Raytheon Company awarded $72.1M contract for aircraft parts, highlighting sole-source procurement in defense

Contract Overview

Contract Amount: $72,117,300 ($72.1M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2023-12-22

End Date: 2028-12-31

Contract Duration: 1,836 days

Daily Burn Rate: $39.3K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: PTS WRA

Place of Performance

Location: EL SEGUNDO, LOS ANGELES County, CALIFORNIA, 90245

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $72.1 million to RAYTHEON COMPANY for work described as: PTS WRA Key points: 1. Contract awarded via sole-source negotiation, raising questions about price competition. 2. Long-term contract duration (5 years) suggests a need for sustained supply. 3. Focus on aircraft parts indicates a critical component of naval aviation readiness. 4. High dollar value signifies significant investment in this specific defense capability. 5. Lack of competition may limit opportunities for other suppliers and potentially increase costs.

Value Assessment

Rating: fair

The contract value of $72.1 million for aircraft parts appears substantial. Without specific benchmarks for these particular parts or comparable sole-source awards, it is difficult to definitively assess value for money. The absence of competition suggests that pricing may not have been rigorously tested against market alternatives. Further analysis would require detailed cost breakdowns and comparisons to similar sole-source procurements for equivalent components.

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 standard competitive bidding process. While sole-source awards can be justified for unique capabilities or urgent needs, they typically result in less price discovery and potentially higher costs for the government compared to full and open competition.

Taxpayer Impact: Taxpayers may be paying a premium due to the lack of competitive pressure to drive down prices. The government did not benefit from the potential cost savings that multiple bids could have generated.

Public Impact

The primary beneficiaries are the Department of the Navy and its aviation units, ensuring the availability of critical aircraft components. Services delivered include the supply of specialized aircraft parts, essential for maintaining operational readiness. The contract's geographic impact is primarily linked to the Department of the Navy's operations, with potential implications for supply chains in California where the contractor is located. Workforce implications may include continued employment for Raytheon personnel involved in manufacturing and supplying these parts.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potentially increases cost to taxpayers.
Long contract duration without clear performance metrics could mask inefficiencies.
Lack of transparency in the sole-source justification process.

Positive Signals

Ensures a consistent supply of critical aircraft parts for naval operations.
Leverages Raytheon's established expertise and existing production capabilities.
Provides long-term stability for a key defense supplier.

Sector Analysis

The aerospace and defense sector is characterized by high technological complexity, significant R&D investment, and often, long procurement cycles. This contract falls within the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' category, a vital sub-sector supporting military aviation. Spending in this area is driven by defense modernization efforts and the need to maintain aging fleets. Comparable spending benchmarks are difficult to establish without knowing the specific parts, but the overall defense budget allocates substantial resources to aircraft sustainment and upgrades.

Small Business Impact

This contract was not set aside for small businesses, nor does it appear to have specific subcontracting requirements for small businesses mentioned in the provided data. The sole-source nature of the award further limits opportunities for small businesses to participate directly. While Raytheon may engage small businesses in its supply chain, the primary award does not directly benefit the small business ecosystem through set-asides.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Navy's contracting and program management offices. Accountability measures are usually embedded in the contract terms, including delivery schedules and quality standards. Transparency is limited due to the sole-source nature of the award; however, contract awards are generally reported in federal procurement databases. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Naval Aviation Sustainment Programs
Aircraft Component Procurement
Defense Logistics Agency (DLA) Contracts
Sole-Source Defense Procurements
Raytheon Defense Contracts

Risk Flags

Sole-source procurement limits price competition.
Long contract duration may reduce flexibility.
Lack of detailed performance metrics in summary data.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $72.1 million to RAYTHEON COMPANY. PTS WRA

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 $72.1 million.

What is the period of performance?

Start: 2023-12-22. End: 2028-12-31.

What is the specific justification for awarding this contract on a sole-source basis to Raytheon Company?

The provided data indicates the contract was 'NOT COMPETED,' signifying a sole-source award. The specific justification for this approach is not detailed in the abbreviated data. Typically, sole-source procurements are justified when only one responsible source is available, or when there is a compelling urgency, or for reasons of industrial mobilization. For defense contracts, justifications often relate to proprietary technology, unique capabilities, or the need to maintain compatibility with existing systems. A full review of the contract file and associated documentation would be required to ascertain the precise justification used by the Department of the Navy in this instance.

How does the $72.1 million contract value compare to historical spending on similar aircraft parts by the Department of the Navy?

Comparing the $72.1 million contract value to historical spending requires access to detailed historical procurement data for similar aircraft parts. The provided data only includes the current award details. To perform this comparison, one would need to identify previous contracts for the same or functionally equivalent aircraft parts, noting their values, durations, and procurement methods (competitive vs. sole-source). Analyzing trends in pricing, volume, and the number of bidders over time would reveal whether this $72.1 million award represents an increase, decrease, or stable level of spending for these components. Without this comparative data, the value is difficult to contextualize historically.

What are the key performance indicators (KPIs) or metrics used to evaluate Raytheon Company's performance under this contract?

The provided data does not specify the key performance indicators (KPIs) or metrics for this contract. Typically, defense contracts include clauses related to delivery timeliness, quality of parts, adherence to specifications, and potentially, cost control. Performance evaluations are usually conducted periodically throughout the contract's life. The Department of the Navy would have established specific metrics to ensure Raytheon meets its obligations. These would be detailed in the contract's statement of work and performance requirements documents, which are not included in the abbreviated data.

What is the potential impact of this sole-source award on market competition for aircraft parts in the future?

A sole-source award, by definition, does not foster current market competition for the specific items procured. In the long term, it could potentially stifle future competition if the awarded contractor becomes entrenched, or if the justification for sole-sourcing is perceived as a barrier to entry for potential competitors. However, if the sole-source justification is based on unique, non-replicable technology or capabilities, the impact on broader market competition might be minimal. The Department of the Navy's procurement strategy and its approach to future solicitations for similar parts will ultimately determine the long-term competitive landscape.

Are there any identified risks associated with Raytheon Company's track record in fulfilling similar defense contracts?

The provided data does not include information on Raytheon Company's past performance or any specific risks associated with their track record on similar contracts. A comprehensive risk assessment would require reviewing past performance evaluations (e.g., Contractor Performance Assessment Reporting System - CPARS), any past disputes or contract terminations, and the company's overall financial stability. Raytheon is a major defense contractor with extensive experience, suggesting a generally capable supplier. However, without specific performance data related to this contract type or similar procurements, a definitive assessment of risks related to their track record cannot be made from the given information.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Other Aircraft Parts and Auxiliary Equipment Manufacturing

Product/Service Code: AEROSPACE CRAFT COMPONENTS AND ACCESSORIES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0038324RA051

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Rockwell Collins Australia PTY Limited

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: $72,117,300

Exercised Options: $72,117,300

Current Obligation: $72,117,300

Subaward Activity

Number of Subawards: 35

Total Subaward Amount: $20,734,290

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: N0038319GUX01

IDV Type: BOA

Timeline