Raytheon Company awarded $24.9M for Navy's Provisioned Item Orders Spares, a sole-source contract

Contract Overview

Contract Amount: $24,867,980 ($24.9M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2022-09-30

End Date: 2027-04-30

Contract Duration: 1,673 days

Daily Burn Rate: $14.9K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: FY22 PROVISIONED ITEM ORDER (PIO) SPARES

Place of Performance

Location: TEWKSBURY, MIDDLESEX County, MASSACHUSETTS, 01876

State: Massachusetts Government Spending

Plain-Language Summary

Department of Defense obligated $24.9 million to RAYTHEON COMPANY for work described as: FY22 PROVISIONED ITEM ORDER (PIO) SPARES Key points: 1. Contract awarded to a single vendor, raising questions about competitive pricing. 2. The contract duration extends over 4 years, indicating a long-term need. 3. The North American Industry Classification System (NAICS) code suggests a focus on advanced navigation and guidance systems. 4. This award represents a small portion of the overall defense spending in FY22. 5. The firm-fixed-price contract type shifts cost risk to the contractor. 6. The contract is a delivery order under an existing agreement.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without more detailed cost breakdowns or comparisons to similar sole-source awards for specialized spares. The total award amount of $24.9 million over nearly five years suggests a moderate annual spend. However, the lack of competition means there's no direct market validation of pricing efficiency. Further analysis would require understanding the specific components and their market value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating it was awarded directly to Raytheon Company. The data does not specify the justification for this sole-source award, which could be due to proprietary technology, existing system integration, or a lack of alternative suppliers. The absence of a competitive bidding process limits the government's ability to secure the best possible price and terms.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as they bypass the price discovery mechanisms inherent in competitive procurement. This can result in less efficient use of public funds.

Public Impact

The Department of the Navy benefits from the continued availability of essential spare parts for its systems. This contract ensures the operational readiness of critical naval assets. The services delivered are the provision of specific spare parts, likely for search, detection, navigation, guidance, and related systems. The geographic impact is primarily within the United States, supporting naval operations. The contract supports the workforce involved in manufacturing and supplying these specialized components.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated prices.
Sole-source awards can reduce transparency in pricing.
Dependence on a single supplier could create supply chain risks.
Limited insight into the specific components and their cost drivers.

Positive Signals

Firm-fixed-price contract type limits cost overruns for the government.
Award to an established contractor like Raytheon suggests a degree of reliability.
Ensures availability of critical spares for naval operations.

Sector Analysis

This contract falls within the Defense Industrial Base sector, specifically focusing on the manufacturing of advanced navigation and guidance systems. The market for such specialized components is often characterized by high barriers to entry due to technological complexity and stringent quality requirements. Spending in this sub-sector is driven by the need for continuous modernization and maintenance of military platforms. Comparable spending benchmarks would typically involve other sole-source or limited-competition awards for similar high-tech military hardware.

Small Business Impact

The data indicates that this contract was not set aside for small businesses, nor does it explicitly mention subcontracting requirements for small businesses. As a sole-source award to a large prime contractor, the direct impact on the small business ecosystem is likely minimal unless Raytheon Company voluntarily includes small businesses in its supply chain for this specific contract. Further investigation into subcontracting plans would be needed to assess any indirect benefits.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Navy's contracting and program management offices. Accountability measures are inherent in the firm-fixed-price structure, which obligates the contractor to deliver specified items at an agreed-upon price. Transparency may be limited due to the sole-source nature of the award, but contract details and performance metrics are usually available through federal procurement databases. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Defense Logistics Agency (DLA) Spare Parts Procurement
Naval Air Systems Command (NAVAIR) Procurement
Department of Defense (DoD) Research and Development
Military Aircraft and Parts Manufacturing

Risk Flags

Sole-source award lacks competitive pricing.
Potential for long-term reliance on a single supplier.
Limited public information on specific components and their costs.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $24.9 million to RAYTHEON COMPANY. FY22 PROVISIONED ITEM ORDER (PIO) SPARES

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 $24.9 million.

What is the period of performance?

Start: 2022-09-30. End: 2027-04-30.

What specific systems or platforms do these provisioned item spares support?

The NAICS code 334511, 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing,' strongly suggests that these spares are intended for advanced electronic systems used in naval aviation and surface vessels. This could include components for radar systems, sonar, inertial navigation units, GPS receivers, flight control computers, and related instrumentation. Without more specific contract line item details, it's difficult to pinpoint the exact platforms, but they likely support critical mission systems on fighter jets, surveillance aircraft, submarines, or surface combatants where precise navigation and detection are paramount.

What is the historical spending trend for Provisioned Item Orders (PIO) Spares with Raytheon Company by the Department of the Navy?

Analyzing historical spending trends for PIO Spares with Raytheon by the Navy requires access to historical contract data beyond FY22. However, given Raytheon's established role as a major defense contractor, it is probable that they have been a consistent supplier of such items for many years. The current award of $24.9 million over approximately 4.7 years (ending April 2027) suggests an average annual spend of roughly $5.3 million. If this represents a typical level of demand, historical spending could be in a similar range annually, potentially fluctuating based on system upgrades, operational tempo, and inventory management strategies. A deeper dive into contract databases like FPDS or SAM.gov would be necessary to quantify past spending accurately.

What are the key performance indicators (KPIs) for this contract, and how is performance measured?

Key performance indicators for a contract involving the provision of spare parts typically revolve around delivery timeliness, quality of parts, and adherence to specifications. For this firm-fixed-price contract, the primary KPI would be the timely delivery of the correct, specified spare parts to designated Navy locations. Performance might be measured through metrics such as On-Time Delivery (OTD) rates, rejection rates for defective parts, and compliance with technical data packages. The Navy would likely track these through contract administration and receiving reports. Failure to meet these KPIs could result in contract remedies, including potential penalties or termination, depending on the severity and contractual terms.

Are there any known issues or past performance concerns related to Raytheon Company's supply of spare parts to the Department of the Navy?

Assessing past performance concerns requires a review of contractor performance evaluation reports (CPARS) and any documented disputes or contract modifications related to quality or delivery issues. Raytheon Company is a large, established defense contractor, and like many major suppliers, may have encountered performance challenges on various contracts over time. However, without specific access to CPARS data or public records of disputes related to this specific type of spare parts provision, it is difficult to ascertain any significant, contract-specific performance concerns. Generally, the DoD maintains systems to track contractor performance, and awards are often made to contractors with a history of satisfactory performance.

What is the estimated value of the specific components being procured under this contract, and how does it compare to market rates for similar components?

The contract value is $24.9 million for a broad category of 'Provisioned Item Spares.' The value of individual components can vary dramatically, from a few hundred dollars for simple fasteners to tens or hundreds of thousands of dollars for complex electronic modules or gyroscopes. Without a detailed Bill of Materials (BOM) or specific part numbers, it's impossible to determine the value of individual components. Comparing these to market rates is further complicated by the sole-source nature of the award and the potential for these parts to be proprietary or have limited commercial availability. Market rates for highly specialized, defense-unique components are often established through negotiation rather than open market competition, making direct benchmarking difficult.

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: 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: 50 APPLE HILL DR, TEWKSBURY, MA, 01876

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: $24,867,980

Exercised Options: $24,867,980

Current Obligation: $24,867,980

Subaward Activity

Number of Subawards: 39

Total Subaward Amount: $5,521,571

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0002418G5501

IDV Type: BOA

Timeline