Raytheon Company awarded $36.5M for aircraft parts, with contract performance extending into late 2025

Contract Overview

Contract Amount: $36,466,911 ($36.5M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2022-09-23

End Date: 2025-12-31

Contract Duration: 1,195 days

Daily Burn Rate: $30.5K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: RACK,SUPPORT ASSEMB

Place of Performance

Location: FOREST, SCOTT County, MISSISSIPPI, 39074

State: Mississippi Government Spending

Plain-Language Summary

Department of Defense obligated $36.5 million to RAYTHEON COMPANY for work described as: RACK,SUPPORT ASSEMB Key points: 1. The contract's value appears reasonable given the scope of aircraft parts and support. 2. Limited competition may have influenced the final pricing. 3. Performance risk is moderate, typical for complex aircraft component manufacturing. 4. This contract supports ongoing readiness for naval aviation assets. 5. The award falls within the broader aerospace and defense manufacturing sector. 6. The fixed-price structure shifts some risk to the contractor.

Value Assessment

Rating: good

The contract value of $36.5 million for aircraft parts and support is within a typical range for such specialized procurements. Benchmarking against similar contracts for advanced aircraft components suggests that the pricing is competitive, especially considering the firm-fixed-price nature which often includes a premium for contractor risk. The duration of the contract, spanning over three years, also indicates a substantial scope of work that justifies the awarded amount.

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 product is only available from a single source, or in situations requiring urgent and compelling needs. The lack of competition means that price discovery through market forces was limited, and the government relied on negotiation and its own cost estimations to ensure a fair price.

Taxpayer Impact: Sole-source awards can potentially lead to higher costs for taxpayers compared to competitively bid contracts, as the benefit of multiple offers driving down prices is absent.

Public Impact

The primary beneficiaries are the Department of the Navy, ensuring the operational readiness of its aircraft fleet. Services delivered include the provision of aircraft parts and auxiliary equipment, crucial for maintenance and repair. The contract's impact is primarily national, supporting naval aviation operations across various deployments. Workforce implications include sustained employment for skilled manufacturing and technical personnel at Raytheon facilities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially impacting cost-effectiveness.
Long contract duration requires diligent oversight to ensure continued value.
Reliance on a single contractor for critical parts could pose supply chain risks if not managed proactively.

Positive Signals

Raytheon is a well-established defense contractor with a proven track record in aerospace manufacturing.
Firm-fixed-price contract provides cost certainty for the government.
Contract supports critical national defense assets, ensuring operational readiness.

Sector Analysis

The aerospace and defense manufacturing sector is characterized by high technological complexity, stringent quality requirements, and significant government investment. This contract for aircraft parts and auxiliary equipment fits within the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' industry code (NAICS 336413). The market is dominated by a few large, specialized firms like Raytheon, often requiring extensive R&D and sophisticated production capabilities. Government spending in this area is substantial, driven by the need to maintain aging fleets and develop next-generation military aircraft.

Small Business Impact

This contract was not set aside for small businesses, nor does it appear to have specific subcontracting requirements mentioned in the provided data. As a sole-source award to a large prime contractor, the direct impact on the small business ecosystem is likely minimal unless Raytheon voluntarily engages small businesses for specific components or services not detailed here. Future opportunities for small businesses might arise through Raytheon's supply chain, but this specific award does not guarantee it.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Navy's contracting and program management offices. Accountability measures are embedded in the firm-fixed-price contract terms, requiring delivery of specified parts meeting quality standards. Transparency is limited due to the sole-source nature, but contract award details are generally available through federal procurement databases. The Inspector General for the Department of Defense may conduct audits or investigations if concerns regarding fraud, waste, or abuse arise.

Related Government Programs

Aircraft Component Manufacturing
Naval Aviation Support Equipment
Defense Logistics and Sustainment
Aerospace Parts Procurement

Risk Flags

Sole-source award
Potential for higher costs due to lack of competition
Supply chain dependency on a single contractor

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $36.5 million to RAYTHEON COMPANY. RACK,SUPPORT ASSEMB

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 $36.5 million.

What is the period of performance?

Start: 2022-09-23. End: 2025-12-31.

What is Raytheon Company's track record with the Department of Defense for similar aircraft parts contracts?

Raytheon Company, now RTX, has an extensive and long-standing track record with the Department of Defense, including the Department of the Navy, for supplying a wide array of aircraft components, systems, and related services. They are a major defense contractor known for producing complex avionics, engines, and structural parts for various military aircraft platforms. Historical data indicates numerous awards for similar items, often involving firm-fixed-price contracts. While specific performance metrics for every contract are not publicly detailed, their continued selection for significant defense procurements suggests a generally satisfactory performance history in terms of quality, delivery, and technical capability, though like any large contractor, they may have faced occasional performance issues or contract disputes on specific programs.

How does the $36.5 million value compare to other sole-source awards for aircraft parts?

The $36.5 million contract value is a substantial but not extraordinary amount for a sole-source award of aircraft parts and auxiliary equipment, especially considering the contract's duration extending to late 2025. Sole-source awards, by their nature, bypass the price competition that typically drives down costs in the open market. Therefore, comparing this value directly to competitively bid contracts would be misleading. However, when benchmarked against other sole-source or limited-competition contracts for specialized aerospace components requiring unique manufacturing capabilities or proprietary technology, this value appears to be within a reasonable range. The government likely engaged in negotiation and cost analysis to ensure the price was fair and reasonable in the absence of competitive offers.

What are the primary risks associated with this sole-source contract for aircraft parts?

The primary risks associated with this sole-source contract are centered around cost and supply chain. Without competition, there's a risk that the negotiated price may be higher than what could have been achieved in a competitive bidding process. Additionally, relying on a single supplier for critical aircraft parts can create supply chain vulnerabilities. If Raytheon Company faces production issues, labor strikes, or other disruptions, it could impact the availability of essential parts, potentially affecting naval aviation readiness. The government's mitigation strategy would involve close monitoring of Raytheon's performance, maintaining open communication, and potentially developing contingency plans or alternative sourcing strategies for the future, though the latter is difficult with sole-source awards.

How does this contract contribute to the operational effectiveness of naval aviation assets?

This contract is crucial for maintaining the operational effectiveness of naval aviation assets by ensuring the availability of necessary parts and auxiliary equipment for aircraft maintenance, repair, and overhaul (MRO). Naval aircraft, like any complex machinery, require a steady supply of high-quality replacement parts to remain airworthy and mission-capable. By securing these parts through Raytheon Company, the Department of the Navy can sustain its existing fleet, address wear and tear, and perform necessary upgrades or modifications. This directly supports the readiness posture of naval aviation, enabling them to execute their diverse missions, from power projection to reconnaissance and support operations.

What is the historical spending trend for aircraft parts and auxiliary equipment by the Department of the Navy?

The Department of the Navy historically spends billions of dollars annually on aircraft parts and auxiliary equipment. This spending is driven by the large size and operational tempo of its air wings, which include fixed-wing aircraft, helicopters, and unmanned aerial systems operating from carriers and shore bases. Spending fluctuates based on fleet modernization programs, the age of existing aircraft requiring more maintenance, and specific operational demands. Contracts like this one, for specialized parts, are a consistent component of this overall spending, reflecting the ongoing need to support a complex and technologically advanced aviation inventory. Analyzing trends requires looking at broader categories like 'Aircraft Parts and Auxiliary Equipment Manufacturing' (NAICS 336413) across multiple fiscal years.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Other Aircraft Parts and Auxiliary Equipment 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: 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: $36,466,911

Exercised Options: $36,466,911

Current Obligation: $36,466,911

Subaward Activity

Number of Subawards: 38

Total Subaward Amount: $7,128,030

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Parent Contract

Parent Award PIID: N0038319GUX01

IDV Type: BOA

Timeline