Raytheon Company awarded $28.2M contract for aircraft manufacturing, with limited competition

Contract Overview

Contract Amount: $28,252,890 ($28.3M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2022-09-09

End Date: 2026-04-30

Contract Duration: 1,329 days

Daily Burn Rate: $21.3K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: TRANSMITTER,RADAR

Place of Performance

Location: INDIANAPOLIS, MARION County, INDIANA, 46219

State: Indiana Government Spending

Plain-Language Summary

Department of Defense obligated $28.3 million to RAYTHEON COMPANY for work described as: TRANSMITTER,RADAR Key points: 1. Contract awarded to a single, large defense contractor, raising questions about competitive pricing. 2. The contract duration of over 3 years suggests a significant, ongoing need for these services. 3. Limited competition may lead to higher costs for taxpayers compared to a more open bidding process. 4. The firm-fixed-price structure shifts some risk to the contractor, but the lack of competition limits upside for the government. 5. This award falls within the broader context of ongoing defense procurement for aircraft components. 6. The contract's value, while substantial, needs to be benchmarked against similar procurements for true value assessment.

Value Assessment

Rating: fair

Benchmarking the value of this $28.2 million contract is challenging without more specific details on the 'TRANSMITTER,RADAR' components. However, given the 'NOT COMPETED' status, it's difficult to ascertain if the pricing reflects optimal value for money. Compared to potentially similar sole-source or limited-competition awards for specialized aircraft components, the price might be within a reasonable range for the contractor, but the government may not have achieved the most competitive rate. Further analysis would require comparing unit costs or total project costs against industry benchmarks for similar systems.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, Raytheon Company, was solicited. This approach is typically used when a specific capability or technology is only available from a single source, or in cases of urgent need where competition is not feasible. The lack of competition means there was no direct price comparison through bidding, potentially limiting the government's ability to secure the lowest possible price.

Taxpayer Impact: Sole-source awards mean taxpayers do not benefit from the price reductions typically driven by competitive bidding. This can result in higher overall spending for the government on this specific procurement.

Public Impact

The primary beneficiaries are the Department of the Navy and potentially its aviation units requiring specialized radar and transmitter components. The contract delivers critical components for aircraft, likely supporting national defense capabilities. The geographic impact is centered around the contractor's facilities in Indiana, where the work will be performed. This contract supports jobs within the aerospace and defense manufacturing sector, specifically at Raytheon Company.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may result in inflated pricing.
Sole-source awards can limit innovation by not engaging a broader market.
Dependence on a single supplier can create supply chain risks.
Transparency is reduced due to the absence of a competitive bidding process.

Positive Signals

Award to a known, established defense contractor suggests a degree of reliability.
Firm-fixed-price contract shifts some cost overrun risk to the contractor.
The contract duration indicates a long-term need, suggesting strategic importance.

Sector Analysis

This contract falls within the Defense Industrial Base sector, specifically focusing on aircraft manufacturing and electronic components like transmitters and radar systems. The market for such specialized defense components is often concentrated among a few large, established prime contractors. Spending in this area is driven by military readiness requirements and technological advancements in defense systems. Comparable spending benchmarks would typically involve analyzing other sole-source or limited-competition awards for similar high-value, specialized military hardware.

Small Business Impact

This contract does not appear to involve a small business set-aside, as it was awarded to Raytheon Company, a large prime contractor. There is no explicit information regarding subcontracting plans for small businesses within the provided data. The lack of a set-aside means that opportunities for small businesses to directly compete for this specific award were likely limited, though they may still participate as subcontractors if Raytheon chooses to engage them.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. Accountability measures are inherent in the firm-fixed-price structure, requiring the contractor to deliver specified goods within the agreed price. Transparency is limited due to the sole-source nature of the award. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse related to the contract.

Related Government Programs

Aircraft Manufacturing
Radar Systems Procurement
Defense Electronics
Naval Aviation Support
Sole-Source Defense Contracts

Risk Flags

Sole-source award limits price competition.
Lack of transparency in the procurement process.
Potential for higher costs due to lack of competition.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $28.3 million to RAYTHEON COMPANY. TRANSMITTER,RADAR

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 $28.3 million.

What is the period of performance?

Start: 2022-09-09. End: 2026-04-30.

What is the specific nature of the 'TRANSMITTER,RADAR' components being procured, and how do they contribute to the overall aircraft system?

The provided data indicates the procurement of 'TRANSMITTER,RADAR' components, which are critical elements for the operational functionality of various aircraft systems, particularly those involved in surveillance, targeting, and communication. Transmitters generate radio frequency signals, while radar systems use these signals to detect objects, determine their range, altitude, direction, and speed. These components are essential for modern military aircraft, enabling situational awareness, navigation, and mission execution. The specific contribution would depend on the aircraft platform and its intended role, but generally, they enhance the aircraft's ability to perceive and interact with its environment, which is vital for defense operations.

Why was this contract awarded on a sole-source basis instead of through full and open competition?

The data explicitly states the contract was 'NOT COMPETED,' indicating a sole-source award. This typically occurs when the procuring agency determines that only one responsible source can provide the required supplies or services. Reasons for this can include unique proprietary technology, specialized manufacturing capabilities held by a single entity, urgent and compelling needs where competition is impractical, or if the requirement is a follow-on to a previous contract where only the original contractor possesses the necessary knowledge and tooling. Without further details from the Department of the Navy, the precise justification for the sole-source award remains unspecified, but it implies a belief that Raytheon Company was the only viable option.

How does the firm-fixed-price (FFP) contract type impact risk allocation and potential cost savings for the government in this sole-source scenario?

A firm-fixed-price (FFP) contract establishes a ceiling price that the contractor must not exceed, and the contractor is obligated to complete the work for that price. In this sole-source scenario, the FFP structure shifts the primary risk of cost overruns to Raytheon Company. If their costs exceed the agreed-upon price, they absorb the loss. Conversely, if their costs are lower, they retain the profit. While FFP is generally preferred for controlling costs, the lack of competition here means the government may not have negotiated the lowest possible FFP. The benefit of risk transfer to the contractor is present, but the potential for cost savings through competitive negotiation is absent.

What is the historical spending pattern for similar 'TRANSMITTER,RADAR' components or aircraft manufacturing contracts by the Department of the Navy?

The provided data snippet does not contain historical spending patterns for similar contracts. To assess this, one would need to query federal procurement databases (like FPDS or USASpending.gov) for contracts awarded by the Department of the Navy for 'TRANSMITTER,RADAR' components or related aircraft manufacturing services over previous fiscal years. Analyzing these patterns would reveal trends in contract values, award types (competed vs. sole-source), and the primary contractors involved. This context is crucial for understanding if the $28.2 million award represents an increase, decrease, or stable level of spending for these types of items.

What are the potential implications of this contract award on Raytheon Company's market position and future business opportunities within the defense sector?

This $28.2 million contract reinforces Raytheon Company's position as a key supplier of critical electronic components for naval aviation. Securing a sole-source award for essential systems like transmitters and radar demonstrates the Navy's reliance on their capabilities and technology. This success can serve as a reference for future procurements, potentially leading to follow-on contracts or awards for similar systems on different platforms. It also solidifies their relationship with the Department of the Navy and contributes to their overall revenue and backlog, strengthening their competitive standing against other major defense contractors in the aerospace and defense market.

Industry Classification

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

Product/Service Code: COMM/DETECT/COHERENT RADIATION

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0038322QD100

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: $37,670,520

Exercised Options: $37,670,520

Current Obligation: $28,252,890

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0038318GN701

IDV Type: BOA

Timeline