Raytheon Company awarded $702M for aluminum products, with limited competition impacting price discovery

Contract Overview

Contract Amount: $70,231,952 ($70.2M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2011-11-23

End Date: 2016-07-31

Contract Duration: 1,712 days

Daily Burn Rate: $41.0K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: FMS ASSETS

Place of Performance

Location: ANDOVER, ESSEX County, MASSACHUSETTS, 01810

State: Massachusetts Government Spending

Plain-Language Summary

Department of Defense obligated $70.2 million to RAYTHEON COMPANY for work described as: FMS ASSETS Key points: 1. Contract awarded at a firm fixed price, offering cost certainty. 2. Limited competition suggests potential for higher pricing than a fully open market. 3. Long contract duration of 1712 days may indicate a stable, ongoing need. 4. The contract falls under the Aluminum Sheet, Plate, and Foil Manufacturing NAICS code. 5. Significant award value suggests a substantial requirement for these materials. 6. The contract was awarded by the Department of the Army, a major defense spender.

Value Assessment

Rating: fair

The total award value of $702 million over approximately 4.7 years is substantial. Without specific per-unit cost data or comparable contract benchmarks for aluminum products of this nature, a precise value-for-money assessment is challenging. The firm fixed price structure provides cost predictability for the government, but the limited competition may have led to a higher price than could have been achieved in a more open bidding environment. Benchmarking against market rates for aluminum sheet, plate, and foil would be necessary for a more definitive value assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

This contract was not competed openly, falling under the 'NOT AVAILABLE FOR COMPETITION' category. This indicates that only one or a limited number of bidders were considered. The lack of broad competition means that the government did not benefit from the full range of market offerings and potentially paid a premium. Price discovery is likely constrained, as there was no broad market test to establish competitive pricing.

Taxpayer Impact: Taxpayers may have paid more than necessary due to the limited competitive landscape. The absence of robust competition reduces the government's leverage to negotiate the best possible price for these aluminum products.

Public Impact

The Department of the Army is the primary beneficiary, receiving essential aluminum materials for its operations. Services delivered include the supply of aluminum sheet, plate, and foil, critical for various defense applications. The contract's geographic impact is primarily within Massachusetts, where Raytheon Company is located. Workforce implications include support for manufacturing jobs within Raytheon and its supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition raises concerns about potential overpayment and lack of price optimization.
The long contract duration could mask inefficiencies if not actively managed.
Lack of detailed contract type information (beyond 'DEFINITIVE CONTRACT') hinders full analysis.

Positive Signals

Firm fixed price contract provides budget certainty.
Award to a large, established defense contractor like Raytheon suggests a level of reliability and capability.
The contract supports critical defense materiel needs.

Sector Analysis

This contract falls within the manufacturing sector, specifically related to aluminum products. The aluminum industry is a significant global market, with applications ranging from aerospace and automotive to construction and defense. The Department of Defense is a major consumer of manufactured goods, including specialized metals like aluminum, for its platforms and equipment. Benchmarking this award against other large-scale government procurements of similar materials would provide further context on its scale within the defense industrial base.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). As a large award to Raytheon Company, it is unlikely that significant subcontracting opportunities for small businesses were mandated within this specific contract, though Raytheon may have its own broader small business subcontracting programs. The direct impact on the small business ecosystem for this particular award appears minimal.

Oversight & Accountability

As a definitive contract awarded by the Department of the Army, oversight would typically be managed through contract administration and program management offices within the agency. Transparency is limited by the 'NOT AVAILABLE FOR COMPETITION' status. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected. Specific oversight mechanisms beyond standard contract management are not detailed in the provided data.

Related Government Programs

Defense Materiel Procurement
Aluminum and Metal Manufacturing
Department of Defense Supply Chain
Raytheon Company Contracts

Risk Flags

Limited Competition
Potential for Overpricing
Lack of Transparency in Award Justification

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $70.2 million to RAYTHEON COMPANY. FMS ASSETS

Who is the contractor on this award?

The obligated recipient is RAYTHEON COMPANY.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Army).

What is the total obligated amount?

The obligated amount is $70.2 million.

What is the period of performance?

Start: 2011-11-23. End: 2016-07-31.

What is Raytheon Company's track record with the Department of Defense for similar aluminum product contracts?

Raytheon Company, now part of RTX, has a long and extensive history of contracting with the Department of Defense across various defense systems and components. While specific data on their track record solely for aluminum sheet, plate, and foil manufacturing contracts is not provided here, their overall performance as a major defense contractor suggests a capacity to meet large-scale, complex requirements. Historical data from contract databases would be needed to analyze their past performance metrics, delivery timeliness, and quality control on similar material procurements. Given their scale, it's probable they have fulfilled numerous contracts involving specialized materials, including aluminum, for diverse defense applications such as aircraft structures, missile components, and ground support equipment.

How does the $702 million award compare to historical spending on aluminum products by the Department of the Army?

Comparing this $702 million award to historical spending requires access to comprehensive historical procurement data for aluminum products by the Department of the Army. Without such data, it's difficult to ascertain if this represents a typical, increased, or decreased level of spending. Factors influencing historical spending include changes in defense readiness levels, modernization programs, specific platform production rates (e.g., aircraft, vehicles), and fluctuations in aluminum commodity prices. A trend analysis over several fiscal years would reveal patterns and help contextualize the significance of this particular award relative to the Army's long-term material needs and budget allocations for such resources.

What are the primary risks associated with a 'NOT AVAILABLE FOR COMPETITION' contract of this magnitude?

The primary risks associated with a 'NOT AVAILABLE FOR COMPETITION' contract of this magnitude ($702 million) are centered around cost and value. Without open competition, the government loses the benefit of multiple bids driving down prices, potentially leading to overpayment. There's also a risk of reduced innovation, as contractors may have less incentive to offer novel solutions or efficiencies when competition is limited. Furthermore, the justification for sole-sourcing or limited competition needs rigorous vetting to ensure it is truly warranted and not a result of poor planning or market research. Ensuring adequate oversight and performance monitoring becomes even more critical to mitigate these risks and confirm the government is receiving fair value.

What specific defense applications are likely driving the demand for these aluminum products?

The demand for aluminum sheet, plate, and foil from the Department of the Army, particularly from a major supplier like Raytheon, likely stems from several key defense applications. These include the manufacturing and repair of aircraft structures (airframes, wings, fuselage components), missile bodies and fins, armored vehicle components, and various ground support equipment. Aluminum's favorable strength-to-weight ratio, corrosion resistance, and formability make it indispensable for platforms where weight reduction is critical for performance and fuel efficiency, such as in aviation and missile technology. Specific programs requiring large quantities of these materials could include new aircraft development, upgrades to existing fleets, or the production of advanced missile systems.

How does the firm fixed price (FFP) contract type impact risk allocation between the government and Raytheon?

A Firm Fixed Price (FFP) contract type, like the one awarded to Raytheon, shifts the majority of the cost risk to the contractor. Under an FFP agreement, the price is set and generally not subject to adjustment based on the contractor's actual costs. This provides the government with significant budget certainty, as the total cost is known upfront. Raytheon assumes the responsibility for managing its costs effectively to maintain profitability. If their costs exceed the agreed-upon price, their profit margin shrinks or they may incur a loss. Conversely, if they manage costs efficiently, their profit increases. This structure incentivizes the contractor to control expenses and perform efficiently.

What does the contract award date (2011) and end date (2016) suggest about its relevance today?

The contract award date of November 23, 2011, and end date of July 31, 2016, indicate that this was a historical procurement. This means the contract is no longer active and the specific terms, pricing, and conditions are from that past period. While it provides insight into past spending patterns and contractor relationships, it is not directly reflective of current market prices, technological requirements, or the Department of the Army's present needs for aluminum products. Analyzing such historical data is valuable for understanding long-term trends, identifying past performance, and informing future procurement strategies, but it should not be used as a benchmark for current value or requirements.

Industry Classification

NAICS: Manufacturing › Alumina and Aluminum Production and Processing › Aluminum Sheet, Plate, and Foil Manufacturing

Product/Service Code: AEROSPACE CRAFT AND STRUCTURAL COMPONENTS

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: W31P4Q11R0025

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

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: $73,965,647

Exercised Options: $70,231,952

Current Obligation: $70,231,952

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline