DoD Awards Raytheon $33.2M for C-130 Transponder Production, Lacking Competition

Contract Overview

Contract Amount: $33,196,092 ($33.2M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2017-11-30

End Date: 2019-09-12

Contract Duration: 651 days

Daily Burn Rate: $51.0K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: C-130H&C-130J TRANSPONDER PRODUCTION BUY

Place of Performance

Location: ABERDEEN PROVING GROUND, HARFORD County, MARYLAND, 21005

State: Maryland Government Spending

Plain-Language Summary

Department of Defense obligated $33.2 million to RAYTHEON COMPANY for work described as: C-130H&C-130J TRANSPONDER PRODUCTION BUY Key points: 1. Significant award to a single large contractor, Raytheon Company. 2. Focus on critical C-130 aircraft components highlights defense sector reliance. 3. Lack of competition raises concerns about potential overpricing and value. 4. The contract's fixed-price nature aims to control costs, but without competition, its effectiveness is questionable.

Value Assessment

Rating: questionable

The contract value of $33.2 million for C-130H&C-130J transponder production is difficult to assess without competitive benchmarks. Given the sole-source nature, there's a risk that the pricing may not reflect the best possible value for taxpayers.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award. This significantly limits price discovery and potentially leads to higher costs compared to a competitive procurement process.

Taxpayer Impact: The lack of competition in this sole-source award means taxpayers may be paying a premium for these essential aircraft components.

Public Impact

Ensures continued operational readiness for the C-130 fleet, a vital asset for global logistics and support. Supports the defense industrial base by providing work for a major aerospace manufacturer. Potential for increased costs due to the absence of competitive bidding impacts overall defense spending efficiency.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competition and price discovery.
Potential for inflated pricing due to lack of competitive pressure.
No indication of small business participation.

Positive Signals

Addresses a critical need for C-130 aircraft components.
Firm Fixed Price contract type aims for cost certainty.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on avionics for the C-130 transport aircraft. Spending in this area is critical for maintaining military readiness, but often involves specialized components where competition can be limited.

Small Business Impact

The data indicates that small business participation was not a factor in this contract award (ss: false, sb: false). This suggests the prime contractor, Raytheon, is handling the entire scope of work, potentially missing opportunities to leverage small business capabilities.

Oversight & Accountability

The sole-source nature of this award warrants scrutiny. While necessary for specific capabilities, agencies should explore justifications for non-competitive awards and ensure fair and reasonable pricing is achieved through robust negotiation.

Related Government Programs

Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing
Department of Defense Contracting
Department of the Air Force Programs

Risk Flags

Sole-source award
Lack of price competition
Potential for cost overruns
No small business participation identified

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $33.2 million to RAYTHEON COMPANY. C-130H&C-130J TRANSPONDER PRODUCTION BUY

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 Air Force).

What is the total obligated amount?

The obligated amount is $33.2 million.

What is the period of performance?

Start: 2017-11-30. End: 2019-09-12.

What is the justification for awarding this contract on a sole-source basis, and what steps were taken to ensure the price was fair and reasonable?

The justification for a sole-source award typically stems from unique capabilities, proprietary technology, or urgent needs where only one source can fulfill the requirement. To ensure fair and reasonable pricing, the Department of Defense would likely conduct detailed cost analyses, review historical pricing, and potentially engage in extensive negotiations with Raytheon. However, without a competitive process, the inherent price discovery mechanism is absent, making robust internal review crucial.

How does the cost of these C-130 transponders compare to similar systems or previous procurements, especially considering the lack of competition?

Without competitive bids, a direct cost comparison is challenging. The absence of competition means there's no market-driven price point. The government relies on its negotiation power and cost analysis capabilities to determine fairness. If this contract's per-unit cost is significantly higher than previous sole-source awards or comparable systems from other manufacturers, it would indicate a potential value concern.

What is the long-term strategy for ensuring competitive sourcing for future C-130 component needs, or is this a perpetual sole-source requirement?

The long-term strategy is crucial for managing costs and fostering innovation. The Department of Defense should assess whether future transponder needs can be opened to competition, perhaps through market research for alternative suppliers or by encouraging new entrants. If this is a long-term, sole-source requirement, continuous oversight and negotiation are essential to mitigate risks associated with sustained non-competitive awards.

Industry Classification

NAICS: Manufacturing › Navigational, Measuring, Electromedical, and Control Instruments Manufacturing › Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing

Product/Service Code: COMM/DETECT/COHERENT RADIATION

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: FA862517R2006

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 6260 GUARDIAN GATEWAY, ABERDEEN PROVING GROUND, MD, 21005

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: $33,196,092

Exercised Options: $33,196,092

Current Obligation: $33,196,092

Subaward Activity

Number of Subawards: 16

Total Subaward Amount: $2,141,465

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline