Department of Defense awards $655M for armored vehicles, including 191 M1117s and 56 tool sets

Contract Overview

Contract Amount: $655,531,170 ($655.5M)

Contractor: Textron Systems Corp

Awarding Agency: Department of Defense

Start Date: 2009-07-16

End Date: 2017-09-30

Contract Duration: 2,998 days

Daily Burn Rate: $218.7K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 191 M1117'S, 38 M1200 KNIGHTS AND 56 TOOL SETS, AWARDED VIA A LETTER CONTRACT

Place of Performance

Location: NEW ORLEANS, ORLEANS County, LOUISIANA, 70129

State: Louisiana Government Spending

Plain-Language Summary

Department of Defense obligated $655.5 million to TEXTRON SYSTEMS CORP for work described as: 191 M1117'S, 38 M1200 KNIGHTS AND 56 TOOL SETS, AWARDED VIA A LETTER CONTRACT Key points: 1. Contract awarded via letter contract, indicating urgency or initial planning phase. 2. Significant quantity of armored vehicles and associated equipment procured. 3. Contract duration spans nearly 8 years, suggesting a long-term program. 4. FIRM FIXED PRICE contract type aims to control costs. 5. Sole source award raises questions about competition and potential cost efficiencies. 6. Awarded to Textron Systems Corp, a major defense contractor. 7. Geographic location of performance is Louisiana.

Value Assessment

Rating: fair

The total award of $655.5 million for armored vehicles and tool sets is substantial. Without specific unit costs or comparisons to similar procurements, a precise value-for-money assessment is difficult. The use of a letter contract suggests potential initial cost uncertainties. However, the firm fixed-price nature of the contract provides some cost control over the long term. Benchmarking against other armored vehicle procurements would be necessary for a more definitive value assessment.

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 among multiple vendors. This approach is typically used when only one source is capable of meeting the requirement, or in situations of urgent need. The lack of competition means that taxpayers did not benefit from the price discovery that typically occurs in a competitive bidding process, potentially leading to higher costs than if multiple bids were solicited.

Taxpayer Impact: The sole-source nature of this award means taxpayers may have paid a premium due to the absence of competitive pressure to lower prices.

Public Impact

Benefits the U.S. Army with enhanced armored vehicle capabilities. Provides critical equipment for military operations. Supports the defense industrial base, particularly in Louisiana. Impacts military personnel by equipping them with advanced protection and mobility.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potentially increases cost to taxpayers.
Letter contract award may indicate initial cost uncertainties or expedited requirements.
Long contract duration (nearly 8 years) could lead to cost overruns if not managed effectively.

Positive Signals

Firm Fixed Price contract type provides cost certainty for the majority of the contract period.
Procurement of essential military hardware supports national security objectives.
Award to an established defense contractor suggests a degree of reliability in delivery.

Sector Analysis

This contract falls within the 'Military Armored Vehicle, Tank, and Tank Component Manufacturing' sector, a specialized segment of the broader defense industrial base. The market for such specialized vehicles is typically dominated by a few large, experienced defense contractors. Spending in this sector is driven by national security needs and technological advancements in military hardware. Comparable spending benchmarks would involve analyzing other large-scale armored vehicle procurements by the U.S. military.

Small Business Impact

The contract data indicates that small business participation was not a stated requirement (ss: false, sb: false). As a sole-source award to a large prime contractor, there is a potential for limited subcontracting opportunities for small businesses unless specifically mandated or pursued by the prime. Further analysis would be needed to determine if Textron Systems Corp has a robust small business subcontracting plan in place for this contract.

Oversight & Accountability

The contract was awarded via a letter contract, which typically requires subsequent definitive contract actions and closer oversight. The firm fixed-price nature provides some cost control. Oversight would likely involve the Department of the Army's contracting officers and potentially the Defense Contract Management Agency (DCMA) to ensure performance and adherence to terms. Transparency may be limited due to the sole-source nature, but contract modifications and performance reports would be subject to standard government oversight.

Related Government Programs

Armored Vehicle Procurement
Military Equipment Manufacturing
Defense Contracts
Textron Systems Corp Contracts

Risk Flags

Sole-source award
Letter contract award

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $655.5 million to TEXTRON SYSTEMS CORP. 191 M1117'S, 38 M1200 KNIGHTS AND 56 TOOL SETS, AWARDED VIA A LETTER CONTRACT

Who is the contractor on this award?

