Raytheon Company awarded $14.7M contract for aircraft materiel, with limited competition

Contract Overview

Contract Amount: $14,737,384 ($14.7M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2020-06-26

End Date: 2025-12-23

Contract Duration: 2,006 days

Daily Burn Rate: $7.3K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: FLIR,AIRCRAFT,MATER

Place of Performance

Location: MCKINNEY, COLLIN County, TEXAS, 75071

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $14.7 million to RAYTHEON COMPANY for work described as: FLIR,AIRCRAFT,MATER Key points: 1. Contract awarded on a firm fixed-price basis, indicating clear cost expectations. 2. Limited competition suggests potential for higher pricing than a fully competed contract. 3. Long performance period (2025) may indicate a need for sustained support. 4. Contract is for aircraft materiel, a critical component of defense operations. 5. Awarded by the Defense Logistics Agency, a key provider of military supplies. 6. No small business set-aside, potentially limiting opportunities for smaller firms.

Value Assessment

Rating: fair

The contract value of $14.7 million for aircraft materiel appears moderate. Without specific details on the exact materiel or comparison to similar sole-source procurements, it's difficult to definitively assess value for money. The firm fixed-price structure provides cost certainty, but the lack of robust competition raises concerns about whether the government secured the most advantageous pricing.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor was solicited. This significantly limits price discovery and negotiation leverage for the government. While sole-source awards can be justified for specialized or proprietary items, the lack of competition here warrants scrutiny to ensure the necessity of this approach and the fairness of the price.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive bidding. The government missed an opportunity to leverage market forces to drive down costs.

Public Impact

The primary beneficiaries are the U.S. military branches relying on the supplied aircraft materiel. Services delivered include the provision of essential components for aircraft maintenance and operation. The contract's geographic impact is primarily within Texas, where the contractor is located. Workforce implications are likely concentrated within Raytheon Company's facilities in Texas.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potentially increases costs for taxpayers.
Lack of transparency in the justification for sole-source procurement.
Long contract duration could lead to cost overruns if not managed effectively.
No small business participation noted, potentially excluding smaller, innovative firms.

Positive Signals

Firm fixed-price contract provides cost certainty for the government.
Award to a large, established defense contractor like Raytheon suggests reliability.
Contract supports critical defense logistics operations.

Sector Analysis

The aerospace and defense sector is characterized by high barriers to entry, significant R&D investment, and a concentrated supplier base. This contract falls within the "Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing" industry. Spending in this area is crucial for maintaining military readiness. Comparable spending benchmarks are difficult to establish without knowing the specific materiel, but large defense contracts are common.

Small Business Impact

This contract does not appear to have a small business set-aside. The absence of subcontracting requirements for small businesses means that opportunities for smaller firms to participate in this significant defense procurement are limited. This could impact the broader small business ecosystem within the defense supply chain.

Oversight & Accountability

Oversight for this contract would primarily fall under the Defense Logistics Agency and potentially the Department of Defense's Inspector General. Transparency is limited due to the sole-source nature of the award. Accountability measures would be tied to the firm fixed-price terms and delivery schedules outlined in the contract.

Related Government Programs

Aircraft Parts and Components
Defense Logistics Support
Aeronautical and Nautical Instruments
Military Materiel Procurement

Risk Flags

Sole-source award
Lack of competition
Potential for overpricing

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $14.7 million to RAYTHEON COMPANY. FLIR,AIRCRAFT,MATER

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 $14.7 million.

What is the period of performance?

Start: 2020-06-26. End: 2025-12-23.

What specific aircraft materiel is being procured under this contract?

The provided data indicates the contract is for 'FLIR, AIRCRAFT, MATER,' which likely refers to Forward-Looking Infrared (FLIR) systems, aircraft components, and general materiel. However, the exact specifications and quantities of the materiel are not detailed in the summary data. This level of detail is typically found in the contract's statement of work or line item details, which are not publicly available in this abbreviated format. Understanding the specific items is crucial for a thorough value assessment and comparison to market rates.

What was the justification for awarding this contract on a sole-source basis?

The justification for a sole-source award is critical for understanding why competitive procedures were not used. Common reasons include the existence of a unique capability, proprietary technology, urgent and compelling needs where only one source can reasonably satisfy the requirement, or if the contract is a follow-on to a previously competed effort where only the original contractor can provide the necessary services or supplies. Without the specific justification document (e.g., a Justification and Approval - J&A), it is impossible to verify the necessity of the sole-source award and assess if it was in the government's best interest.

How does the $14.7 million contract value compare to similar procurements for aircraft materiel?

Benchmarking the $14.7 million contract value requires comparing it to similar procurements for comparable aircraft materiel. This involves identifying contracts with similar North American Industry Classification System (NAICS) codes (334511 in this case), similar scope of work, and similar contract types (firm fixed-price). Factors like the specific type of materiel (e.g., engines, avionics, structural components), quantity, and the specific aircraft platforms supported would need to be considered. Without access to a comprehensive database of historical contract data and detailed line-item information for this specific award, a precise comparison is challenging. However, for major aircraft components or systems, $14.7 million can represent a significant investment.

What is Raytheon Company's track record with the Defense Logistics Agency and similar contracts?

Raytheon Company is a major defense contractor with extensive experience serving the Department of Defense and its various agencies, including the Defense Logistics Agency (DLA). Their track record typically involves delivering a wide range of defense systems, components, and services. For contracts similar to this one, involving aircraft materiel and systems, Raytheon has a history of performance. However, a detailed assessment would require reviewing their past performance evaluations, any past performance issues or disputes, and their success rate on previous DLA or similar sole-source awards to ensure reliability and quality.

What are the potential risks associated with a sole-source award of this magnitude?

The primary risk associated with a sole-source award of this magnitude is the potential for inflated pricing due to the lack of competition. The government may not achieve the best possible price without the pressure of multiple bidders vying for the contract. Other risks include vendor lock-in, where the government becomes dependent on a single supplier, potentially limiting future flexibility and innovation. There's also a risk that without competitive pressure, the contractor may be less incentivized to focus on cost efficiency or timely delivery, although contract terms and oversight aim to mitigate this. Ensuring the sole-source justification is robust and the pricing is independently validated is crucial.

How does the contract's duration (ending 2025) impact its overall value and risk?

The contract duration, extending into December 2025, provides a long-term supply of critical aircraft materiel, ensuring operational readiness for the supported platforms. This extended period can offer stability for both the government and the contractor. However, a longer duration also increases the potential for cost volatility if market prices for raw materials or labor fluctuate significantly. It also means that any inefficiencies or pricing issues within the contract could persist for a longer period. Effective contract management, including regular performance reviews and potential price adjustments based on established clauses, is essential to mitigate risks over the contract's lifespan.

Industry Classification

NAICS: Manufacturing › Navigational, Measuring, Electromedical, and Control Instruments Manufacturing › Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing

Product/Service Code: AEROSPACE CRAFT COMPONENTS AND ACCESSORIES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: SPRPA119QX370

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: RTX Corp

Address: 350 LOWELL ST, ANDOVER, MA, 01810

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: $14,737,384

Exercised Options: $14,737,384

Current Obligation: $14,737,384

Subaward Activity

Number of Subawards: 16

Total Subaward Amount: $2,034,618

Contract Characteristics

Consolidated Contract: Yes

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: SPRBL115D0017

IDV Type: IDC

Timeline