DoD awards Raytheon $47M for aircraft parts, raising concerns over sole-source procurement

Contract Overview

Contract Amount: $46,990,399 ($47.0M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2005-01-31

End Date: 2010-06-30

Contract Duration: 1,976 days

Daily Burn Rate: $23.8K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Place of Performance

Location: ANDOVER, ESSEX County, MASSACHUSETTS, 01810

State: Massachusetts Government Spending

Plain-Language Summary

Department of Defense obligated $47.0 million to RAYTHEON COMPANY for work described as: Key points: 1. Significant contract value of $46.99M awarded to a major defense contractor. 2. Lack of competition raises questions about price discovery and potential overspending. 3. Long contract duration (1976 days) may indicate complex requirements or limited vendor pool. 4. The sector is dominated by large, established players, potentially limiting small business opportunities.

Value Assessment

Rating: questionable

The contract type is Cost Plus Fixed Fee, which can incentivize higher costs. Without competitive bidding, it's difficult to assess if the $46.99M price is reasonable compared to market rates for similar aircraft parts.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award. This limits price discovery and may lead to higher costs for taxpayers as there was no market pressure to offer the best price.

Taxpayer Impact: The lack of competition for this $46.99M contract means taxpayers may have paid more than necessary for these aircraft parts.

Public Impact

Taxpayers may be overpaying for essential aircraft parts due to the absence of competitive bidding. The long duration of the contract could impact the availability of parts and potentially lead to obsolescence issues. Reliance on a single source for critical components can create supply chain vulnerabilities for the Department of Defense.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award
Cost-plus contract type
Long contract duration
No small business participation indicated

Positive Signals

Award to established contractor
Potential for specialized parts

Sector Analysis

The 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' sector is crucial for defense readiness. Spending benchmarks are hard to establish without competitive data, but sole-source awards in this area warrant scrutiny.

Small Business Impact

The data indicates no small business participation in this contract. Given the sole-source nature and the large prime contractor, opportunities for small businesses were likely missed.

Oversight & Accountability

The 'NOT COMPETED' status suggests a potential lack of robust oversight in the initial procurement phase. Further review is needed to understand the justification for the sole-source award and ensure accountability.

Related Government Programs

Other Aircraft Parts and Auxiliary Equipment Manufacturing
Department of Defense Contracting
Defense Contract Management Agency Programs

Risk Flags

Sole-source procurement
Cost-plus contract type
Lack of small business participation
Long contract duration
Potential for price inflation
Limited market research evidence

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $47.0 million to RAYTHEON COMPANY. See the official description on USAspending.

Who is the contractor on this award?

The obligated recipient is RAYTHEON COMPANY.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $47.0 million.

What is the period of performance?

Start: 2005-01-31. End: 2010-06-30.

What was the specific justification for awarding this contract on a sole-source basis, and were alternative sourcing options thoroughly explored?

The justification for a sole-source award is critical for understanding potential value. Without competition, the government relies heavily on the contractor's proposed pricing. A thorough review would involve examining the necessity of unique capabilities, the unavailability of alternatives, and any market research conducted to ensure the government wasn't foregoing a more cost-effective solution.

How does the Cost Plus Fixed Fee structure impact the final cost and the contractor's incentive to control expenses for these aircraft parts?

Cost Plus Fixed Fee (CPFF) contracts reimburse the contractor for allowable costs plus a predetermined fixed fee. While the fee is fixed, the contractor has less incentive to control costs compared to fixed-price contracts, as higher costs directly translate to higher reimbursements. This structure can lead to cost overruns if not closely monitored.

What is the potential long-term impact on the Department of Defense's supply chain and technological readiness given this sole-source, long-duration award?

A sole-source, long-duration contract can create dependency on a single supplier, potentially leading to supply chain vulnerabilities and reduced flexibility. It may also stifle innovation if alternative suppliers or newer technologies are not explored. This could impact the DoD's ability to adapt to evolving threats and maintain a diverse, resilient supply base.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Other Aircraft Parts and Auxiliary Equipment Manufacturing

Product/Service Code: GUIDED MISSLES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 350 LOWELL ST, ANDOVER, MA, 06

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

Contract Characteristics

Cost or Pricing Data: YES

Timeline