Raytheon Company awarded $84.6M for aircraft parts, with limited competition impacting price discovery

Contract Overview

Contract Amount: $84,655,824 ($84.7M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2018-03-29

End Date: 2021-06-30

Contract Duration: 1,189 days

Daily Burn Rate: $71.2K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: TURRET,SENSOR-SIGHT

Place of Performance

Location: MCKINNEY, COLLIN County, TEXAS, 75071

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $84.7 million to RAYTHEON COMPANY for work described as: TURRET,SENSOR-SIGHT Key points: 1. Value for money is difficult to assess due to limited competition and lack of detailed cost breakdowns. 2. Competition dynamics show a sole-source award, raising concerns about potential overpricing. 3. Risk indicators include the sole-source nature of the award and the long duration of the contract. 4. Performance context is provided by the delivery order under a larger contract, suggesting ongoing needs. 5. Sector positioning is within the defense logistics and aircraft parts manufacturing industry.

Value Assessment

Rating: questionable

Benchmarking the value for this $84.6 million contract is challenging due to the sole-source award and the absence of publicly available comparative pricing data. The firm fixed-price structure offers some cost certainty, but without competitive bids, it's difficult to ascertain if the pricing reflects fair market value. The duration of the contract (nearly 4 years) also warrants scrutiny to ensure continued cost-effectiveness over its lifecycle.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning there was no open competition. This significantly limits the opportunity for price discovery and potentially leads to higher costs for the government. The lack of multiple bidders means the government did not benefit from the competitive pressures that typically drive down prices and encourage innovation.

Taxpayer Impact: Taxpayers may have paid a premium for these aircraft parts due to the absence of a competitive bidding process. The government's negotiating position is weakened without alternative suppliers to consider.

Public Impact

The Department of Defense, specifically the Defense Logistics Agency, benefits from the supply of critical aircraft parts. Services delivered include the provision of 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' components. The geographic impact is primarily within Texas, where the contractor is located. Workforce implications include the support of jobs within the aerospace manufacturing sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition.
Long contract duration may not reflect evolving market prices.
Lack of transparency in cost breakdown makes value assessment difficult.

Positive Signals

Firm fixed-price contract provides cost certainty.
Contract supports critical defense logistics needs.
Contractor is an established entity in defense manufacturing.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on aircraft parts. The market for such specialized components is often characterized by high barriers to entry and a limited number of qualified suppliers. Comparable spending benchmarks are difficult to establish without more specific part details, but overall defense spending on aircraft components is substantial.

Small Business Impact

There is no indication that this contract included small business set-asides, nor is there information on subcontracting plans. As a sole-source award to a large prime contractor, the direct impact on the small business ecosystem is likely minimal unless Raytheon actively engages small businesses in its supply chain for this specific contract.

Oversight & Accountability

Oversight for this contract would typically fall under the Defense Contract Management Agency (DCMA) and the Defense Contract Audit Agency (DCAA). Transparency is limited due to the sole-source nature and the lack of detailed public cost information. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Defense Logistics Agency Procurement
Aircraft Parts Manufacturing
Sole-Source Defense Contracts
Raytheon Company Contracts

Risk Flags

Sole-source award
Lack of competitive bidding
Limited public cost data

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $84.7 million to RAYTHEON COMPANY. TURRET,SENSOR-SIGHT

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 $84.7 million.

What is the period of performance?

Start: 2018-03-29. End: 2021-06-30.

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

Raytheon Company, now RTX Corporation, has a long and extensive history of contracting with the Department of Defense across various defense systems and components. For aircraft parts specifically, they are a major supplier, often involved in complex systems integration and manufacturing. Their track record generally includes delivering on large, critical defense contracts. However, the specifics of their performance on past contracts for similar parts, including on-time delivery rates, quality metrics, and any past disputes or overruns, would require a deeper dive into contract performance databases and historical award data. Given their size and scope, they are a primary contractor for many DoD needs, but the nature of sole-source awards means direct comparisons to competitive bids are not always feasible.

How does the $84.6 million award compare to similar aircraft parts contracts awarded competitively?

Direct comparison of this $84.6 million award to competitively awarded contracts for similar aircraft parts is challenging due to the sole-source nature of this award and the proprietary nature of specific aircraft component pricing. Competitively awarded contracts typically allow for price discovery, where multiple bids are evaluated, leading to a market-driven price. Sole-source awards, by definition, bypass this process. To benchmark effectively, one would need to identify contracts for identical or highly similar parts awarded under full and open competition, with comparable quantities and delivery schedules. Without such direct comparisons, assessing whether this award represents good value for money is difficult. It is plausible that a competitive process could have yielded a lower price.

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

The primary risks associated with a sole-source award of this magnitude ($84.6 million) for aircraft parts include: 1. **Price Inflation:** Without competition, the contractor has less incentive to offer the lowest possible price, potentially leading to overpayment. 2. **Reduced Innovation:** The lack of competitive pressure can stifle innovation in product development or manufacturing processes. 3. **Dependency:** The government becomes reliant on a single supplier, which can create vulnerabilities in the supply chain, especially if the supplier faces production issues or goes out of business. 4. **Limited Oversight Effectiveness:** While oversight mechanisms exist, the absence of competing proposals makes it harder to validate the reasonableness of costs and pricing strategies. 5. **Potential for Scope Creep:** In longer-term sole-source contracts, there can be a risk of scope creep or less rigorous change management if not actively managed.

What is the typical duration for contracts of this type, and does the 1189-day duration (approx. 3.25 years) present any specific concerns?

The typical duration for contracts supplying specialized aircraft parts can vary significantly based on the complexity of the parts, the production lead times, and the anticipated operational lifespan of the aircraft systems they support. A duration of approximately 3.25 years (1189 days) for a contract of this value is not inherently unusual, especially if it covers multiple production runs or a sustained period of demand. However, concerns can arise if the market for these parts is volatile or if technological advancements could render the parts obsolete sooner than the contract's end date. For a sole-source award, a longer duration can exacerbate the risk of paying above-market rates over time, as the price remains fixed without opportunities for renegotiation based on market shifts. Continuous monitoring and justification for the duration are important.

How does the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' classification impact the analysis of this contract?

The classification 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' (NAICS code 336413) is broad and indicates that the contract is for components that are not specifically engines, airframes, or avionics, but are still essential for aircraft operation and maintenance. This broadness can make direct price comparisons difficult, as the specific nature of the 'other' parts can vary widely in complexity, cost, and market availability. It suggests the contract could cover a range of items from structural components to specialized hardware. For analysis, it means we must assume a degree of customization or specialized production, which often correlates with higher costs and potentially fewer suppliers, thus lending some context to why a sole-source award might have been considered, though not necessarily justified without further evidence.

Industry Classification

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

Product/Service Code: FIRE CONTROL EQPT.

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: RTX Corp (UEI: 001344142)

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: $84,655,824

Exercised Options: $84,655,824

Current Obligation: $84,655,824

Subaward Activity

Number of Subawards: 8

Total Subaward Amount: $898,538

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Parent Contract

Parent Award PIID: SPRPA114G001X

IDV Type: BOA

Timeline