The obligated recipient is TEXTRON SYSTEMS CORP.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Army).

What is the total obligated amount?

The obligated amount is $655.5 million.

What is the period of performance?

Start: 2009-07-16. End: 2017-09-30.

What is the historical spending pattern for Textron Systems Corp with the Department of Defense for similar armored vehicles?

Analyzing Textron Systems Corp's historical contract data with the Department of Defense reveals a consistent pattern of large-value awards for defense systems, including armored vehicles and related components. Prior to this $655 million award, Textron has secured numerous contracts for various military platforms. For instance, data may show previous awards for the M1117 Guardian Armored Reconnaissance Vehicle or other vehicle programs. Understanding the volume, value, and duration of these past contracts provides context for the current award, indicating Textron's established role as a key supplier. It also allows for comparison of pricing trends and performance history on similar, albeit potentially smaller or earlier, procurements, helping to assess whether the current contract represents a fair price and reasonable terms based on past dealings.

How does the per-unit cost of the M1117s and M1200 Knights compare to industry benchmarks or similar government procurements?

A detailed per-unit cost comparison for the M1117s and M1200 Knights is challenging without access to the specific contract line item details and the exact configuration of the 'tool sets.' However, historical data and industry reports suggest that armored vehicles of this class can range significantly in price, often from several hundred thousand dollars to over a million dollars per unit, depending on customization, technology, and survivability features. Given the $655 million total award for 191 M1117s, 38 M1200s, and 56 tool sets, the average cost per vehicle appears to be in the millions. Without direct benchmarking data for these specific configurations from recent, competitively awarded contracts, it's difficult to definitively state if this represents optimal value. The sole-source nature of this award further complicates direct price comparison.

What are the primary risks associated with awarding a contract of this magnitude via a letter contract?

Awarding a contract of this magnitude ($655 million) via a letter contract introduces several key risks. Firstly, letter contracts are typically used in urgent situations or when detailed specifications are not yet finalized, leading to potential cost uncertainties and scope creep. This can result in higher final costs than initially anticipated. Secondly, the lack of a fully defined scope at the outset increases the risk of performance issues or disputes between the government and the contractor. Thirdly, the initial funding provided under a letter contract might not fully cover the eventual cost, requiring subsequent modifications and potentially straining program budgets. Finally, the expedited nature of a letter contract award can sometimes bypass thorough vetting processes, increasing the risk of contractor performance issues or financial instability, although Textron Systems Corp is a well-established entity.

What is the expected impact of these armored vehicles on the U.S. Army's operational capabilities?

The procurement of 191 M1117 Armored Reconnaissance Vehicles and 38 M1200 Knight Armored Combat Systems, along with associated tool sets, is expected to significantly enhance the U.S. Army's operational capabilities. The M1117 provides advanced reconnaissance, security, and command and control functions, offering substantial protection against threats. The M1200 Knight is a versatile platform that can be configured for various roles, including fire support and troop transport. Together, these vehicles bolster the Army's ground maneuverability, survivability, and combat effectiveness, particularly in asymmetric warfare environments. The addition of these assets allows for improved force protection, enhanced situational awareness, and greater mission flexibility across diverse operational theaters.

Given the sole-source nature, what mechanisms are in place to ensure accountability and fair pricing post-award?

Even with a sole-source award, several mechanisms are in place to ensure accountability and fair pricing. The Department of Defense utilizes contracting officers who are responsible for overseeing contract performance and ensuring compliance with terms and conditions. For significant contracts, especially those awarded via letter contract, there is often increased scrutiny from program management and potentially oversight bodies like the Government Accountability Office (GAO) or the Inspector General. Price reasonableness is typically established through pre-negotiation objectives and post-award audits, even if competition wasn't present initially. The firm fixed-price (FFP) contract type itself provides a degree of cost control, as the contractor is obligated to complete the work for the agreed-upon price. Contract modifications require justification and approval, adding another layer of oversight.

Industry Classification

NAICS: Manufacturing › Other Transportation Equipment Manufacturing › Military Armored Vehicle, Tank, and Tank Component Manufacturing

Product/Service Code: MOTOR VEHICLES, CYCLES, TRAILERS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: W56HZV09R0449

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 19401 CHEF MENTEUR HWY, NEW ORLEANS, LA, 70129

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

Financial Breakdown

Contract Ceiling: $655,531,170

Exercised Options: $655,531,170

Current Obligation: $655,531,170

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline