Raytheon Company awarded $12.9M contract for aircraft parts, raising questions about competition and value

Contract Overview

Contract Amount: $12,901,603 ($12.9M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2022-09-12

End Date: 2026-10-30

Contract Duration: 1,509 days

Daily Burn Rate: $8.6K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: INTERCONNECTING BOX

Place of Performance

Location: MCKINNEY, COLLIN County, TEXAS, 75071

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $12.9 million to RAYTHEON COMPANY for work described as: INTERCONNECTING BOX Key points: 1. Contract awarded on a sole-source basis, limiting price discovery and potentially increasing costs. 2. Significant duration of 1509 days suggests a long-term need for these aircraft parts. 3. The contract's value, while substantial, requires benchmarking against similar procurements for true value assessment. 4. Performance risk appears moderate given the fixed-price nature, but delivery timelines are critical. 5. This procurement falls within the broader defense industrial base, supporting aircraft maintenance and readiness. 6. The absence of small business participation is noted, with no set-aside or subcontracting plans evident.

Value Assessment

Rating: fair

The contract value of $12.9 million for aircraft parts requires careful benchmarking against similar procurements to ascertain value for money. Without comparative data on unit costs or total package value for equivalent items, it is difficult to definitively assess if the pricing is competitive. The fixed-price nature of the contract provides some cost certainty, but the lack of competition introduces a risk that the government may not be achieving the best possible price. Further analysis of the specific parts and their market rates is needed for a more robust value assessment.

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 bypasses the competitive bidding process, which typically involves multiple vendors submitting proposals. While sole-source awards can be justified in specific circumstances (e.g., unique capabilities, urgent needs), they inherently limit price discovery and can lead to higher costs for the government compared to a competed procurement. The absence of competition means taxpayers do not benefit from the potential cost savings that could arise from a bidding war among suppliers.

Taxpayer Impact: The lack of competition means taxpayers may be paying a premium for these aircraft parts, as there was no market pressure to drive down prices. This sole-source award limits the government's ability to secure the most cost-effective solution.

Public Impact

The primary beneficiaries are the Department of the Navy and potentially military personnel who rely on operational aircraft. The contract delivers essential aircraft parts, contributing to the maintenance and operational readiness of naval aviation assets. The geographic impact is primarily within the United States, supporting defense logistics and supply chains. Workforce implications may include specialized manufacturing and logistics roles within Raytheon and its potential suppliers.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing, potentially leading to overpayment.
Long contract duration (1509 days) increases exposure to price fluctuations and market changes.
Lack of small business involvement means missed opportunities for economic inclusion and diverse supplier bases.
Absence of detailed performance metrics in the provided data makes assessing effectiveness challenging.

Positive Signals

Fixed-price contract type offers cost certainty for the government.
Award to a known entity (Raytheon) may indicate reliance on established capabilities and supply chains.
Contract supports critical defense needs, contributing to national security objectives.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on aircraft parts. The market for such components is characterized by high technical requirements, stringent quality control, and often long production cycles. Major defense contractors like Raytheon play a significant role in this ecosystem. Comparable spending benchmarks would involve analyzing other contracts for similar aircraft parts, both within the Department of Defense and potentially other federal agencies, to gauge pricing and value.

Small Business Impact

This contract does not appear to include any small business set-aside provisions, nor is there information suggesting subcontracting opportunities for small businesses. The award to a large prime contractor like Raytheon, without specific small business considerations, indicates a missed opportunity to leverage the small business industrial base. This could limit the economic benefits for smaller enterprises and reduce the diversity of the supply chain for these critical aircraft parts.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Navy's contracting and program management offices. Accountability measures would be tied to the delivery of specified aircraft parts according to the contract's terms and conditions, including quality standards and delivery schedules. Transparency is limited due to the sole-source nature and the absence of publicly available detailed performance reports. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Aircraft Parts Manufacturing
Defense Logistics Support
Naval Aviation Maintenance
Sole-Source Defense Procurements
Fixed-Price Contracts

Risk Flags

Sole-source award raises concerns about price reasonableness.
Lack of competition limits potential cost savings for taxpayers.
Absence of detailed performance metrics hinders oversight.
No clear small business participation plan identified.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $12.9 million to RAYTHEON COMPANY. INTERCONNECTING BOX

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 $12.9 million.

What is the period of performance?

Start: 2022-09-12. End: 2026-10-30.

What is the specific type and quantity of aircraft parts being procured under this contract?

The provided data indicates the contract is for 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' (NAICS code 336413). However, the specific types and quantities of parts are not detailed in the summary data. This level of specificity is crucial for a thorough analysis of value for money, as different parts have vastly different costs and criticality. Without this information, it's challenging to benchmark pricing effectively or understand the precise operational impact of this procurement. Further investigation into the contract's statement of work would be necessary to identify the exact components being acquired.

How does the $12.9 million contract value compare to historical spending on similar aircraft parts by the Department of the Navy?

Benchmarking the $12.9 million contract value against historical spending requires access to detailed procurement databases and analysis of comparable items. Without specific part numbers or categories, a direct comparison is difficult. However, given the sole-source nature, there is a heightened risk that this value may be higher than if the contract had been competed. Historical data on similar sole-source awards for aircraft parts could provide some context, but a true value-for-money assessment would necessitate comparing this contract to previously competed procurements for identical or functionally equivalent parts. The long duration (1509 days) also suggests that the total expenditure over the contract's life could be significant, further emphasizing the need for historical context.

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

The provided data does not specify the key performance indicators (KPIs) or detailed delivery milestones for this contract. While the contract has a fixed-price type and a defined end date (October 30, 2026), the absence of explicit performance metrics makes it difficult to assess the contractor's adherence to quality, timeliness, and other critical aspects of performance. Effective oversight relies on clearly defined and measurable KPIs. Without them, the government's ability to hold Raytheon accountable for performance is diminished, potentially impacting aircraft readiness and operational effectiveness.

What is Raytheon Company's track record with similar sole-source contracts for aircraft parts?

Raytheon Company is a major defense contractor with extensive experience in producing aircraft components. However, their track record specifically with sole-source contracts for similar aircraft parts is not detailed in the provided data. Analyzing past sole-source awards to Raytheon for comparable items would be necessary to identify any patterns of pricing concerns, performance issues, or successful delivery. A review of past performance evaluations and any associated contract disputes or modifications would offer further insight into their reliability and cost-effectiveness in such scenarios.

What is the justification for awarding this contract on a sole-source basis instead of through full and open competition?

The justification for a sole-source award is critical for understanding why competition was bypassed. Common reasons include the existence of only one responsible source capable of providing the required supplies or services, urgent and compelling needs that preclude full competition, or specific national security requirements. Without the official justification document (e.g., a Justification and Approval - J&A), it is impossible to assess the validity of the sole-source determination. This lack of transparency raises concerns about whether competition was genuinely not feasible or if it was simply deemed less convenient.

What is the potential impact of this contract on the broader aerospace and defense supply chain, particularly for small businesses?

As a sole-source award to a large prime contractor, this contract has limited direct positive impact on the broader small business ecosystem. There are no indications of small business set-asides or subcontracting plans, meaning opportunities for smaller firms to participate in this specific procurement are likely minimal. While Raytheon may utilize its existing supply chain, which could include small businesses, this contract does not actively foster new small business engagement. This represents a missed opportunity to promote economic diversity and support the growth of small enterprises within the defense industrial base.

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

Solicitation ID: N0038319RD419

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Rockwell Collins Australia PTY Limited

Address: 2501 W UNIVERSITY DR, MCKINNEY, TX, 75071

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: $17,405,134

Exercised Options: $17,405,134

Current Obligation: $12,901,603

Subaward Activity

Number of Subawards: 2

Total Subaward Amount: $6,031,345

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Parent Contract

Parent Award PIID: N0038320GVW01

IDV Type: BOA

Timeline