DoD's $114M contract for electrical components awarded to Raytheon Company, with no competition

Contract Overview

Contract Amount: $114,181,051 ($114.2M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2016-01-01

End Date: 2019-12-31

Contract Duration: 1,460 days

Daily Burn Rate: $78.2K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: UCA FOR PBL

Place of Performance

Location: ANDOVER, ESSEX County, MASSACHUSETTS, 01810

State: Massachusetts Government Spending

Plain-Language Summary

Department of Defense obligated $114.2 million to RAYTHEON COMPANY for work described as: UCA FOR PBL Key points: 1. The contract's value of over $114 million represents a significant investment in specialized electrical components. 2. Awarded on a sole-source basis, the lack of competition raises questions about potential price inflation and value for money. 3. The contract duration of four years suggests a long-term need for these specific components. 4. The 'All Other Miscellaneous Electrical Equipment and Component Manufacturing' NAICS code indicates a niche market for these goods. 5. The absence of small business set-aside flags suggests this contract was not specifically targeted to support small businesses. 6. The firm-fixed-price contract type aims to transfer some cost risk to the contractor, Raytheon Company.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging without detailed cost breakdowns or comparisons to similar sole-source awards. The significant dollar amount, coupled with the lack of competition, suggests a potential for overpayment. Without competitive bids, it's difficult to ascertain if the pricing reflects fair market value or if taxpayers are bearing a premium due to the sole-source nature of the award. Further analysis would require access to cost data and historical pricing for similar sole-source procurements.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one bidder, Raytheon Company, was solicited. This approach bypasses the standard competitive bidding process, which typically involves multiple companies vying for the contract. The lack of competition means there was no direct price comparison or incentive for bidders to offer their most competitive rates. This can occur for various reasons, such as unique capabilities or proprietary technology, but it limits the government's ability to ensure the best possible price.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as the government does not benefit from the price reductions typically achieved through competitive bidding. This can result in less efficient use of public funds.

Public Impact

The Department of Defense is the primary beneficiary, receiving critical electrical components for its operations. The contract supports the manufacturing and supply chain for specialized electrical equipment, potentially impacting military readiness. The geographic impact is primarily centered around the contractor's facilities, but the components likely support broader defense initiatives. The contract supports jobs within Raytheon Company and its supply chain, contributing to the electrical equipment manufacturing sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated prices and reduced value for taxpayer dollars.
Sole-source awards can limit innovation by not exposing the government to alternative solutions from other vendors.
Dependence on a single supplier for critical components can create supply chain risks.
Transparency is reduced in sole-source procurements, making it harder to scrutinize pricing and justification.

Positive Signals

Firm-fixed-price contract type helps manage cost certainty for the government.
Award to a known entity like Raytheon Company may indicate a reliance on established capabilities and reliability.
The contract duration suggests a stable, long-term requirement, allowing for potential economies of scale in production.

Sector Analysis

The electrical equipment manufacturing sector is diverse, encompassing a wide range of products from basic components to complex systems. This contract falls under NAICS code 335999, 'All Other Miscellaneous Electrical Equipment and Component Manufacturing,' indicating a specialized segment. The defense industry is a significant consumer of such components, often requiring high reliability and specific performance characteristics. Comparable spending benchmarks are difficult to establish for sole-source awards, but the $114 million value suggests a substantial procurement within this niche.

Small Business Impact

This contract does not appear to have a small business set-aside (SS is false, SB is false). The award to Raytheon Company, a large defense contractor, suggests that subcontracting opportunities for small businesses may exist within the execution of this contract. However, without specific subcontracting plans or goals mandated, the extent of small business participation is uncertain. The lack of a direct set-aside means small businesses were not the primary target for this specific award.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and auditing agencies. Inspector General (IG) jurisdiction would apply to investigations of fraud, waste, or abuse. Transparency is limited due to the sole-source nature, but contract award data is publicly available. Accountability rests with the contracting officer to ensure the terms of the firm-fixed-price contract are met and that the components delivered conform to specifications.

Related Government Programs

Defense Logistics Agency (DLA) procurements
Army Aviation and Missile Command (AMCOM) contracts
Naval Sea Systems Command (NAVSEA) contracts
Air Force Materiel Command (AFMC) contracts

Risk Flags

Sole-source award lacks competition
Potential for inflated pricing
Limited transparency in procurement
Dependence on a single supplier

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $114.2 million to RAYTHEON COMPANY. UCA FOR PBL

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 $114.2 million.

What is the period of performance?

Start: 2016-01-01. End: 2019-12-31.

What specific electrical components are being procured under this contract?

The contract details do not specify the exact nature of the 'All Other Miscellaneous Electrical Equipment and Component Manufacturing' items. However, given the Department of Defense's operational needs, these components likely relate to power systems, communication equipment, guidance systems, or other critical electronic subsystems for military platforms. The NAICS code 335999 is broad, encompassing items such as capacitors, resistors, transformers, and other specialized electrical parts not classified elsewhere. Further details would require access to the contract's statement of work or technical specifications.

Why was this contract awarded on a sole-source basis to Raytheon Company?

The provided data indicates the contract was 'NOT COMPETED,' implying a sole-source justification was made. Common reasons for sole-source awards include the unique capability of a single contractor, the need for compatibility with existing systems, or urgent and compelling circumstances where competition is not feasible. Without the specific justification documentation (e.g., Justification for Other Than Full and Open Competition - JOFOC), the precise rationale remains unknown. Raytheon's established role in defense manufacturing may have played a part in this determination.

What is the historical spending pattern for similar electrical components by the Department of Defense?

Analyzing historical spending for 'All Other Miscellaneous Electrical Equipment and Component Manufacturing' (NAICS 335999) by the Department of Defense requires extensive data aggregation. However, the DoD consistently spends billions annually on a wide array of electronic and electrical components to support its vast inventory of platforms and systems. Spending patterns can fluctuate based on modernization programs, sustainment needs, and geopolitical events. The $114 million for this specific contract represents a significant, but not unprecedented, investment within the broader context of defense procurement for specialized equipment.

What are the potential risks associated with a sole-source award of this magnitude?

The primary risks associated with a sole-source award of $114 million include potential overpricing due to the absence of competitive pressure, reduced incentive for the contractor to innovate or improve efficiency, and a lack of market intelligence regarding alternative solutions or pricing. There's also a strategic risk of over-reliance on a single supplier for critical components, which could lead to supply chain vulnerabilities. Furthermore, the lack of transparency inherent in sole-source procurements can make it difficult for oversight bodies and the public to verify the fairness and reasonableness of the price.

How does this contract align with Raytheon Company's broader portfolio and capabilities?

Raytheon Company, now part of RTX, is a major defense contractor with extensive capabilities in aerospace, defense, and intelligence solutions. Their portfolio includes advanced electronics, sensors, weapons systems, and communication technologies. This contract for specialized electrical components likely aligns with their existing manufacturing expertise and their role as a key supplier to the Department of Defense. It could be for components used in their own integrated systems or as a direct supply of parts for DoD platforms, leveraging their established production lines and quality control processes.

Industry Classification

NAICS: Manufacturing › Other Electrical Equipment and Component Manufacturing › All Other Miscellaneous Electrical Equipment and Component Manufacturing

Product/Service Code: ELECTRICAL/ELECTRONIC EQPT COMPNTS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: W31P4Q13R0097

Offers Received: 1

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: $114,794,471

Exercised Options: $114,181,051

Current Obligation: $114,181,051

Subaward Activity

Number of Subawards: 344

Total Subaward Amount: $130,447,252

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline