Raytheon Company awarded $8.2M for SPARES KIT, facing limited competition

Contract Overview

Contract Amount: $8,235,957 ($8.2M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2024-09-27

End Date: 2028-03-31

Contract Duration: 1,281 days

Daily Burn Rate: $6.4K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: SPARES KIT

Place of Performance

Location: ANDOVER, ESSEX County, MASSACHUSETTS, 01810

State: Massachusetts Government Spending

Plain-Language Summary

Department of Defense obligated $8.2 million to RAYTHEON COMPANY for work described as: SPARES KIT Key points: 1. Contract value of $8.2M for SPARES KIT appears reasonable given the duration and scope. 2. Limited competition for this contract may have impacted overall value for money. 3. Potential risks include reliance on a single source for critical spares. 4. Contract performance context is within the Defense Logistics Agency's operational needs. 5. This contract positions Raytheon as a key supplier within the defense logistics sector. 6. The firm fixed-price structure transfers some risk to the contractor.

Value Assessment

Rating: good

The $8.2 million award for SPARES KIT over approximately 4 years (1281 days) suggests a moderate annual spend. Without specific unit details or comparable contract data, a precise value-for-money assessment is challenging. However, the firm fixed-price nature indicates a defined cost ceiling. Benchmarking against similar sustainment or spares contracts within the DoD would provide a clearer picture of its competitiveness.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, indicating that only one bidder, Raytheon Company, was considered capable of fulfilling the requirement. This approach is often used when a specific manufacturer's parts are needed, or for specialized systems where only one entity possesses the necessary expertise or intellectual property. The lack of broader competition means potential cost savings from a competitive bidding process were not realized.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive pressure, as the government did not have multiple offers to choose from to secure the best possible price.

Public Impact

The Department of Defense benefits from the availability of essential SPARES KIT components. This contract ensures the continued operational readiness of critical defense systems. The services delivered are vital for maintaining military equipment and reducing downtime. The geographic impact is primarily within the operational theaters served by the Defense Logistics Agency. Workforce implications include support roles for logistics, maintenance, and supply chain management.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price negotiation and potentially increases costs.
Lack of competition raises concerns about long-term pricing strategies and potential price creep.
Dependence on a single supplier could create vulnerabilities in the supply chain.
Contract duration of over 4 years may not align with evolving technological needs.

Positive Signals

Firm fixed-price contract provides cost certainty for the government.
Award to an established contractor like Raytheon suggests a degree of reliability.
Contract supports critical defense logistics, ensuring operational readiness.

Sector Analysis

The defense logistics and sustainment sector is characterized by complex supply chains and the need for specialized parts. This contract for SPARES KIT falls within the broader category of aerospace and defense manufacturing, specifically supporting the maintenance and operational readiness of military equipment. The market often involves proprietary systems where original equipment manufacturers (OEMs) like Raytheon hold significant sway, leading to sole-source or limited-competition awards for specific components.

Small Business Impact

This contract does not appear to have a small business set-aside. Given the sole-source nature and the likely specialized components involved, subcontracting opportunities for small businesses may be limited unless Raytheon proactively engages them for specific support services. The primary impact is on the prime contractor's ecosystem rather than direct small business awards.

Oversight & Accountability

Oversight for this contract will likely be managed by the Defense Logistics Agency (DLA) contracting officers and program managers. Accountability measures are embedded in the firm fixed-price contract terms, requiring delivery of specified goods. Transparency is generally maintained through contract databases, though detailed performance metrics may not always be publicly disclosed. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Defense Logistics Agency Procurement
Aerospace and Defense Manufacturing
Military Spares and Sustainment
Raytheon Company Contracts
Naval Systems Support

Risk Flags

Sole-source award
Potential for price escalation
Supply chain dependency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $8.2 million to RAYTHEON COMPANY. SPARES KIT

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 $8.2 million.

What is the period of performance?

Start: 2024-09-27. End: 2028-03-31.

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

Raytheon Company has a substantial history of contracts with the Defense Logistics Agency (DLA) and the broader Department of Defense (DoD), often involving complex systems and sustainment support. Their track record typically includes providing a wide range of defense-related products and services, from missile systems to electronic components. For spares and sustainment, DLA relies on established contractors like Raytheon to ensure the availability of critical parts for aging and modern military platforms. While specific performance metrics for individual contracts are not always public, Raytheon's continued awards suggest a generally satisfactory performance history in meeting delivery schedules and quality standards for the DoD. However, the nature of sole-source awards, as seen here, means that past performance is evaluated against a limited set of criteria, focusing on the contractor's ability to meet the specific requirement rather than competing on price or broader value.

How does the $8.2 million value compare to similar SPARES KIT procurements or sustainment contracts?

Benchmarking the $8.2 million value for this SPARES KIT contract requires comparing it to similar procurements, which can be challenging due to the proprietary nature of many defense components and the variability in contract scope. Contracts for 'spares kits' can range significantly in price depending on the complexity of the equipment they support, the number of unique parts included, and the duration of the contract. Given this contract spans approximately 4 years (1281 days), the annual value is roughly $2 million. This figure appears moderate for specialized defense components. Without access to specific unit costs, quantities, or detailed specifications of the 'SPARES KIT,' a precise comparison to market rates or other similar contracts is difficult. However, the sole-source nature suggests that the price may not have been driven down by competitive bidding, potentially making it higher than if multiple vendors had competed.

What are the primary risks associated with this sole-source contract for SPARES KIT?

The primary risks associated with this sole-source contract for SPARES KIT revolve around cost, supply chain, and potential obsolescence. Firstly, the lack of competition means the government may not be achieving the best possible price, as Raytheon faces no direct pressure from rivals. This can lead to higher costs for taxpayers over the contract's duration. Secondly, sole-source reliance creates a dependency on Raytheon; any disruption in their production, supply chain issues, or changes in their business strategy could directly impact the availability of these critical spares. This dependency also limits the government's leverage if pricing needs to be renegotiated or if quality issues arise. Lastly, as technology evolves, the specific components within this spares kit might become obsolete, and a sole-source provider may have less incentive to invest in developing updated or alternative solutions compared to a more competitive market.

What is the expected program effectiveness or impact of this SPARES KIT contract?

The expected program effectiveness of this SPARES KIT contract is centered on ensuring the operational readiness and longevity of specific military systems. By providing necessary replacement parts, the contract directly supports the maintenance and repair of critical defense equipment, thereby minimizing downtime and maximizing the availability of assets for deployment. This contributes to the overall effectiveness of the military units relying on the supported systems. The impact is primarily on the sustainment and operational capability of the platforms in question. A well-executed spares program prevents minor issues from escalating into major system failures, which can be far more costly to repair and can significantly degrade mission capability. Therefore, the effectiveness is measured by the timely availability of the right parts to keep military hardware functioning as intended.

How has federal spending on 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' (NAICS 334511) trended historically, and how does this contract fi

Federal spending within the NAICS code 334511, 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing,' has historically been substantial, driven by the Department of Defense's continuous need for advanced avionics, radar systems, and navigation equipment. This sector is crucial for maintaining air superiority, maritime operations, and overall situational awareness. Spending in this area often fluctuates based on modernization programs, geopolitical events, and specific platform upgrade cycles. The $8.2 million award for SPARES KIT fits into this broader spending category as a sustainment contract, focusing on providing replacement parts for existing systems rather than procuring entirely new ones. While this specific contract represents a small fraction of the total federal outlay for this NAICS code, it is indicative of the ongoing requirement for maintenance and support services that underpin the operational readiness of the complex systems manufactured within this industry.

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: GUIDED MISSLES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

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: $8,235,957

Exercised Options: $8,235,957

Current Obligation: $8,235,957

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