Raytheon Company awarded $26.6M contract for Beech Aircraft, highlighting sole-source procurement in defense manufacturing

Contract Overview

Contract Amount: $26,614,516 ($26.6M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2011-05-27

End Date: 2015-01-15

Contract Duration: 1,329 days

Daily Burn Rate: $20.0K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: B1900D BEECH AIRCRAFT

Place of Performance

Location: MCKINNEY, COLLIN County, TEXAS, 75071

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $26.6 million to RAYTHEON COMPANY for work described as: B1900D BEECH AIRCRAFT Key points: 1. Contract awarded on a sole-source basis, raising questions about price discovery and potential for overpayment. 2. The firm-fixed-price contract structure shifts risk to the contractor, but the lack of competition limits leverage. 3. Performance period spans over three years, indicating a significant commitment for aircraft manufacturing services. 4. The contract falls under the Aircraft Manufacturing NAICS code, placing it within a specialized defense sector. 5. Geographic location in Texas may offer insights into regional defense industry concentration. 6. Absence of small business set-aside suggests a focus on large prime contractors for this specific requirement.

Value Assessment

Rating: questionable

Without competitive bidding, it is difficult to benchmark the value for money on this $26.6 million contract. The firm-fixed-price structure is standard, but the lack of competition means the government did not benefit from potential price reductions that could arise from multiple bidders vying for the contract. A comparison to similar sole-source aircraft manufacturing contracts would be necessary to assess if the pricing is within an acceptable range, but such data is not readily available in this context. The absence of competition inherently limits the government's ability to ensure it is receiving the best possible price.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed. This typically occurs when only one responsible source is available or authorized by statute. The lack of competition means there were no other bidders, and therefore no direct price comparison from a competitive process. This can lead to higher prices for the government as there is no incentive for the contractor to offer the lowest possible price.

Taxpayer Impact: Taxpayers may have paid a premium for this aircraft manufacturing requirement due to the absence of a competitive bidding process. Without competing offers, the government had limited leverage to negotiate the best possible price.

Public Impact

The Department of the Army is the primary beneficiary, receiving aircraft manufacturing services. This contract supports the operational readiness and capabilities of military aviation assets. The geographic impact is concentrated in Texas, where the contractor is located. Workforce implications include employment opportunities within Raytheon Company's aircraft manufacturing division.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potentially increases costs for taxpayers.
Lack of transparency in the procurement process due to non-competitive nature.
Potential for contractor lock-in given the specialized nature of aircraft manufacturing.

Positive Signals

Firm-fixed-price contract shifts cost overrun risk to the contractor.
Award to an established contractor like Raytheon suggests a degree of confidence in their capabilities.
Contract duration indicates a sustained need for these aircraft manufacturing services.

Sector Analysis

This contract falls within the Aircraft Manufacturing sector (NAICS 336411), a critical component of the aerospace and defense industry. This sector is characterized by high barriers to entry, significant R&D investment, and stringent quality and safety standards. The total market for aircraft manufacturing is substantial, with government contracts forming a significant portion. Comparable spending benchmarks are difficult to establish without more specific details on the aircraft type and services, but defense aircraft procurement typically involves large sums.

Small Business Impact

The contract was not competed and there is no indication of small business set-asides (ss: false, sb: false). This suggests that the primary contractor, Raytheon Company, is expected to fulfill the requirement directly or through its own supply chain, rather than through specific subcontracting opportunities for small businesses mandated by this award. The absence of set-asides means that small businesses are unlikely to be direct beneficiaries of this particular contract, though they may be part of Raytheon's broader supply network.

Oversight & Accountability

Oversight for this contract would typically be managed by the Department of the Army contracting officers and program managers. Accountability measures are embedded in the firm-fixed-price contract terms, which obligate the contractor to deliver specific aircraft manufacturing services. Transparency is limited due to the sole-source nature of the award. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Department of Defense Aircraft Procurement
Raytheon Company Defense Contracts
Sole-Source Defense Procurements
Aircraft Manufacturing Services

Risk Flags

Sole-source procurement
Lack of competitive bidding
Potential for cost overruns
Limited transparency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $26.6 million to RAYTHEON COMPANY. B1900D BEECH AIRCRAFT

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 $26.6 million.

