DoD Awards Raytheon $14.5M for Aircraft Parts, Lacking Competition

Contract Overview

Contract Amount: $14,562,984 ($14.6M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2023-08-24

End Date: 2026-08-23

Contract Duration: 1,095 days

Daily Burn Rate: $13.3K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: LABOR & MATERIAL (PROC) (BASE YEAR)

Place of Performance

Location: FULLERTON, ORANGE County, CALIFORNIA, 92833

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $14.6 million to RAYTHEON COMPANY for work described as: LABOR & MATERIAL (PROC) (BASE YEAR) Key points: 1. Significant contract value awarded to a single large defense contractor. 2. Lack of competition raises concerns about potential overpricing and reduced innovation. 3. The contract is for aircraft parts, a critical but potentially high-cost sector. 4. The sole-source nature limits taxpayer value and oversight effectiveness.

Value Assessment

Rating: questionable

The contract is Cost Plus Fixed Fee, which can lead to higher costs than fixed-price contracts. Without competitive bidding, it's difficult to benchmark pricing against similar services.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award. This limits price discovery and potentially leads to higher costs for the government.

Taxpayer Impact: The lack of competition means taxpayers may not be receiving the best possible value for this significant expenditure.

Public Impact

Taxpayers may be overpaying for aircraft parts due to the absence of competitive bidding. Limited transparency in pricing could obscure inefficiencies in the contract. The reliance on a single contractor may impact the availability of parts if issues arise. Future defense procurement strategies could be influenced by this sole-source award.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award
Cost-plus contract type
Lack of transparency in pricing
No small business participation

Positive Signals

Awarded to a known defense contractor
Supports critical aircraft parts manufacturing

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on aircraft parts. Spending in this sector is often characterized by high R&D costs and specialized manufacturing requirements, making competitive bidding challenging but crucial for cost control.

Small Business Impact

This contract does not appear to involve small businesses, as indicated by the prime contractor being Raytheon Company. There is no information suggesting subcontracting opportunities for small businesses.

Oversight & Accountability

The sole-source nature of this award warrants close oversight to ensure costs are reasonable and performance meets requirements. Transparency in reporting and regular audits would be essential for accountability.

Related Government Programs

Other Aircraft Parts and Auxiliary Equipment Manufacturing
Department of Defense Contracting
Department of the Navy Programs

Risk Flags

Sole-source award limits competition and price discovery.
Cost-plus contract type can incentivize higher spending.
Lack of small business participation.
Potential for cost overruns without strong oversight.
Limited transparency on pricing justification.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $14.6 million to RAYTHEON COMPANY. LABOR & MATERIAL (PROC) (BASE YEAR)

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 $14.6 million.

What is the period of performance?

Start: 2023-08-24. End: 2026-08-23.

What is the justification for awarding this contract on a sole-source basis, and what steps were taken to ensure fair and reasonable pricing?

The justification for a sole-source award typically involves unique capabilities, urgent needs, or lack of viable alternatives. Without competitive bidding, ensuring fair and reasonable pricing relies heavily on the government's negotiation skills, market research, and cost analysis. The Cost Plus Fixed Fee structure necessitates rigorous monitoring of costs incurred by the contractor to prevent excessive spending.

What are the potential risks associated with a sole-source, cost-plus contract for critical aircraft parts?

The primary risks include inflated costs due to the absence of competitive pressure, potential for contractor inefficiency being passed on to the government, and a lack of incentive for innovation. For critical parts, a sole-source award could also create a single point of failure in the supply chain, impacting readiness if the contractor faces production issues or disputes.

How does this contract contribute to the Department of Defense's overall mission effectiveness and long-term strategic goals?

This contract supports the Department of Defense's mission by ensuring the supply of necessary aircraft parts, which are vital for maintaining operational readiness and capability. However, the sole-source nature and cost-plus structure raise questions about the long-term strategic effectiveness if it leads to unsustainable costs or hinders the development of a more competitive industrial base.

Industry Classification

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

Product/Service Code: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

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: $38,057,867

Exercised Options: $27,812,292

Current Obligation: $14,562,984

Subaward Activity

Number of Subawards: 2

Total Subaward Amount: $105,455

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0001920G0007

IDV Type: BOA

Timeline