DoD's $1.9B Light Armored Vehicle Anti-Tank Modernization Program awarded to Raytheon Company

Contract Overview

Contract Amount: $191,971,800 ($192.0M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2012-04-16

End Date: 2019-10-30

Contract Duration: 2,753 days

Daily Burn Rate: $69.7K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: LIGHT ARMORED VEHICLE ANTI TANK MODERIZATION PROGRAM. PHASE I IS ENGINEERING MANUFACTURING AND DEVELOPMENT AND PHASE II IS PRODUCTION.

Place of Performance

Location: MCKINNEY, COLLIN County, TEXAS, 75071

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $192.0 million to RAYTHEON COMPANY for work described as: LIGHT ARMORED VEHICLE ANTI TANK MODERIZATION PROGRAM. PHASE I IS ENGINEERING MANUFACTURING AND DEVELOPMENT AND PHASE II IS PRODUCTION. Key points: 1. The contract spans Engineering, Manufacturing, and Development (EMD) and production phases. 2. Awarded under full and open competition, indicating a broad market search. 3. The contract type is Cost Plus Fixed Fee (CPFF), which can shift risk to the government. 4. The duration of 2753 days suggests a long-term, complex program. 5. The program is located in Texas, potentially impacting the local economy and workforce. 6. The North American Industry Classification System (NAICS) code 336992 points to specialized manufacturing capabilities.

Value Assessment

Rating: fair

The total award amount of approximately $1.92 billion for the Light Armored Vehicle Anti-Tank Modernization Program is substantial. Without specific benchmarks for similar modernization efforts or detailed cost breakdowns, assessing value-for-money is challenging. The Cost Plus Fixed Fee (CPFF) contract type, while common for R&D, can lead to cost overruns if not closely managed, as the contractor is reimbursed for costs plus a fixed fee. Benchmarking against other vehicle modernization programs or similar defense contracts would be necessary for a more definitive value assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, suggesting that the Department of the Army actively sought proposals from all responsible sources. The presence of two bidders indicates a competitive environment, though the specific details of the bidding process, such as the number of proposals received and their relative strengths, are not provided. A competitive process generally leads to better price discovery and potentially more innovative solutions.

Taxpayer Impact: Full and open competition is generally favorable for taxpayers as it aims to secure the best value through market forces, potentially driving down costs and improving quality.

Public Impact

The primary beneficiaries are the U.S. Army, receiving modernized anti-tank capabilities for its light armored vehicles. The program delivers enhanced firepower and survivability for ground forces. The geographic impact is concentrated in Texas, where the contractor is located. Workforce implications include specialized manufacturing and engineering jobs within the defense sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Fixed Fee (CPFF) contract type can incentivize contractor spending without direct cost savings.
Long contract duration (2753 days) increases the potential for scope creep and cost escalation.
Lack of detailed performance metrics makes it difficult to assess program effectiveness and efficiency.

Positive Signals

Awarded under full and open competition, suggesting a robust market search.
The program addresses a critical military need for anti-tank modernization.
The contractor, Raytheon Company, is a major defense contractor with significant experience.

Sector Analysis

The defense manufacturing sector is characterized by high R&D investment, long product development cycles, and significant government procurement. This contract falls within the military armored vehicle manufacturing sub-sector. The total U.S. federal spending on defense procurement is in the hundreds of billions annually, with specific programs like this representing targeted investments in technological advancement and force modernization. Comparable spending benchmarks would typically involve analyzing other major vehicle platform upgrades or weapon system development contracts.

Small Business Impact

The contract details do not indicate any specific small business set-asides or subcontracting plans. Given the nature and scale of this program, it is likely that Raytheon Company would engage various subcontractors, potentially including small businesses, for specialized components or services. However, without explicit subcontracting goals or reporting, the direct impact on the small business ecosystem remains unclear.

Oversight & Accountability

Oversight for this Department of Defense contract would typically involve the Defense Contract Management Agency (DCMA) for contract administration and performance monitoring. The Inspector General of the Department of Defense would have jurisdiction for audits and investigations into fraud, waste, or abuse. Transparency is generally maintained through contract awards databases and reporting requirements, though detailed program-specific oversight mechanisms are not explicitly stated in the provided data.

Related Government Programs

Light Armored Vehicle (LAV) Program
Army Combat Systems
Missile and Fire Control Systems
Defense Vehicle Modernization Programs

Risk Flags

Cost Plus Fixed Fee contract type carries inherent cost risk for the government.
Long contract duration increases potential for cost overruns and scope creep.
Lack of detailed performance metrics makes objective assessment of efficiency difficult.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $192.0 million to RAYTHEON COMPANY. LIGHT ARMORED VEHICLE ANTI TANK MODERIZATION PROGRAM. PHASE I IS ENGINEERING MANUFACTURING AND DEVELOPMENT AND PHASE II IS PRODUCTION.

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 $192.0 million.

What is the period of performance?

Start: 2012-04-16. End: 2019-10-30.

What is Raytheon Company's track record with similar large-scale defense manufacturing contracts?

Raytheon Company, now part of RTX Corporation, has a long and extensive history of managing and executing large-scale defense manufacturing contracts for the U.S. Department of Defense and allied nations. They are a prime contractor on numerous complex programs involving aircraft, missiles, sensors, and command and control systems. Their track record includes both successful program deliveries and instances of cost and schedule challenges, which are common in the defense industry due to the inherent complexity and evolving technological requirements. Specific to vehicle modernization, Raytheon has been involved in upgrading various platforms, though the specifics of their performance on programs directly comparable to the LAV Anti-Tank Modernization would require a deeper dive into historical contract data and performance reviews.

How does the Cost Plus Fixed Fee (CPFF) contract structure compare to other contract types for this type of program?

The Cost Plus Fixed Fee (CPFF) contract structure is often used for research and development (R&D) or complex projects where the scope and costs are not well-defined at the outset. In a CPFF contract, the contractor is reimbursed for all allowable costs incurred, plus a predetermined fixed fee representing profit. This structure shifts a significant portion of the cost risk to the government, as the contractor is incentivized to control costs to protect their fee, but the government bears the ultimate cost burden. Alternative contract types like Firm-Fixed-Price (FFP) would offer greater cost certainty to the government but are less suitable for R&D phases with uncertain outcomes. Cost-Plus-Incentive-Fee (CPIF) or Cost-Plus-Award-Fee (CPAF) contracts could offer better incentives for performance and cost control than pure CPFF, by linking a portion of the fee to achieving specific targets.

What are the primary risks associated with a long-duration defense contract like this?

Long-duration defense contracts, such as the 2753-day LAV Anti-Tank Modernization Program, carry several inherent risks. One major risk is 'scope creep,' where requirements evolve or expand beyond the original agreement, leading to increased costs and delays. Technological obsolescence is another concern; by the time production is complete, the technology may be outdated. Inflation and economic fluctuations can significantly impact the cost of materials and labor over such an extended period. Furthermore, contractor performance can degrade over time, or key personnel may leave, impacting program continuity. Political and budgetary shifts within the government can also lead to program re-prioritization or funding cuts, jeopardizing the contract's long-term viability.

What is the historical spending pattern for Light Armored Vehicle modernization programs within the Department of Defense?

Historical spending on Light Armored Vehicle (LAV) modernization within the Department of Defense (DoD) has been cyclical, often tied to strategic reviews, emerging threats, and the lifecycle of existing platforms. LAVs are versatile platforms, and modernization efforts typically focus on enhancing their lethality (e.g., improved armament, anti-tank capabilities), survivability (e.g., armor upgrades, mine protection), and situational awareness (e.g., advanced sensors, communication systems). Specific spending figures for LAV modernization vary year-to-year and by service branch. Programs like the one awarded to Raytheon represent significant, multi-year investments aimed at addressing specific capability gaps. Analyzing past budgets for similar LAV upgrades, such as those for the U.S. Marine Corps or Army variants, would reveal trends in investment levels and the types of upgrades prioritized.

How does the geographic location in Texas potentially influence program execution and costs?

The program's location in Texas, specifically the state code 'TX', can influence program execution and costs in several ways. Texas has a significant defense industrial base, offering access to a skilled workforce experienced in manufacturing and engineering, potentially reducing recruitment and training costs. Proximity to related supply chains and other defense contractors in the region could also streamline logistics and collaboration. However, labor costs in certain areas of Texas might be higher than in other regions. State and local incentives, tax structures, and infrastructure availability also play a role. The presence of a large, established defense contractor like Raytheon in Texas suggests a supportive ecosystem for such programs, but specific cost impacts would depend on the exact location within Texas and prevailing economic conditions.

Industry Classification

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

Product/Service Code: GUIDED MISSLES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 2

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: RTX Corp

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: $193,251,004

Exercised Options: $191,971,800

Current Obligation: $191,971,800

Actual Outlays: $98,174

Subaward Activity

Number of Subawards: 259

Total Subaward Amount: $383,543,549

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NOT OBTAINED - WAIVED

Timeline