What is the period of performance?

Start: 2011-05-27. End: 2015-01-15.

What is Raytheon Company's track record with similar sole-source aircraft manufacturing contracts?

Raytheon Company, a major defense contractor, has a long history of securing various contracts, including those for aircraft manufacturing. While specific data on their sole-source aircraft manufacturing contracts is not provided here, their extensive experience suggests a capacity to handle complex requirements. However, sole-source awards, by their nature, limit public visibility into the competitive landscape and pricing strategies employed. Analyzing Raytheon's broader contract portfolio, including competitively awarded contracts, would provide a more comprehensive view of their performance and pricing across different procurement scenarios. Without specific data on past sole-source aircraft deals, it's challenging to definitively assess their track record in this precise context, but their status as a prime contractor implies a history of successful, albeit sometimes non-competitively awarded, engagements.

How does the $26.6 million value compare to other aircraft manufacturing contracts awarded by the Department of the Army?

The $26.6 million value of this contract for Beech Aircraft manufacturing is a moderate sum within the context of large defense procurements. The Department of the Army frequently awards contracts for aircraft, ranging from small component repairs to the acquisition of entire fleets, often costing hundreds of millions or even billions of dollars. This specific contract's value suggests it may pertain to a defined set of manufacturing services for a particular aircraft type or a limited production run, rather than a large-scale acquisition program. To provide a precise comparison, one would need to analyze the scope of work (e.g., new production, modification, sustainment) and the specific aircraft model. However, in the broader landscape of Army aviation spending, $26.6 million represents a significant but not exceptionally large contract.

What are the primary risks associated with a sole-source award for aircraft manufacturing?

The primary risks associated with a sole-source award for aircraft manufacturing include inflated pricing due to a lack of competition, reduced incentive for the contractor to innovate or improve efficiency, and potential for contractor lock-in. Without competing bids, the government has less leverage to negotiate favorable terms and pricing, potentially leading to higher costs for taxpayers. Furthermore, a sole-source award can limit the government's ability to explore alternative solutions or technologies that might be offered by other manufacturers. There's also a risk that the contractor may not prioritize the contract as highly if they perceive less competitive pressure. Ensuring robust oversight and clear performance metrics becomes even more critical in sole-source situations to mitigate these inherent risks.

What does the contract duration of 1329 days imply about the program's effectiveness?

The contract duration of 1329 days (approximately 3.6 years) implies a sustained and significant requirement for the specified aircraft manufacturing services. This extended period suggests that the program is not a short-term or ad-hoc need, but rather a planned and ongoing effort critical to the Department of the Army's operations or strategic goals. Such a duration typically indicates a complex manufacturing process, a need for ongoing support, or a phased delivery schedule. While duration alone doesn't guarantee effectiveness, it points to a commitment and investment by the agency, suggesting that the services provided are deemed essential and are expected to contribute to the program's objectives over a considerable timeframe. Effective program management and contractor performance throughout this period will be key to realizing the intended outcomes.

How has federal spending on aircraft manufacturing (NAICS 336411) trended historically, and where does this contract fit?

Federal spending on aircraft manufacturing, categorized under NAICS code 336411, has historically been substantial, driven primarily by the Department of Defense's needs for military aircraft, including fixed-wing planes, helicopters, and related components. Spending in this sector can fluctuate based on geopolitical events, modernization programs, and budget allocations. While specific historical spending figures for NAICS 336411 are not provided in this data snippet, it is known that the defense sector represents a significant portion of the overall aircraft manufacturing market. This $26.6 million contract, awarded by the Department of the Army, fits within this historical pattern of defense-related aircraft procurement. Its value suggests it is a specific project or a component of a larger acquisition, contributing to the overall federal investment in maintaining and advancing its aviation capabilities.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft Manufacturing

Product/Service Code: AEROSPACE CRAFT AND STRUCTURAL COMPONENTS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: W58RGZ11R0086

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 13510 N. CENTRAL EXPRESSWAY, DALLAS, TX, 90

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

Financial Breakdown

Contract Ceiling: $26,614,516

Exercised Options: $26,614,516

Current Obligation: $26,614,516

Contract Characteristics

Cost or Pricing Data: NO

Timeline