Raytheon Company awarded $380M+ for MK54 LWT Common Parts Kits by the Department of the Navy

Contract Overview

Contract Amount: $380,128,003 ($380.1M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2016-08-25

End Date: 2026-09-30

Contract Duration: 3,688 days

Daily Burn Rate: $103.1K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: MK54 LWT COMMON PARTS KITS

Place of Performance

Location: PORTSMOUTH, NEWPORT County, RHODE ISLAND, 02871

State: Rhode Island Government Spending

Plain-Language Summary

Department of Defense obligated $380.1 million to RAYTHEON COMPANY for work described as: MK54 LWT COMMON PARTS KITS Key points: 1. Contract awarded via full and open competition, suggesting a competitive bidding process. 2. The contract type is Firm Fixed Price, which shifts cost risk to the contractor. 3. Long duration of the contract (over 9 years) may indicate a need for sustained supply. 4. The award is for common parts kits, suggesting a focus on standardization and interoperability. 5. The North American Industry Classification System (NAICS) code 334511 points to a manufacturing sector focused on navigation and guidance systems. 6. The contract value exceeds $380 million, indicating a significant investment by the Department of Defense.

Value Assessment

Rating: good

Benchmarking the value of this contract requires detailed cost breakdowns and comparisons to similar parts kits. However, the firm fixed-price structure generally indicates a commitment to cost control by the government. The long duration suggests potential for economies of scale in production, which could lead to better value over time. Without specific unit cost data or comparisons to alternative suppliers, a definitive value assessment is challenging, but the competitive award process is a positive indicator.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under a full and open competition, meaning all responsible sources were permitted to submit bids. The presence of two bids (no: 2) indicates some level of competition, though the exact number of bidders can influence price discovery. A higher number of bidders typically leads to more competitive pricing for the government.

Taxpayer Impact: A full and open competition generally benefits taxpayers by fostering a competitive environment that can drive down prices and encourage innovation from multiple vendors.

Public Impact

The Department of the Navy benefits from a reliable supply of essential parts for its systems. This contract supports the manufacturing sector, specifically in the production of advanced navigation and guidance instruments. The contract's duration implies sustained operational readiness for naval assets. Workforce implications may include employment in manufacturing and logistics related to defense systems.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if initial pricing does not accurately reflect long-term material costs.
Risk of supply chain disruptions impacting delivery schedules over the contract's extended period.
Dependence on a single contractor for critical common parts could create future sole-source risks if competition diminishes.

Positive Signals

Firm fixed-price contract structure mitigates cost escalation risk for the government.
Full and open competition at the outset suggests a competitive market for these parts.
Long-term contract provides supply chain stability for essential naval components.

Sector Analysis

This contract falls within the Defense sector, specifically the manufacturing of navigation, guidance, and control systems. The NAICS code 334511 represents a segment of the aerospace and defense industry focused on high-technology instrumentation. Spending in this area is critical for maintaining the technological edge of military assets. Comparable spending benchmarks would involve analyzing other contracts for similar components or systems within the Department of Defense and other military branches.

Small Business Impact

The data indicates that small business participation (sb: false) was not a specific set-aside requirement for this contract. While the prime contractor, Raytheon Company, is a large business, there may be opportunities for small businesses to participate as subcontractors. The extent of small business subcontracting would need further investigation to assess its impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would typically be managed by the Department of the Navy's contracting and program management offices. Accountability measures are embedded in the firm fixed-price contract terms, requiring the contractor to deliver specified goods within agreed-upon costs. Transparency is generally maintained through contract award databases and reporting requirements, though detailed performance metrics may not always be publicly available. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

MK54 Torpedo Program
Naval Air Systems Command (NAVAIR) Contracts
Department of Defense Common Parts Procurement
Defense Logistics Agency (DLA) Supply Chain Management

Risk Flags

Long contract duration may increase risk of obsolescence or cost volatility.
Limited competition (2 bidders) could impact price discovery.
Dependence on a single contractor for common parts could pose future supply risks.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $380.1 million to RAYTHEON COMPANY. MK54 LWT COMMON PARTS KITS

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 $380.1 million.

What is the period of performance?

Start: 2016-08-25. End: 2026-09-30.

What is the historical spending trend for MK54 LWT Common Parts Kits with Raytheon Company?

Analyzing historical spending requires access to prior contract awards for the same or similar parts kits. Without specific historical data for this exact contract line item, it's difficult to establish a precise trend. However, the current award of over $380 million suggests a substantial and ongoing requirement for these components. If this is a new award or a continuation of a previous effort, the duration and value indicate a significant, long-term commitment by the Department of the Navy to procure these parts. Future analysis could involve tracking subsequent awards or modifications to this contract to understand spending patterns over its lifecycle.

How does the per-unit cost of these common parts kits compare to industry benchmarks or similar government contracts?

Determining the per-unit cost benchmark for these MK54 LWT Common Parts Kits is challenging without access to the detailed pricing structure of the contract and specific unit cost data. The contract is a Firm Fixed Price (FFP) award, which implies that Raytheon Company has priced the units to cover their costs and profit. To benchmark, one would need to compare the unit price of each component within the kit against market rates for similar items, or against prices paid by other government agencies or defense contractors for comparable parts. The fact that it was awarded under full and open competition suggests the price was deemed acceptable in a competitive environment, but a precise benchmark requires granular cost data.

What are the key performance indicators (KPIs) used to measure the success of this contract?

Key performance indicators for this contract would likely focus on delivery timeliness, quality of the parts, and adherence to specifications. For a firm fixed-price contract, meeting delivery schedules (on-time delivery) is crucial. Quality assurance would involve ensuring that the parts meet all technical specifications and are free from defects, likely measured through inspection and testing results. Compliance with contract terms, including any reporting requirements, also serves as a performance measure. While specific KPIs are not detailed in the provided data, these are standard metrics for defense manufacturing contracts to ensure operational readiness and value for money.

What is Raytheon Company's track record in delivering similar defense manufacturing contracts?

Raytheon Company (now RTX) has an extensive track record in delivering complex defense manufacturing contracts across various domains, including aerospace, naval systems, and missile technology. They are a major defense contractor with significant experience in producing components and integrated systems for the U.S. military and allied nations. Their history includes numerous awards for weapon systems, sensors, and related support services. While specific performance details for every contract are not always public, Raytheon's sustained position as a prime contractor indicates a generally reliable performance history in meeting government requirements, though like any large contractor, they may have faced challenges on specific programs.

What are the potential risks associated with the long duration (over 9 years) of this contract?

The extended duration of this contract presents several potential risks. Firstly, there's the risk of technological obsolescence; the components or the systems they support might become outdated before the contract ends, requiring costly modifications or replacements. Secondly, material costs and labor rates can fluctuate significantly over nearly a decade, potentially impacting the contractor's profitability or leading to requests for equitable adjustments if not adequately accounted for in the FFP pricing. Thirdly, supply chain vulnerabilities can be amplified over a longer period, increasing the likelihood of disruptions. Finally, maintaining consistent quality control and oversight across such a long timeframe requires sustained effort and resources from both the contractor and the government.

How does this contract contribute to the overall readiness and capability of naval assets?

This contract is crucial for maintaining the operational readiness and capability of naval assets that utilize the MK54 Lightweight Torpedo (LWT) system. The MK54 is a primary anti-submarine warfare (ASW) torpedo used by the U.S. Navy and allied forces. By ensuring a steady supply of common parts kits, the Department of the Navy can perform necessary maintenance, repairs, and upgrades on these torpedoes. This directly supports the Navy's ability to conduct ASW missions effectively, contributing to maritime security and power projection. Without a reliable source of these parts, the serviceability and deployment of critical ASW capabilities would be jeopardized.

Industry Classification

NAICS: Manufacturing › Navigational, Measuring, Electromedical, and Control Instruments Manufacturing › Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing

Product/Service Code: WEAPONS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: N0002415R6406

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: RTX Corp

Address: 1847 W MAIN RD, PORTSMOUTH, RI, 02871

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: $439,649,100

Exercised Options: $417,744,930

Current Obligation: $380,128,003

Actual Outlays: $11,871,588

Subaward Activity

Number of Subawards: 594

Total Subaward Amount: $769,498,229

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline