DoD Spends $35.7M on Electrical Racks via Sole-Source Contract with Raytheon

Contract Overview

Contract Amount: $35,668,895 ($35.7M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2018-09-19

End Date: 2021-10-29

Contract Duration: 1,136 days

Daily Burn Rate: $31.4K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: RACK,ELECTRICAL EQU

Place of Performance

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

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $35.7 million to RAYTHEON COMPANY for work described as: RACK,ELECTRICAL EQU Key points: 1. Significant spending on a specialized component, indicating critical need. 2. Sole-source award to Raytheon suggests limited market alternatives or established relationship. 3. Long contract duration (1136 days) may impact price competitiveness over time. 4. High contract value warrants scrutiny for potential cost efficiencies.

Value Assessment

Rating: questionable

The contract value of $35.7M for electrical racks is substantial. Without comparable contract data or a competitive bidding process, it's difficult to definitively assess pricing fairness. The benchmark of $31,399 per contract suggests a high per-unit cost.

Cost Per Unit: $31,399

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning competition was not sought. This approach limits price discovery and may result in higher costs compared to a fully competed procurement. The rationale for sole-sourcing is not provided.

Taxpayer Impact: The lack of competition for a $35.7M contract raises concerns about taxpayer value. Funds may not have been optimized due to the absence of market-driven price negotiation.

Public Impact

Taxpayers may be overpaying for essential electrical components due to a lack of competition. Reliance on a single supplier for critical defense equipment poses a potential supply chain risk. The long duration of the contract could lock the government into potentially suboptimal pricing. Transparency regarding the justification for sole-sourcing is limited.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award
High contract value
Long contract duration
Lack of competition

Positive Signals

Specific component identified
Contract awarded to a known defense contractor

Sector Analysis

The procurement falls under 'Other Aircraft Parts and Auxiliary Equipment Manufacturing,' a niche within the broader aerospace and defense sector. Spending benchmarks for specialized electrical components like these are often difficult to establish due to unique specifications and limited suppliers.

Small Business Impact

The contract was awarded to Raytheon Company, a large prime contractor. There is no indication that small businesses were involved as subcontractors or suppliers in this specific award, which is common for large sole-source procurements.

Oversight & Accountability

The sole-source nature of this award warrants closer oversight to ensure the government received fair value. Documentation justifying the sole-source decision and any subsequent price negotiations should be thoroughly reviewed.

Related Government Programs

Other Aircraft Parts and Auxiliary Equipment Manufacturing
Department of Defense Contracting
Defense Logistics Agency Programs

Risk Flags

Sole-source award limits competition and price discovery.
High per-unit cost requires validation against benchmarks.
Long contract duration may not reflect current market conditions.
Lack of small business participation noted.
Potential for supply chain disruption due to single supplier.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $35.7 million to RAYTHEON COMPANY. RACK,ELECTRICAL EQU

Who is the contractor on this award?

The obligated recipient is RAYTHEON COMPANY.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Logistics Agency).

What is the total obligated amount?

The obligated amount is $35.7 million.

What is the period of performance?

Start: 2018-09-19. End: 2021-10-29.

What was the specific justification for awarding this contract on a sole-source basis to Raytheon Company, and were alternative solutions or suppliers considered?

The provided data does not include the justification for the sole-source award. Typically, sole-sourcing is reserved for situations where only one responsible source can provide the required supplies or services, or in cases of urgent and compelling need. A thorough review of the contract file would be necessary to ascertain the specific rationale and confirm if alternatives were indeed evaluated.

How does the per-unit cost of $31,399 for these electrical racks compare to industry benchmarks or previous procurements of similar items?

Without access to detailed specifications of the 'RACK,ELECTRICAL EQU' and comparable market data, a precise benchmark is challenging. However, $31,399 per unit is a significant cost, suggesting either a highly specialized or complex component, or potentially inflated pricing due to the lack of competition. Further investigation into the item's specifications and market pricing is recommended.

What is the potential risk to the Department of Defense if Raytheon Company is unable to fulfill this contract, given its sole-source nature?

The sole-source nature of this contract presents a considerable risk. If Raytheon were unable to deliver, the DoD would face significant challenges in finding an alternative supplier quickly, potentially leading to mission delays or critical capability gaps. The government's reliance on a single entity for this component necessitates robust contract management and contingency planning.

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: SPRPA117RX032

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: RTX Corp (UEI: 001344142)

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: $35,668,895

Exercised Options: $35,668,895

Current Obligation: $35,668,895

Subaward Activity

Number of Subawards: 14

Total Subaward Amount: $1,917,733

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: SPRPA117GC301

IDV Type: BOA

Timeline