PROCURE FLIR SPARES FOR THE FOLLOWING FMS CUSTOMERS: SPAIN, INDIA, NORWAY, SOUTH KOREA, SAUDI ARABIA. Key points: 1. Contract awarded for critical FLIR spares, supporting allied nations' defense capabilities. 2. Raytheon Company, a major defense contractor, is the sole awardee. 3. The contract spans over three years, indicating a long-term need for these components. 4. Fixed-price contract type suggests cost certainty for the government. 5. The award is for Foreign Military Sales (FMS) customers, highlighting international cooperation. 6. Specific part number 336413 relates to aircraft parts manufacturing.

Value Assessment

Rating: fair

The contract value of $52.2 million for FLIR spares over approximately three years appears reasonable given the nature of specialized defense equipment for multiple international partners. Without specific unit cost data or a detailed breakdown of the spares included, a precise value-for-money assessment is challenging. However, the fixed-price nature of the contract provides some cost predictability. Benchmarking against similar FMS spare parts procurements would be necessary for a more definitive valuation.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. This approach is often taken when a specific contractor possesses unique capabilities, proprietary technology, or is the sole authorized supplier for the required parts. The lack of competition means the government did not benefit from potential price reductions or innovative solutions that might arise from a competitive bidding process.

Taxpayer Impact: Sole-source awards can lead to higher prices for taxpayers as there is no competitive pressure to drive down costs. This necessitates robust oversight to ensure fair pricing.

Public Impact

International allies (Spain, India, Norway, South Korea, Saudi Arabia) will receive critical FLIR spares, enhancing their military operational readiness. The contract supports the sustainment of aircraft equipped with FLIR systems, ensuring continued surveillance and targeting capabilities. This procurement indirectly supports the U.S. defense industrial base by providing work for Raytheon Company and its supply chain. The availability of these spares is crucial for maintaining interoperability between U.S. and allied forces.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing advantages.
Lack of detailed cost breakdown makes value assessment difficult.
Long-term sustainment contracts can sometimes be subject to price creep if not managed carefully.

Positive Signals

Fixed-price contract provides cost certainty.
Supports critical defense needs for multiple allied nations.
Award to a major defense contractor suggests established capability and reliability.

Sector Analysis

This contract falls within the broader aerospace and defense sector, specifically focusing on aircraft parts and auxiliary equipment manufacturing (NAICS 336413). The market for specialized defense components like FLIR spares is often characterized by high barriers to entry due to technological complexity and stringent quality requirements. Spending in this area is driven by military modernization programs and the need for ongoing sustainment of existing fleets, with significant government investment globally.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb: false'. Given the sole-source nature and the award to a large prime contractor, Raytheon Company, the direct impact on small businesses is likely limited to subcontracting opportunities. The extent to which Raytheon will utilize small businesses for fulfilling this order is not specified, but it is a common practice for large defense contractors to engage small businesses for specialized components or services.

Oversight & Accountability

Oversight for this contract will primarily reside with the Department of the Navy, the awarding agency, and potentially the Defense Contract Management Agency (DCMA). As a Foreign Military Sales (FMS) case, additional oversight may be provided by the relevant FMS program offices and the governments of the purchasing nations. Transparency is facilitated through contract award databases, but detailed performance metrics and cost breakdowns are typically internal to the government and contractor unless specific reporting requirements are mandated.

Related Government Programs

Foreign Military Sales Program
Aircraft Parts and Auxiliary Equipment Manufacturing
Defense Logistics Agency (DLA) Spare Parts Procurement
Tactical Aircraft Sustainment Programs

Risk Flags

Sole-source award
Lack of detailed cost breakdown
Potential for higher pricing without competition

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $52.2 million to RAYTHEON COMPANY. THE PURPOSE OF THIS ORDER IS TO PROCURE FLIR SPARES FOR THE FOLLOWING FMS CUSTOMERS: SPAIN, INDIA, NORWAY, SOUTH KOREA, SAUDI ARABIA.

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 $52.2 million.

What is the period of performance?

Start: 2025-02-07. End: 2028-02-29.

What is the historical spending pattern for FLIR spares procured by the Department of Defense?

Analyzing historical spending on FLIR spares requires access to detailed procurement data beyond this single award. Generally, spending on specialized aircraft components like FLIR systems is driven by fleet size, operational tempo, and modernization cycles. Contracts for such items can range from small, infrequent orders for specific units to large, multi-year sustainment programs. Factors influencing spending include technological advancements in sensor technology, the lifespan of existing platforms, and geopolitical demands requiring enhanced surveillance capabilities. Without specific historical data for FLIR spares, it's difficult to establish a precise trend, but it's reasonable to assume consistent, albeit fluctuating, investment to maintain operational readiness for platforms equipped with these systems.

How does the unit cost of these FLIR spares compare to similar items purchased by other FMS customers or the U.S. military?

A direct comparison of unit costs for these FLIR spares is challenging without access to the detailed pricing structure of this contract and comparable procurement data. Sole-source awards, like this one, often lack the price discovery benefits of competition, potentially leading to higher unit costs. However, FMS contracts can sometimes leverage U.S. government purchasing power for better pricing, or conversely, include additional administrative fees. The specific type and quantity of spares, along with the contract's fixed-price nature, influence the overall cost. A thorough benchmark would require analyzing pricing data for identical or functionally equivalent FLIR components acquired through competitive bids or other FMS agreements by the U.S. or allied nations.

What is Raytheon Company's track record in supplying FLIR systems and related spares?

Raytheon Company, now part of RTX Corporation, has a significant and long-standing track record in developing and supplying advanced sensor systems, including Forward-Looking Infrared (FLIR) technology, for various military platforms. They are a major defense contractor with extensive experience in producing complex avionics and electro-optical systems. Their history includes supplying FLIR systems for fighter jets, surveillance aircraft, and other platforms used by the U.S. military and allied nations. This includes providing sustainment, upgrades, and spare parts for these systems. Given their established position in the defense industry and specialization in sensor technology, Raytheon is a logical sole-source provider for FLIR spares, implying a history of successful delivery and technical capability.

What are the potential risks associated with a sole-source award for critical defense spares?

The primary risk associated with a sole-source award for critical defense spares is the potential for inflated pricing due to the lack of competitive pressure. This can lead to reduced value for taxpayer money. Another risk is vendor lock-in, where the government becomes dependent on a single supplier, potentially limiting flexibility in future procurements or upgrades. Furthermore, sole-source awards can sometimes mask inefficiencies or a lack of innovation if the contractor faces no external pressure to improve processes or reduce costs. Ensuring fair and reasonable pricing, along with robust contract management and oversight, becomes paramount to mitigate these risks.

How does this contract contribute to the overall sustainment strategy for allied FMS customers' aircraft?

This contract is a crucial component of the sustainment strategy for allied FMS customers operating aircraft equipped with FLIR systems. By providing a dedicated source for essential spare parts, it ensures that these nations can maintain their aircraft's operational readiness and fulfill their defense missions. Reliable access to spares prevents aircraft downtime, reduces logistical burdens, and supports the long-term viability of their defense platforms. This procurement directly enables allies to keep their critical surveillance and targeting capabilities functional, reinforcing interoperability and collective security objectives.

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 AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0001925R0205

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

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: $52,200,000

Exercised Options: $52,200,000

Current Obligation: $52,200,000

Subaward Activity

Number of Subawards: 9

Total Subaward Amount: $1,344,078

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: N0001920G0007

IDV Type: BOA

Timeline