Raytheon Company awarded $36.7M for aircraft parts, with limited competition and a long performance period

Contract Overview

Contract Amount: $36,726,622 ($36.7M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2019-05-20

End Date: 2023-11-30

Contract Duration: 1,655 days

Daily Burn Rate: $22.2K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: EU: ELECTRONIC UNIT

Place of Performance

Location: MCKINNEY, COLLIN County, TEXAS, 75071

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $36.7 million to RAYTHEON COMPANY for work described as: EU: ELECTRONIC UNIT Key points: 1. Contract awarded to a single, large defense contractor, indicating potential for limited market engagement. 2. The contract spans over four years, suggesting a long-term need for these aircraft parts. 3. Fixed-price contract type may offer cost certainty but could limit flexibility for unforeseen issues. 4. The specific aircraft parts fall under 'Other Aircraft Parts and Auxiliary Equipment Manufacturing,' a niche but critical sector. 5. Performance is concentrated in Texas, potentially impacting regional economic activity and supply chains.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without specific details on the 'Other Aircraft Parts' procured. However, the $36.7 million award over nearly four years suggests a substantial but not exceptionally high annual spend. Given the 'NOT COMPETED' status, a direct comparison to market rates is difficult, and the absence of competitive pressure raises questions about whether the government secured the best possible price. Further analysis would require understanding the specific parts and their market availability.

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 is typically used when a unique product or service is required, or when only one responsible source is available. The lack of competition means that the government did not benefit from the price discovery and innovation that typically arises from multiple bidders vying for a contract. This can lead to higher prices and potentially less favorable terms.

Taxpayer Impact: Sole-source awards mean taxpayers may not be getting the most competitive pricing, as there was no opportunity for other companies to bid and potentially offer better value.

Public Impact

The primary beneficiaries are likely the military branches relying on the specified aircraft parts for operational readiness. Services delivered include the provision of essential components for aircraft maintenance and repair. Geographic impact is concentrated in Texas, where the contractor is located and likely where the parts will be utilized or shipped from. Workforce implications may include continued employment for Raytheon personnel involved in manufacturing and logistics for these parts.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potentially reduces value for taxpayer dollars.
Long contract duration (over 4 years) could lead to price increases if market conditions change significantly.
Lack of transparency in the justification for sole-sourcing requires further scrutiny.
Specifics of 'Other Aircraft Parts' are not detailed, making it hard to assess true necessity and market alternatives.

Positive Signals

Award to a known, large defense contractor like Raytheon suggests a level of established capability and reliability.
Firm Fixed Price contract type provides budget predictability for the agency.
The contract addresses a specific need within the Defense Logistics Agency's supply chain for aircraft components.

Sector Analysis

The aerospace and defense sector is characterized by high barriers to entry, significant R&D investment, and a concentrated supplier base, particularly for specialized components. Contracts like this, for aircraft parts, are crucial for maintaining the operational readiness of military fleets. The market for such parts can be complex, with proprietary designs and long qualification processes often favoring established manufacturers. Spending in this sub-sector is driven by defense budgets and the lifecycle needs of various aircraft platforms.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Furthermore, the prime contractor, Raytheon Company, is a large corporation. While large prime contractors are often required to subcontract a portion of their work to small businesses, the specific subcontracting plan for this delivery order is not detailed here. Without this information, it's difficult to assess the direct impact on the small business ecosystem, though it's likely minimal for this specific award.

Oversight & Accountability

Oversight for this contract would primarily fall under the Defense Contract Management Agency (DCMA) and the Defense Logistics Agency (DLA) contracting officers. As a sole-source award, the justification and negotiation process would be subject to internal agency review and potentially audits by the Government Accountability Office (GAO) or the Department of Defense Inspector General (IG) if specific concerns arise. Transparency is limited due to the sole-source nature, but contract award data is publicly available.

Related Government Programs

Defense Logistics Agency (DLA) Aviation Procurement
Aircraft Parts and Components Manufacturing
Raytheon Company Defense Contracts
Sole-Source Defense Procurements

Risk Flags

Sole-source award lacks competitive pricing.
Long contract duration may expose government to price fluctuations.
Lack of specific part details hinders value assessment.
Potential for contractor complacency due to lack of competition.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $36.7 million to RAYTHEON COMPANY. EU: ELECTRONIC UNIT

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 $36.7 million.

What is the period of performance?

Start: 2019-05-20. End: 2023-11-30.

What specific types of aircraft parts are included in this $36.7 million award, and what is their criticality to military operations?

The provided data categorizes these parts under NAICS code 336413, 'Other Aircraft Parts and Auxiliary Equipment Manufacturing.' This broad classification encompasses a wide range of components beyond engines and airframes, potentially including avionics, landing gear parts, electrical systems, hydraulic components, and specialized hardware. Without more granular detail, it's impossible to pinpoint the exact items. Their criticality is presumed high, given the Defense Logistics Agency's role in supporting military readiness and the sole-source nature of the award, suggesting a specific, potentially unique, or long-standing requirement that may be difficult to source competitively.

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

The data indicates the contract was 'NOT COMPETED' and is 'sole-source.' Typically, sole-source justifications are required under Federal Acquisition Regulation (FAR) Part 6.302, citing reasons such as only one responsible source being available, or the item being a unique non-commercial product. Common justifications include proprietary technology, urgent and compelling needs where competition is impractical, or specific government-unique requirements. Without the official justification document (often referred to as a Justification and Approval or J&A), it's unknown if alternative sources were considered or why they were deemed unsuitable. This lack of competition raises concerns about potential overpayment and reduced innovation.

How does the $36.7 million contract value compare to historical spending on similar aircraft parts by the Defense Logistics Agency or Department of Defense?

Comparing this $36.7 million award requires context on the specific parts and the contract's duration (approximately 4 years). If these are high-value, specialized components, the annual spend (around $9-10 million) might be reasonable. However, without knowing the exact nature of the parts, a direct historical comparison is difficult. The Defense Logistics Agency manages a vast inventory, and spending fluctuates based on fleet readiness, modernization programs, and supply chain strategies. Historical data for specific part categories, especially those procured sole-source, would be needed to determine if this represents an increase, decrease, or stable spending trend relative to prior periods or similar items.

What are the potential risks associated with a long-term, sole-source contract for aircraft parts, and what mitigation strategies are in place?

Key risks include price escalation over the contract's ~4-year duration, potential for complacency from the sole provider leading to quality issues, and the government's reduced leverage in negotiations. Mitigation strategies often involve robust contract surveillance by the Defense Contract Management Agency (DCMA), requiring detailed cost proposals and audits (especially for cost-plus contracts, though this is firm-fixed-price), and potentially initiating market research periodically to identify potential future competitors or alternative solutions. The firm-fixed-price nature here mitigates some cost overrun risk for the government but places it on the contractor, potentially leading to pressure on quality or delivery if not managed closely.

What is Raytheon Company's track record with the Defense Logistics Agency and the Department of Defense, particularly concerning aircraft parts supply?

Raytheon Company (now RTX) is a major defense contractor with a long history of supplying complex systems and components to the U.S. military. They have extensive experience in aerospace and defense manufacturing. Their track record with the DLA and DoD is generally extensive, involving numerous contracts across various platforms and defense needs. While specific performance metrics for this particular delivery order aren't detailed, Raytheon's overall standing as a prime contractor suggests a baseline level of capability and reliability. However, like any large contractor, they may have faced past performance issues on specific contracts, which would typically be documented in source selection decision records.

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: Rockwell Collins Australia PTY Limited

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: $36,726,622

Exercised Options: $36,726,622

Current Obligation: $36,726,622

Subaward Activity

Number of Subawards: 48

Total Subaward Amount: $6,990,717

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: SPRPA119GCB01

IDV Type: BOA

Timeline