DoD Awards $19M for PATRIOT Spares to Raytheon, Lacking Competition

Contract Overview

Contract Amount: $18,990,096 ($19.0M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2023-09-22

End Date: 2027-09-30

Contract Duration: 1,469 days

Daily Burn Rate: $12.9K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: PATRIOT SPARES PROCUREMENT

Place of Performance

Location: ANDOVER, ESSEX County, MASSACHUSETTS, 01810

State: Massachusetts Government Spending

Plain-Language Summary

Department of Defense obligated $19.0 million to RAYTHEON COMPANY for work described as: PATRIOT SPARES PROCUREMENT Key points: 1. Significant award for critical defense components. 2. Sole-source award raises concerns about price discovery. 3. Long-term contract (4 years) for sustainment. 4. High value contract in the defense sector.

Value Assessment

Rating: questionable

The contract value of $18.99M for PATRIOT spares is substantial. Without competitive bidding, it's difficult to assess if this price is optimal compared to potential market rates for similar complex defense components.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award to Raytheon Company. This lack of competition limits price discovery and may result in higher costs for taxpayers.

Taxpayer Impact: The absence of competition for essential defense spares could lead to inflated prices, directly impacting taxpayer funds allocated for defense.

Public Impact

Ensures continued operational readiness of PATRIOT missile systems. Supports critical defense supply chains. Potential for higher costs due to lack of competition.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award
Lack of price competition
Long contract duration

Positive Signals

Ensures availability of critical spares
Supports national defense

Sector Analysis

This award falls within the Defense sector, specifically for aerospace and defense manufacturing. Spending benchmarks for sole-source procurements of this nature often show higher costs compared to competitive bids.

Small Business Impact

The data indicates this contract was not awarded to small businesses, as both the prime contractor (Raytheon) and the small business indicator are absent. This procurement does not appear to support small business participation.

Oversight & Accountability

Oversight is crucial for sole-source contracts to ensure fair pricing and prevent potential waste. The Department of Defense and Defense Logistics Agency should monitor this contract closely for cost efficiencies.

Related Government Programs

Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing
Department of Defense Contracting
Defense Logistics Agency Programs

Risk Flags

Sole-source award
Potential for price inflation
Lack of transparency in pricing
Long-term commitment without competitive validation

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $19.0 million to RAYTHEON COMPANY. PATRIOT SPARES PROCUREMENT

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 $19.0 million.

What is the period of performance?

Start: 2023-09-22. End: 2027-09-30.

What is the justification for awarding this contract sole-source?

The justification for a sole-source award typically involves factors such as unique capabilities, proprietary technology, or urgent need where only one source can reasonably fulfill the requirement. Without specific documentation, the exact reason remains unclear, but it's essential for ensuring national security and operational readiness of the PATRIOT system.

What is the potential cost overrun risk associated with this sole-source contract?

The primary risk is the lack of competitive pressure, which can lead to inflated pricing over the contract's four-year duration. Without market validation through competition, Raytheon may not be incentivized to offer the lowest possible price, potentially resulting in cost overruns compared to a competitively bid scenario.

How does this procurement impact the overall readiness and cost-effectiveness of the PATRIOT system?

While ensuring the availability of critical spares is vital for PATRIOT system readiness, the sole-source nature raises concerns about cost-effectiveness. Taxpayers may be paying a premium for these spares, which could divert funds from other critical defense needs or reduce the overall value obtained for the allocated budget.

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: ELECTRICAL/ELECTRONIC EQPT COMPNTS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Rockwell Collins Australia PTY Limited

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: $18,990,096

Exercised Options: $18,990,096

Current Obligation: $18,990,096

Subaward Activity

Number of Subawards: 30

Total Subaward Amount: $3,889,079

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