Raytheon Company awarded $29M contract for aircraft parts, raising questions about competition and value

Contract Overview

Contract Amount: $29,035,903 ($29.0M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2023-03-24

End Date: 2025-12-31

Contract Duration: 1,013 days

Daily Burn Rate: $28.7K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: INTERFACE UNIT,DATA

Place of Performance

Location: FOREST, SCOTT County, MISSISSIPPI, 39074

State: Mississippi Government Spending

Plain-Language Summary

Department of Defense obligated $29.0 million to RAYTHEON COMPANY for work described as: INTERFACE UNIT,DATA Key points: 1. Contract awarded on a sole-source basis, limiting price discovery and potentially increasing costs. 2. The contract duration of over 3 years suggests a long-term need for these aircraft parts. 3. The fixed-price contract type offers some cost certainty, but the lack of competition is a concern. 4. Performance is in Mississippi, indicating a specific geographic focus for this procurement. 5. The procurement falls under the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' NAICS code. 6. No small business set-aside was indicated, suggesting potential missed opportunities for smaller firms.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to the lack of competitive bids. The raw dollar amount of $29 million for aircraft parts needs to be assessed against the specific nature and quantity of the items procured. Without comparable contract data or market research, it's difficult to definitively state if this represents good value for money. The sole-source nature inherently reduces the pressure on the contractor to offer the most competitive pricing.

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 can provide the required goods or services, or in cases of urgent need. The lack of competition means there were no other bidders to compare against, which can limit 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 there is no competitive pressure to drive down prices. This limits the government's leverage in negotiations and may result in paying a premium for the goods or services.

Public Impact

The Department of the Navy benefits from the acquisition of essential aircraft parts, ensuring operational readiness. This contract supports the maintenance and operational capabilities of specific naval aircraft. The primary geographic impact is in Mississippi, where the contractor is located and likely where the parts will be manufactured or delivered. The contract supports jobs within Raytheon Company and potentially its supply chain, contributing to the aerospace manufacturing workforce.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated pricing.
Sole-source award limits transparency in pricing and negotiation.
Potential for overpayment due to absence of market-driven price discovery.
Limited opportunity for small businesses to participate in this significant contract.

Positive Signals

Fixed-price contract provides some cost predictability.
Award to an established contractor like Raytheon may indicate reliability.
Contract duration suggests a stable supply chain for critical parts.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on aircraft parts. The market for specialized aircraft components is often characterized by high barriers to entry due to technical expertise, certifications, and established relationships with prime contractors. Spending in this area is critical for maintaining military aviation fleets. Comparable spending benchmarks would typically involve analyzing other contracts for similar aircraft parts or maintenance services within the Department of Defense.

Small Business Impact

The contract data indicates that this was not a small business set-aside, nor does it appear to involve significant subcontracting opportunities for small businesses based on the information provided. This suggests that larger, established companies like Raytheon are the primary recipients of such contracts. Without specific subcontracting plans, it's difficult to assess the impact on the small business ecosystem, but it likely means fewer opportunities for smaller firms to engage in this particular procurement.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. Accountability measures would include performance monitoring against contract requirements and delivery schedules. Transparency is limited due to the sole-source nature of the award. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Department of Defense Aircraft Procurement
Naval Aviation Maintenance and Sustainment
Aerospace Component Manufacturing
Sole-Source Defense Contracts

Risk Flags

Sole-source award
Lack of competition
Potential for inflated pricing
Limited small business participation

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $29.0 million to RAYTHEON COMPANY. INTERFACE UNIT,DATA

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 $29.0 million.

What is the period of performance?

Start: 2023-03-24. End: 2025-12-31.

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

Raytheon Company, now part of RTX, has a long-standing and extensive history of contracting with the Department of Defense, including the Department of the Navy. They are a major defense contractor known for producing a wide range of aerospace and defense systems, including aircraft components, electronics, and weapons systems. Analyzing their past performance on similar contracts would involve reviewing contract databases for awards related to aircraft parts, auxiliary equipment, and maintenance services. Key metrics to examine would include on-time delivery rates, quality of goods provided, and any history of contract disputes or performance issues. Given their size and scope, they likely have numerous contracts, and their overall track record with the Navy is generally considered strong, though specific contract performance can vary.

How does the $29 million award compare to other contracts for similar aircraft parts?

Directly comparing the $29 million award for 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' is challenging without knowing the exact specifications, quantity, and type of parts procured. However, as a sole-source award, it inherently lacks the price discovery that comes from a competitive bidding process. Typically, contracts for specialized aircraft components can range significantly in price depending on complexity, technology involved, and volume. Larger, more complex systems or components for advanced aircraft would naturally command higher prices. To benchmark this $29 million figure effectively, one would need to identify comparable sole-source or competitively awarded contracts for similar parts from the same or other military branches, looking at price per unit or total value for equivalent quantities. The absence of competition makes a definitive value assessment difficult.

What are the primary risks associated with a sole-source award of this magnitude?

The primary risks associated with a sole-source award of $29 million are centered around cost and potential inefficiencies. Without competition, the government loses the leverage to negotiate the lowest possible price, potentially leading to overpayment. There's also a risk that the contractor may not be incentivized to innovate or improve efficiency as strongly as they would under competitive pressure. Furthermore, sole-source awards can sometimes indicate a lack of market research or a failure to identify potential alternative suppliers, which could represent a missed opportunity for cost savings or access to better technology. Dependence on a single supplier also introduces supply chain risk if that supplier faces production issues or goes out of business.

What is the expected program effectiveness given this contract?

The expected program effectiveness hinges on Raytheon Company's ability to deliver the specified aircraft parts according to the contract's terms, including quality standards, delivery schedules, and technical specifications. As a sole-source award, the government is relying on Raytheon's established capabilities and past performance. If Raytheon successfully meets these requirements, the program effectiveness will be high, ensuring the Department of the Navy has the necessary components to maintain its aircraft fleet's operational readiness. However, the lack of competition means that the government cannot be certain it is achieving the *most* effective outcome possible in terms of cost-efficiency or technological advancement compared to what a competitive market might offer. The effectiveness is thus tied to the contractor's execution rather than market forces.

How does this contract fit into the broader historical spending patterns for aircraft parts within the Department of the Navy?

This $29 million contract for aircraft parts fits within the Department of the Navy's consistent and substantial historical spending on aviation sustainment and readiness. The Navy operates a large and complex fleet of aircraft, requiring continuous procurement of spare parts, components, and related services to ensure operational capability. Annual spending on aircraft parts and maintenance often runs into the billions of dollars across the entire Navy aviation enterprise. Contracts like this, even if sole-source, represent a necessary component of that overall spending strategy, aimed at securing critical supplies. Historical patterns show a reliance on major defense contractors like Raytheon for such procurements, often through a mix of competitive and sole-source awards, depending on the specific part's availability and criticality.

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: N0038322RD372

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: $29,035,903

Exercised Options: $29,035,903

Current Obligation: $29,035,903

Subaward Activity

Number of Subawards: 42

Total Subaward Amount: $10,623,087

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Parent Contract

Parent Award PIID: N0038319GUX01

IDV Type: BOA

Timeline