Raytheon Company awarded $51M for aircraft component maintenance, raising value-for-money questions

Contract Overview

Contract Amount: $51,052,378 ($51.1M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2003-03-01

End Date: 2008-06-30

Contract Duration: 1,948 days

Daily Burn Rate: $26.2K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 200306!000025!9700!ZA95 !USSOCOM, TAKO CONTRACTING DIV. !USZA9503C0004 !A!N! !N! !20030301!20031231!060897063!060897063!001339159!N!RAYTHEON COMPANY !2000 EAST EL SEGUNDO BLVD !EL SEGUNDO !CA!90245!22412!037!06!EL SEGUNDO !LOS ANGELES !CALIFORNIA!+000043040024!N!N!000000000000!J016!MAINT & REPAIR OF EQ/AIRCRAFT COMPS & ACCYS !A1A!AIRFRAMES AND SPARES !1000!NOT DISCERNABLE OR CLASSIFIED !541330!E! !3! ! ! ! ! !99990909!B! ! !A! !D!U!J!1!001!N!1B!Z!Y!Z! ! !N!C!N! ! ! !A!A!A!A!000!A!C!N! ! ! ! ! ! !0001! !

Place of Performance

Location: EL SEGUNDO, LOS ANGELES County, CALIFORNIA, 90245

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $51.1 million to RAYTHEON COMPANY for work described as: 200306!000025!9700!ZA95 !USSOCOM, TAKO CONTRACTING DIV. !USZA9503C0004 !A!N! !N! !20030301!20031231!060897063!060897063!001339159!N!RAYTHEON COMPANY !2000 EAST EL SEGUNDO BLVD !EL SEGUNDO !CA!90245!22412!037!06!EL SEGUNDO !LOS A… Key points: 1. Contract awarded on a sole-source basis, limiting price competition and potentially increasing costs. 2. Significant contract duration of over 5 years suggests a long-term need for these services. 3. The contract's value of $51M warrants scrutiny regarding its alignment with market rates for similar services. 4. Focus on maintenance and repair of aircraft components indicates a critical support role for defense operations. 5. The lack of competition raises concerns about potential overpricing and reduced incentive for efficiency. 6. Contract awarded to a single, large defense contractor, potentially impacting opportunities for smaller businesses.

Value Assessment

Rating: questionable

The contract value of $51,023,782.50 for aircraft component maintenance and repair appears substantial. Without specific benchmarks for the exact services rendered, it is difficult to definitively assess value for money. However, the sole-source nature of the award suggests that competitive pricing pressures were absent, which could lead to less favorable terms compared to a competed contract. Further analysis would require detailed service breakdowns and comparisons to industry standards for similar maintenance and repair tasks.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded using a sole-source justification, meaning it was not competed among multiple vendors. This approach is typically used when only one responsible source is available or when a compelling justification exists for not seeking competition. The lack of competition limits the government's ability to explore a wider range of pricing and service options, potentially impacting the final cost and value received.

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 secure the best possible price and terms for these essential aircraft component maintenance services.

Public Impact

The primary beneficiaries are likely U.S. Special Operations Command (USSOCOM) and its operational units, ensuring the readiness of critical aircraft. Services delivered include maintenance and repair of aircraft components and accessories, crucial for flight safety and mission effectiveness. The geographic impact is primarily within the United States, supporting defense logistics and maintenance infrastructure. Workforce implications include the employment of skilled technicians and engineers by Raytheon Company to perform these specialized services.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing, potentially leading to higher costs for taxpayers.
Extended contract duration (over 5 years) could lock in potentially unfavorable terms if market conditions change.
Lack of transparency in the sole-source justification makes it difficult to assess the necessity of this approach.
Potential for contractor lock-in, making it harder to switch providers or renegotiate terms in the future.

Positive Signals

Award to a known entity (Raytheon Company) suggests a potentially reliable provider with established expertise.
Contract focuses on essential maintenance, contributing to the operational readiness of critical assets.
Clear definition of services (maintenance & repair of aircraft components) provides some level of scope clarity.

Sector Analysis

This contract falls within the Engineering Services sector, specifically related to the maintenance and repair of aerospace equipment. The aerospace and defense industry is characterized by high technological complexity and significant government spending. Contracts for maintenance and repair are essential for ensuring the operational readiness of military assets. Benchmarking this contract's value would ideally involve comparing it to similar sole-source or competed contracts for aircraft component MRO services within the Department of Defense, considering factors like aircraft type, component complexity, and service level agreements.

Small Business Impact

The contract was awarded to Raytheon Company, a large prime contractor, and there is no indication of a small business set-aside. Given the sole-source nature and the prime contractor's size, it is unlikely that significant subcontracting opportunities for small businesses were mandated or actively pursued through competitive set-asides within this specific award. Further investigation into Raytheon's subcontracting plans would be needed to assess the impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would primarily fall under the U.S. Special Operations Command (USSOCOM) contracting and program management offices. As a Department of Defense contract, it is also subject to oversight by the Department of Defense Inspector General (DoD IG) for potential fraud, waste, and abuse. Transparency regarding the sole-source justification and performance metrics would be key to assessing accountability.

Related Government Programs

Aircraft Maintenance and Repair Services
Aerospace Component Support
Special Operations Forces Equipment Sustainment
Defense Logistics and Readiness Contracts

Risk Flags

Sole-source award lacks competitive pricing.
Extended contract duration may not reflect current market value.
Lack of detailed service scope hinders value assessment.
Potential for contractor lock-in.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $51.1 million to RAYTHEON COMPANY. 200306!000025!9700!ZA95 !USSOCOM, TAKO CONTRACTING DIV. !USZA9503C0004 !A!N! !N! !20030301!20031231!060897063!060897063!001339159!N!RAYTHEON COMPANY !2000 EAST EL SEGUNDO BLVD !EL SEGUNDO !CA!90245!22412!037!06!EL SEGUNDO !LOS ANGELES !CALIFORNIA!+000043040024!N!N!000000000000!J016!MAINT & REPAIR OF EQ/AIRCRAFT COMPS & ACCYS !A1A!AIRFRAMES AND SPARES !1000!NOT DISCERNABLE OR CLASSIFIED !541330!E! !3! ! ! ! ! !99990909!B

Who is the contractor on this award?

The obligated recipient is RAYTHEON COMPANY.

Which agency awarded this contract?

Awarding agency: Department of Defense (U.S. Special Operations Command).

What is the total obligated amount?

The obligated amount is $51.1 million.

What is the period of performance?

Start: 2003-03-01. End: 2008-06-30.

What specific aircraft components and systems are covered under this maintenance and repair contract?

The provided data indicates the contract covers 'MAINT & REPAIR OF EQ/AIRCRAFT COMPS & ACCYS' and falls under the Product Service Code (PSC) '541330' for Engineering Services, with a broader category of 'AIRFRAMES AND SPARES'. However, the specific aircraft models, component types (e.g., engines, avionics, structural parts), and the exact nature of the maintenance (e.g., scheduled, unscheduled, depot-level) are not detailed in the summary data. This level of specificity is crucial for a thorough value-for-money assessment and for understanding the scope of work performed by Raytheon Company.

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

The data explicitly states the contract type as 'NOT COMPETED', which typically implies a sole-source or limited competition award. The specific justification for this sole-source determination is not provided in the data. Common reasons for sole-source awards include unique capabilities of a single contractor, urgent and compelling needs where competition is not feasible, or when only one source is capable of meeting the requirement. Without the official justification document, it is impossible to verify the validity of the sole-source decision and assess if it was appropriate.

How does the contract's value compare to similar maintenance and repair contracts for aircraft components?

Comparing the $51 million contract value requires identifying comparable contracts. This would involve looking for other Department of Defense contracts for the maintenance and repair of similar types of aircraft components (e.g., airframes, avionics, engines) awarded around the same period (2003-2008). Crucially, the comparison should ideally be made against contracts that were competitively procured to establish a benchmark for 'fair and reasonable' pricing. Given this contract's sole-source nature, its price may be higher than what could have been achieved through competition. A detailed analysis would need to account for contract duration, scope of work, and specific service level agreements.

What is Raytheon Company's track record with USSOCOM and similar maintenance contracts?

Raytheon Company is a major defense contractor with extensive experience in aerospace and defense systems, including maintenance and support services. Their track record with USSOCOM and other branches of the Department of Defense would likely include numerous contracts for various platforms and components. A review of their past performance ratings, any contract disputes, or significant issues on similar maintenance and repair contracts would provide insight into their reliability and capability. The fact that USSOCOM awarded them this contract suggests they were deemed capable, but a deeper dive into their specific performance history on comparable contracts is warranted.

What are the potential risks associated with a long-term, sole-source contract for aircraft component maintenance?

The primary risks associated with a long-term, sole-source contract include potential cost overruns due to a lack of competitive pressure, reduced incentive for the contractor to innovate or improve efficiency, and contractor lock-in. If the government becomes heavily reliant on a single provider, it can be difficult and costly to switch vendors even if performance or pricing becomes unsatisfactory. Furthermore, market conditions or technological advancements might make the contracted services less relevant or more expensive over the contract's lifespan, but the government may be bound by the existing terms.

What performance metrics or oversight mechanisms were in place to ensure the quality and cost-effectiveness of the services provided?

The provided data does not detail the specific performance metrics, quality assurance surveillance plans (QASPs), or oversight mechanisms implemented for this contract. Typically, government contracts include clauses for performance monitoring, acceptance of services, and remedies for non-performance. For a contract of this magnitude and duration, regular reviews by contracting officers' representatives (CORs) and program managers would be expected. The effectiveness of these oversight measures is critical, especially in a sole-source scenario, to ensure taxpayer funds are used efficiently and that the required level of service is maintained.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services

Product/Service Code: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Contractor Details

Address: 2000 EAST EL SEGUNDO BLVD., EL SEGUNDO, CA, 90245

Business Categories: Category Business, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline