Raytheon Company awarded $47.3M contract for aircraft manufacturing by the Department of the Navy

Contract Overview

Contract Amount: $47,346,973 ($47.3M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2018-02-13

End Date: 2024-06-30

Contract Duration: 2,329 days

Daily Burn Rate: $20.3K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: CAVITY,TUNED

Place of Performance

Location: INDIANAPOLIS, MARION County, INDIANA, 46219

State: Indiana Government Spending

Plain-Language Summary

Department of Defense obligated $47.3 million to RAYTHEON COMPANY for work described as: CAVITY,TUNED Key points: 1. Contract value of $47.3M represents a significant investment in aircraft manufacturing capabilities. 2. The sole-source nature of this award warrants scrutiny regarding potential price inflation. 3. Long contract duration of 2329 days suggests a need for ongoing performance monitoring. 4. The contract is categorized under Aircraft Manufacturing, a critical defense sector. 5. Delivery order type indicates flexibility in procurement but may lack long-term predictability. 6. Fixed-price contract type offers cost certainty for the government.

Value Assessment

Rating: fair

Benchmarking the value of this $47.3M contract is challenging without specific details on the aircraft components or services procured. However, given the firm fixed-price structure, the government has a degree of cost certainty. The long duration suggests that the pricing was likely negotiated with future cost escalations in mind, which could impact overall value. Comparison to similar sole-source contracts for specialized aircraft parts would be necessary for a more definitive value assessment.

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 typically used when only one vendor possesses the necessary capabilities, technology, or proprietary rights. The lack of competition limits the government's ability to leverage market forces to achieve the lowest possible price and may indicate a reliance on a single supplier for critical components or services.

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

Public Impact

The Department of the Navy benefits from the acquisition of specialized aircraft manufacturing capabilities. This contract supports the maintenance and readiness of naval aviation assets. The contract's geographic impact is centered in Indiana, where the contractor is located. It likely supports a workforce skilled in advanced manufacturing and aerospace engineering.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing, potentially increasing costs for taxpayers.
Long contract duration may obscure true value if market prices fluctuate significantly.
Lack of competition raises concerns about contractor's incentive to innovate or improve efficiency.
Specific details on deliverables are not provided, making performance assessment difficult.

Positive Signals

Firm fixed-price contract provides cost predictability for the government.
Award to Raytheon Company, a known defense contractor, suggests established capabilities.
Contract supports critical defense needs for the Department of the Navy.

Sector Analysis

The Aircraft Manufacturing sector is a vital component of the aerospace and defense industry, characterized by high barriers to entry, complex supply chains, and significant R&D investment. This contract falls within the broader defense industrial base, supporting the production or modification of aircraft. Spending in this sector is often driven by national security requirements and technological advancements. Comparable spending benchmarks would typically involve analyzing other contracts for similar aircraft components or manufacturing services awarded by various defense agencies.

Small Business Impact

There is no indication that this contract includes small business set-asides. As a sole-source award to a large prime contractor, the primary impact on small businesses would likely be through subcontracting opportunities. The extent to which Raytheon Company engages small businesses as subcontractors will determine the broader impact on the small business ecosystem within the aerospace and defense supply chain.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of the Navy's contracting and program management offices. Accountability measures are inherent in the firm fixed-price structure, requiring delivery of specified goods or services. Transparency may be limited due to the sole-source nature, but contract award data is publicly available. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Naval Air Systems Command (NAVAIR) Contracts
Department of Defense Aircraft Procurement
Aerospace Manufacturing Services
Defense Production Act Investments

Risk Flags

Sole-source award
Long contract duration
Lack of detailed scope of work

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $47.3 million to RAYTHEON COMPANY. CAVITY,TUNED

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 $47.3 million.

What is the period of performance?

Start: 2018-02-13. End: 2024-06-30.

What specific aircraft components or manufacturing services does this contract cover?

The provided data indicates the contract is for 'Aircraft Manufacturing' (NAICS code 336411) awarded to Raytheon Company. However, the specific components, systems, or manufacturing processes are not detailed. This could range from the production of new aircraft parts, assembly of sub-components, specialized manufacturing processes for existing platforms, or even modification and upgrade services. Without further details, it's difficult to ascertain the precise nature of the work, which impacts a granular assessment of value and performance.

How does the $47.3M contract value compare to similar sole-source aircraft manufacturing contracts?

Direct comparison of this $47.3M sole-source contract value to similar awards is challenging without knowing the specific scope of work. Sole-source contracts inherently lack direct price competition, making benchmarking difficult. However, the value is substantial, suggesting a significant procurement. To assess value, one would need to identify other sole-source contracts for comparable aircraft manufacturing services or components awarded by the Department of Defense or other agencies, considering factors like contract duration, complexity, and the specific technologies involved. Raytheon's historical pricing on similar sole-source awards could also serve as a benchmark.

What are the key performance indicators (KPIs) and delivery milestones for this contract?

The provided data does not specify the key performance indicators (KPIs) or delivery milestones for this contract. For a firm fixed-price contract of this duration (2329 days), there would typically be a series of scheduled deliveries or performance targets. The Department of the Navy's program office would be responsible for monitoring adherence to these milestones. The absence of this information in the summary data limits the ability to assess the contractor's performance trajectory and the government's progress in receiving the contracted goods or services.

What is Raytheon Company's track record with sole-source contracts of this magnitude?

Raytheon Company, now part of RTX, has a long history as a major defense contractor and frequently engages in large-value contracts, including sole-source awards, particularly for specialized defense systems and components. Their track record with sole-source contracts of this magnitude is generally extensive, reflecting their established position in the defense industrial base. However, the specific performance, pricing, and oversight associated with each sole-source award can vary. A detailed review of Raytheon's past sole-source awards within the aircraft manufacturing domain would be necessary to fully assess their performance and pricing consistency.

What are the potential risks associated with a sole-source award for aircraft manufacturing?

The primary risks associated with a sole-source award for aircraft manufacturing include potential overpricing due to the lack of competition, reduced incentive for the contractor to innovate or improve efficiency, and a heightened dependence on a single supplier. This dependence can create vulnerabilities in the supply chain. Furthermore, without competitive pressure, there's a risk that the government may not be receiving the best possible value. Robust contract management, including thorough cost analysis and performance monitoring, is crucial to mitigate these risks.

How does this contract fit into the broader context of the Department of the Navy's aviation procurement strategy?

This contract likely fits into the Department of the Navy's strategy for maintaining and modernizing its aviation fleet. Aircraft manufacturing, especially for specialized components or platforms, is critical for ensuring operational readiness and technological superiority. The sole-source nature might indicate a need for specific, proprietary technology or a unique capability that only Raytheon possesses for a particular aircraft system. Understanding the specific platform or component this contract supports would provide better insight into its strategic importance within the Navy's overall aviation sustainment and development plans.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft Manufacturing

Product/Service Code: ELECTRICAL/ELECTRONIC EQPT COMPNTS

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: 6125 E 21ST ST, INDIANAPOLIS, IN, 46219

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: $47,346,973

Exercised Options: $47,346,973

Current Obligation: $47,346,973

Subaward Activity

Number of Subawards: 3

Total Subaward Amount: $566,140

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Parent Contract

Parent Award PIID: N0038318GN701

IDV Type: BOA

Timeline