DoD's $248.8M aircraft manufacturing contract awarded to Raytheon Company shows limited competition

Contract Overview

Contract Amount: $248,826,075 ($248.8M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2011-09-29

End Date: 2014-09-30

Contract Duration: 1,097 days

Daily Burn Rate: $226.8K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: FY 11 AND FY 12 MTS A PRODUCTION

Place of Performance

Location: MCKINNEY, COLLIN County, TEXAS, 75070, UNITED STATES OF AMERICA

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $248.8 million to RAYTHEON COMPANY for work described as: FY 11 AND FY 12 MTS A PRODUCTION Key points: 1. The contract value of $248.8 million over three years represents a significant investment in aircraft manufacturing capabilities. 2. Awarded to a single, large defense contractor, this contract highlights a potential concentration in the supply chain. 3. The firm-fixed-price structure suggests a defined scope and cost control, but requires careful monitoring for scope creep. 4. The duration of the contract, spanning over 1000 days, indicates a long-term need for these specialized manufacturing services. 5. Performance context is crucial to understand if the delivered aircraft meet the Department of Defense's operational requirements. 6. The absence of small business involvement raises questions about broader economic impact and subcontracting opportunities.

Value Assessment

Rating: fair

Benchmarking the value of this $248.8 million contract is challenging without specific details on the aircraft produced and their intended use. However, given the firm-fixed-price nature, the government has a defined cost ceiling. Comparing this to similar large-scale aircraft manufacturing contracts within the Department of Defense would provide a clearer picture of whether the pricing is competitive for the scope of work. The lack of competition, as noted below, may have influenced the final negotiated 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 when there is a compelling justification for not seeking competition. The implications for price discovery are significant, as the absence of multiple bids means the government did not benefit from the competitive pressure that usually drives down costs. This approach necessitates robust negotiation and oversight to ensure fair pricing.

Taxpayer Impact: For taxpayers, a sole-source award means there is a higher risk of paying a premium compared to a competitively bid contract. Without competing offers, the government may not achieve the best possible price for the goods or services.

Public Impact

The primary beneficiaries are the Department of Defense, which receives critical aircraft manufacturing services. The contract supports the production of specialized aircraft, likely for military operations and national security. The geographic impact is centered in Texas, where Raytheon Company's operations are located, potentially supporting local employment and the regional economy. Workforce implications include the employment of skilled labor in aircraft manufacturing, engineering, and related support roles within Raytheon.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to higher costs for taxpayers.
Sole-source awards can reduce transparency and accountability in the procurement process.
Limited opportunities for small businesses to participate in this significant defense contract.
Potential for contractor lock-in due to the specialized nature of aircraft manufacturing.

Positive Signals

Award to a large, established defense contractor like Raytheon suggests a high level of technical capability and experience.
Firm-fixed-price contract provides cost certainty for the government, assuming no significant scope changes.
The contract duration indicates a sustained commitment to a critical defense capability.

Sector Analysis

The aircraft manufacturing sector is a critical component of the defense industrial base, characterized by high barriers to entry, significant capital investment, and complex technological requirements. Major players like Raytheon Company are dominant in this space, often holding substantial government contracts. Spending in this sector is driven by national security needs, modernization programs, and the lifecycle support of existing fleets. Comparable spending benchmarks would involve analyzing other large-scale aircraft production or modification contracts awarded by the Department of Defense or other government agencies.

Small Business Impact

This contract was not set aside for small businesses, and the data indicates no small business participation (sb: false). As a sole-source award to a large prime contractor, it limits direct subcontracting opportunities for small businesses within this specific procurement. While Raytheon may have its own small business subcontracting program for other contracts, this particular award does not appear to contribute to the small business contracting goals.

Oversight & Accountability

Oversight for this Department of Defense contract would typically be managed by the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractors meet contractual requirements. Accountability measures are embedded in the firm-fixed-price structure, which holds the contractor responsible for delivering the specified aircraft within the agreed-upon cost. Transparency is limited due to the sole-source nature of the award, but contract award data is publicly available. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Department of Defense Aircraft Procurement
Defense Industrial Base Manufacturing
Raytheon Company Defense Contracts
Aircraft Production Contracts
Firm Fixed Price Defense Contracts

Risk Flags

Sole-source award limits price competition.
Lack of small business participation.
Long contract duration may increase risk of unforeseen issues.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $248.8 million to RAYTHEON COMPANY. FY 11 AND FY 12 MTS A PRODUCTION

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 $248.8 million.

What is the period of performance?

Start: 2011-09-29. End: 2014-09-30.

What specific types of aircraft are being manufactured under this contract, and what are their intended operational roles?

The provided data does not specify the exact types of aircraft being manufactured under this $248.8 million contract awarded to Raytheon Company. The North American Industry Classification System (NAICS) code 336411, 'Aircraft Manufacturing,' is broad and encompasses a wide range of aerial vehicles, from small drones to large military transport or combat aircraft. The intended operational roles would depend on the specific aircraft type, but given the Department of Defense as the agency, these are likely for military applications such as reconnaissance, combat, transport, or training. Further investigation into contract line item numbers (CLINs) or associated documentation would be necessary to identify the precise aircraft and their mission profiles.

How does the $248.8 million contract value compare to historical spending on similar aircraft manufacturing services by the Department of Defense?

Comparing the $248.8 million contract value to historical spending requires access to a broader dataset of Department of Defense aircraft manufacturing contracts. Without this comparative data, it's difficult to ascertain if this amount is high, low, or average for the period (FY11-FY14) and the type of aircraft produced. However, given that it's a sole-source award to a major defense contractor over a three-year period, the value suggests a significant procurement. Analyzing trends in defense spending on aircraft production, particularly for similar platforms or capabilities, would provide context. For instance, if the DoD historically procures similar aircraft through competitive bids at lower aggregate values, this sole-source contract might warrant closer scrutiny regarding its value for money.

What are the key performance indicators (KPIs) used to assess the successful delivery of aircraft under this contract?

The provided data does not detail the specific Key Performance Indicators (KPIs) for this contract. However, in aircraft manufacturing contracts, typical KPIs often include adherence to production schedules, meeting quality control standards (e.g., defect rates, material specifications), performance of the delivered aircraft against design specifications (e.g., speed, range, payload capacity), and successful completion of testing and acceptance trials. For a firm-fixed-price contract, meeting the defined specifications and delivery timelines within the agreed budget is paramount. The Defense Contract Management Agency (DCMA) would likely be involved in monitoring these aspects to ensure the contractor fulfills its obligations.

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

Raytheon Company, now part of RTX, has a long and extensive history of securing large defense contracts, including those for aircraft manufacturing and related systems. While this specific contract was sole-source, Raytheon frequently engages in both competitive and sole-source procurements across various defense domains. Their track record generally indicates a strong capability in delivering complex defense systems. However, the implications of sole-source awards, regardless of the contractor, often raise concerns about potential cost inefficiencies compared to competitive processes. Analyzing Raytheon's performance on other sole-source contracts, particularly those involving aircraft production, would provide a more comprehensive view of their performance in such scenarios.

Are there any identified risks associated with this contract, such as potential cost overruns, schedule delays, or performance deficiencies, given its sole-source nature?

The primary risk associated with this sole-source contract is the potential for higher costs due to the lack of competitive bidding, which can reduce the incentive for the contractor to offer the lowest possible price. Schedule delays and performance deficiencies are always risks in complex manufacturing projects, but the sole-source nature might mean less pressure to mitigate these risks aggressively compared to a competitive environment. Without specific performance data or identified issues, it's difficult to quantify these risks. However, the firm-fixed-price structure does place the cost risk primarily on the contractor, which can incentivize them to manage schedules and performance effectively to avoid losses.

Industry Classification

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

Product/Service Code: COMM/DETECT/COHERENT RADIATION

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 2501 W UNIVERSITY DR, MCKINNEY, TX, 75071

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

Financial Breakdown

Contract Ceiling: $252,729,499

Exercised Options: $252,729,499

Current Obligation: $248,826,075

Contract Characteristics

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA862011G4050

IDV Type: BOA

Timeline