Raytheon Company awarded $119.6M for Abrams Series vehicle development, with a 5-year period of performance

Contract Overview

Contract Amount: $119,636,260 ($119.6M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2000-07-13

End Date: 2015-05-15

Contract Duration: 5,419 days

Daily Burn Rate: $22.1K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 5

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: 200010!1700!000442!F9999 !MARINE CORPS SYSTEMS COMMAND !M6785400C1060 !A!*!* !20000713!20020713!799855812!001339159!001339159!N!96214!RAYTHEON COMPANY !2501 W UNIVERSITY DRIVE M!MC KINNEY !TX!75070!45744!085!48!MCKINNEY !COLLIN !TEXAS !0001!+000001905000!N!N!000000000000!AC15!RDTE/AIRCRAFT-ENG/MANUF DEVELOP !A4A!COMBAT VEHICLES !2DJN!ABRAMS SERIES (M1/M1A1/M1A2) !9999!3!*!*!*!B!A!*!A !U!U!2!005!B!* !Z!N!Z!* !* !N!C!*!C!C!A!A!A!A!* !*!N!A!C!N!*!*!*!*!*!

Place of Performance

Location: MCKINNEY, COLLIN County, TEXAS, 75071

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $119.6 million to RAYTHEON COMPANY for work described as: 200010!1700!000442!F9999 !MARINE CORPS SYSTEMS COMMAND !M6785400C1060 !A!*!* !20000713!20020713!799855812!001339159!001339159!N!96214!RAYTHEON COMPANY !2501 W UNIVERSITY DRIVE M!MC KINNEY !TX!75070!45744!085!48!MCKINNEY !COL… Key points: 1. Contract awarded for research, development, testing, and evaluation (RDT&E) of combat vehicles. 2. Significant portion allocated to aircraft engine manufacturing and development, suggesting advanced technology integration. 3. Contract duration of over 5 years indicates a long-term commitment to program objectives. 4. Awarded under full and open competition, implying a competitive bidding process. 5. Cost-plus-fixed-fee contract type suggests potential for cost overruns but incentivizes completion. 6. Prime contractor is Raytheon Company, a major defense contractor with extensive experience.

Value Assessment

Rating: fair

The total award amount of $119.6 million for RDT&E of combat vehicles over a 5-year period appears reasonable given the complexity of defense systems. However, without specific benchmarks for Abrams series development or comparable RDT&E contracts, a precise value-for-money assessment is challenging. The cost-plus-fixed-fee structure introduces risk, as costs can escalate beyond initial estimates, though the fixed fee provides some contractor incentive. Further analysis would require comparing specific development milestones and deliverables against industry standards.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. The presence of 5 bids suggests a healthy level of competition for this defense development contract. A competitive process generally leads to better price discovery and potentially more innovative solutions as contractors vie for the award. The number of bidders is a positive indicator of market interest and the perceived value of the contract.

Taxpayer Impact: Taxpayers benefit from a competitive bidding process which typically drives down costs and ensures that the government receives the best possible value for its investment in defense research and development.

Public Impact

The primary beneficiaries are the U.S. Army and Marine Corps, who will receive advanced combat vehicle capabilities. Services delivered include research, development, testing, and evaluation for the Abrams series of vehicles. Geographic impact is primarily within Texas, where Raytheon Company's facility is located, potentially creating or sustaining jobs. Workforce implications include highly skilled engineers, technicians, and support staff involved in advanced defense manufacturing and R&D.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus-fixed-fee contract type can lead to cost overruns if not managed tightly.
Long contract duration (over 5 years) increases exposure to changing technological requirements and economic conditions.
Reliance on a single prime contractor for complex RDT&E may limit flexibility.
Specific details on RDT&E deliverables and success metrics are not provided, making performance assessment difficult.
Potential for scope creep in research and development phases without clear, fixed objectives.

Positive Signals

Awarded through full and open competition, indicating a robust bidding process.
Multiple bidders (5) suggest significant interest and a competitive market.
Prime contractor, Raytheon Company, has a strong track record in defense contracting.
Contract focuses on critical defense capabilities for armored vehicles.
Clear period of performance (over 5 years) provides a defined timeframe for development.

Sector Analysis

This contract falls within the Defense sector, specifically focusing on the development and manufacturing of combat vehicles. The market for defense R&D is characterized by high barriers to entry, significant government investment, and long product development cycles. Comparable spending benchmarks would typically involve other major defense acquisition programs for ground vehicles or advanced weapon systems, which often run into hundreds of millions or billions of dollars over their lifecycle.

Small Business Impact

There is no explicit indication of small business set-asides for this contract. Given the nature of advanced RDT&E for major defense systems, prime contractors like Raytheon often manage subcontracting opportunities. It is likely that smaller, specialized firms could be involved as subcontractors, contributing specific technologies or components. However, the direct impact on the small business ecosystem through set-asides appears limited based on the provided data.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Contract Management Agency (DCMA) and the relevant program executive office within the Department of Defense. Accountability measures would be tied to the achievement of RDT&E milestones outlined in the contract. Transparency is generally maintained through contract award databases and reporting requirements, though specific project details may be sensitive. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Abrams Main Battle Tank Modernization Programs
Combat Vehicle Research and Development
Armored Vehicle Systems Engineering
Defense R&D Contracts
Tactical Wheeled Vehicle Development

Risk Flags

Long contract duration may indicate potential for cost overruns or scope creep.
Cost-plus-fixed-fee structure requires diligent oversight to manage costs.
Classification suggests integration of aircraft engine technology, requiring specialized expertise.
Potential for technology obsolescence given the extended period of performance.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $119.6 million to RAYTHEON COMPANY. 200010!1700!000442!F9999 !MARINE CORPS SYSTEMS COMMAND !M6785400C1060 !A!*!* !20000713!20020713!799855812!001339159!001339159!N!96214!RAYTHEON COMPANY !2501 W UNIVERSITY DRIVE M!MC KINNEY !TX!75070!45744!085!48!MCKINNEY !COLLIN !TEXAS !0001!+000001905000!N!N!000000000000!AC15!RDTE/AIRCRAFT-ENG/MANUF DEVELOP !A4A!COMBAT VEHICLES !2DJN!ABRAMS SERIES (M1/M1A1/M1A2) !9999!3!*!*!*!B!A!*!A !U!U!

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 $119.6 million.

What is the period of performance?

Start: 2000-07-13. End: 2015-05-15.

What is Raytheon Company's track record with similar RDT&E contracts for combat vehicles?

Raytheon Company has a substantial track record in defense contracting, including significant work on advanced systems and platforms. While this specific contract focuses on the Abrams series, Raytheon's broader portfolio includes development and integration of complex electronic systems, sensors, and weapon platforms for various military applications. Their experience spans numerous RDT&E efforts across different defense domains. A detailed review of their past performance on similar-sized and technically complex contracts, particularly those involving ground combat systems or vehicle modernization, would be necessary to fully assess their capability and reliability for this specific award. Past performance evaluations and contract close-outs for related projects would provide crucial insights into their ability to meet cost, schedule, and technical requirements.

How does the $119.6 million award compare to other RDT&E contracts for combat vehicles?

The $119.6 million award for RDT&E of Abrams series vehicles falls within a moderate range for major defense development programs. Large-scale combat vehicle modernization or new platform development contracts can easily reach hundreds of millions or even billions of dollars over their lifecycle. For instance, programs involving entirely new vehicle designs or significant upgrades to existing fleets often involve substantial RDT&E phases. This particular award, with a 5-year performance period, suggests a focused effort on specific technological advancements or system integration rather than a complete platform overhaul. Benchmarking against similar RDT&E efforts for specific subsystems (e.g., advanced armor, fire control systems, engine upgrades) would provide a more granular comparison of value.

What are the primary risks associated with a Cost Plus Fixed Fee (CPFF) contract type for this RDT&E effort?

The primary risk with a Cost Plus Fixed Fee (CPFF) contract for Research, Development, Test, and Evaluation (RDT&E) is the potential for cost overruns. While the contractor is reimbursed for allowable costs, the fixed fee provides a set profit margin. If the actual costs significantly exceed estimates, the government bears the burden of these increased expenses. This can occur due to unforeseen technical challenges, scope creep, or inefficient performance. For RDT&E, where the technical path is often uncertain, CPFF contracts can incentivize contractors to control costs to protect their fee, but they also require robust government oversight to ensure costs are reasonable and allocable. The government's risk is primarily financial, while the contractor's risk is related to managing performance within the estimated cost structure to achieve their fixed fee.

What does the 'RDTE/AIRCRAFT-ENG/MANUF DEVELOP' classification imply for the contract's scope?

The classification 'RDTE/AIRCRAFT-ENG/MANUF DEVELOP' suggests that a significant portion of this contract's research, development, testing, and evaluation (RDT&E) effort is directed towards aircraft engine-related technologies and their manufacturing development, even though the ultimate application is for combat vehicles (Abrams series). This could imply the integration of advanced, potentially lighter or more powerful, engine systems derived from or adapted from aircraft technology into the Abrams platform. It might also indicate research into new manufacturing processes for these advanced engines or components. This classification highlights a focus on propulsion systems and their associated engineering and production aspects, suggesting a technological advancement in the vehicle's power unit.

How does the 5-bid competition level influence price discovery and taxpayer value?

A competition level of 5 bids for this contract is generally considered healthy and indicative of a reasonably competitive market. With multiple bidders submitting proposals, there is a greater likelihood that prices will be driven down towards a more efficient level, as contractors compete against each other. This process enhances price discovery, meaning the market effectively reveals a more accurate valuation for the required RDT&E services. For taxpayers, this translates to better value for money, as the government is more likely to secure services at a competitive rate rather than paying a premium that might occur in a less competitive environment. The presence of multiple offers allows the contracting agency to compare technical approaches and costs, selecting the best overall value.

What are the potential implications of the contract's end date (2015-05-15) given its start date (2000-07-13)?

The contract's start date of July 13, 2000, and end date of May 15, 2015, indicate a very long performance period of approximately 15 years. This extended duration is unusual for a single definitive contract award, suggesting it may have undergone numerous modifications, extensions, or task orders over its lifespan. Such a long period for RDT&E could imply a highly complex, evolving program where requirements changed significantly over time, or it could point to potential inefficiencies or a lack of clear program definition early on. For taxpayers, a prolonged RDT&E phase can increase overall program costs due to sustained overhead, potential for scope creep, and the risk of developing technology that becomes obsolete before deployment. It necessitates careful oversight to ensure continued relevance and value.

Industry Classification

NAICS: Manufacturing › Commercial and Service Industry Machinery Manufacturing › Optical Instrument and Lens Manufacturing

Product/Service Code: RESEARCH AND DEVELOPMENT › C – National Defense R&D Services

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Offers Received: 5

Pricing Type: COST PLUS FIXED FEE (U)

Contractor Details

Address: 2501 W UNIVERSITY DRIVE M, MC KINNEY, TX, 75070

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

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline