DoD awards $41.6M for Abrams tank components, including 86 thermal receiver units and 86 CITVs

Contract Overview

Contract Amount: $41,625,832 ($41.6M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2013-11-29

End Date: 2015-10-31

Contract Duration: 701 days

Daily Burn Rate: $59.4K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: THIS IS A FORIEGN MILITARY SALES FOR THE PURCHASE OF LONG LEAD ITEM COMPONENTS IN THE ABRAMS TANK CONVERSION PROGRAM. THIS CONTRACT PURCHASES EIGHTY-SIX (86) THERMAL RECEIVER UNITS (TRU), EIGHTY-SIX (86) COMMANDER S INDEPENDENT THERMAL RECEIVERS (CITV), AND EIGHTY-FOUR (84) SERVO ELECTRONICS UNIT (SEU).

Place of Performance

Location: MCKINNEY, COLLIN County, TEXAS, 75071

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $41.6 million to RAYTHEON COMPANY for work described as: THIS IS A FORIEGN MILITARY SALES FOR THE PURCHASE OF LONG LEAD ITEM COMPONENTS IN THE ABRAMS TANK CONVERSION PROGRAM. THIS CONTRACT PURCHASES EIGHTY-SIX (86) THERMAL RECEIVER UNITS (TRU), EIGHTY-SIX (86) COMMANDER S INDEPENDENT THERMAL RECEIVERS (CITV), AND EIGHTY-FOUR (84) SERVO… Key points: 1. Contract focuses on long-lead components for Abrams tank conversion, ensuring future program readiness. 2. Procurement includes critical thermal receiver units and commander's independent thermal receivers. 3. The contract's firm-fixed-price structure aims to control costs for these specialized components. 4. Awarded to Raytheon Company, a significant defense contractor with established capabilities. 5. The duration of 701 days suggests a complex manufacturing and delivery process for the components. 6. This Foreign Military Sales contract highlights international defense cooperation and equipment modernization.

Value Assessment

Rating: good

The contract value of $41.6 million for 86 thermal receiver units, 86 commander's independent thermal receivers, and 84 servo electronics units appears reasonable given the specialized nature of military hardware. Benchmarking against similar advanced defense systems is challenging due to proprietary information and unique configurations. However, the firm-fixed-price nature of the contract suggests an effort to establish a clear cost baseline. The inclusion of long-lead items indicates a strategic approach to managing the production timeline for a larger program.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicated as 'NOT AVAILABLE FOR COMPETITION'. This suggests that Raytheon Company was likely the sole source capable of providing these specific, highly specialized components for the Abrams tank conversion program. Without a competitive bidding process, it is difficult to assess the full extent of price discovery and potential cost savings that might have been achieved through open competition.

Taxpayer Impact: For taxpayers, a sole-source award means there is less assurance that the government secured the best possible price. Oversight and robust negotiation are critical to ensure fair pricing in such instances.

Public Impact

The primary beneficiaries are the U.S. Army and potentially allied nations through Foreign Military Sales, receiving modernized Abrams tanks. Services delivered include the manufacturing and supply of critical electronic and thermal components essential for tank operation and targeting. The geographic impact is primarily within Texas, where Raytheon Company's facility is located, supporting local manufacturing and employment. Workforce implications include skilled labor in advanced manufacturing, electronics, and defense systems at the contractor's site.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition limits price transparency and potential savings for taxpayers.
Reliance on a single contractor for critical long-lead items could pose supply chain risks if not managed proactively.
Foreign Military Sales add complexity in terms of coordination, requirements alignment, and potential geopolitical considerations.

Positive Signals

Firm-fixed-price contract provides cost certainty for this specific procurement.
Award to an established defense contractor like Raytheon suggests a high likelihood of technical capability and quality.
Focus on long-lead items demonstrates strategic planning for a larger defense modernization program.

Sector Analysis

This contract falls within the Defense Industrial Base sector, specifically focusing on armored vehicle manufacturing and component production. The market for such specialized components is highly concentrated, often dominated by a few key defense contractors with the necessary expertise and security clearances. Spending in this area is driven by military modernization efforts, readiness requirements, and international partnerships. Comparable spending benchmarks are difficult to ascertain publicly due to the classified or proprietary nature of many defense systems and their components.

Small Business Impact

The data indicates this contract was not set aside for small businesses, nor does it explicitly mention subcontracting plans for small businesses. As a sole-source award to a large prime contractor, the direct impact on small businesses is likely minimal unless Raytheon Company voluntarily includes them in its supply chain. Further investigation into subcontracting reports would be needed to assess the broader impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Army's contracting and program management offices. Accountability measures are embedded in the firm-fixed-price contract terms, requiring delivery of specified components. Transparency is limited due to the sole-source nature and the defense sector context. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Abrams Tank Systems
Foreign Military Sales Program
Defense Manufacturing
Armored Vehicle Components
Thermal Imaging Systems

Risk Flags

Sole-source award
Long-lead item procurement
Foreign Military Sales complexity

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $41.6 million to RAYTHEON COMPANY. THIS IS A FORIEGN MILITARY SALES FOR THE PURCHASE OF LONG LEAD ITEM COMPONENTS IN THE ABRAMS TANK CONVERSION PROGRAM. THIS CONTRACT PURCHASES EIGHTY-SIX (86) THERMAL RECEIVER UNITS (TRU), EIGHTY-SIX (86) COMMANDER S INDEPENDENT THERMAL RECEIVERS (CITV), AND EIGHTY-FOUR (84) SERVO ELECTRONICS UNIT (SEU).

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 $41.6 million.

What is the period of performance?

Start: 2013-11-29. End: 2015-10-31.

What is Raytheon Company's track record with the Abrams tank program and similar defense contracts?

Raytheon Company, now RTX, has a long and established history as a major defense contractor, frequently involved in complex systems integration and component manufacturing for various military platforms, including armored vehicles. While specific details on their involvement with the Abrams tank program prior to this contract may be proprietary, their extensive experience in producing advanced electronics, sensors, and targeting systems for defense applications suggests a strong capability. They are known for delivering high-technology solutions across air, land, sea, space, and cyber domains. Their track record generally indicates a capacity to handle large, complex defense procurements, though performance can vary across individual contracts. Assessing specific past performance metrics would require access to detailed contract databases and performance reviews, which are often not publicly available.

How does the unit cost of the thermal receiver units and CITVs compare to market rates or similar government procurements?

Determining a precise per-unit cost comparison for these specialized military components is challenging due to several factors. The contract does not break down the total award by item type, making it difficult to isolate the cost per TRU, CITV, or SEU. Furthermore, these are highly specific, technologically advanced components for military use, not commercial off-the-shelf items. Their design, manufacturing processes, and stringent quality control requirements contribute to higher costs than comparable civilian technology. Without access to classified data or detailed breakdowns of similar sole-source procurements for the Abrams platform, a direct market rate comparison is not feasible. The 'NOT AVAILABLE FOR COMPETITION' status further complicates benchmarking, as competitive bids often drive prices closer to market realities.

What are the primary risks associated with this sole-source contract for long-lead item procurement?

The primary risks associated with this sole-source contract involve cost control and supply chain security. Since the contract was not competed, there's an inherent risk that the government may not have achieved the lowest possible price. The government's leverage in negotiating terms and pricing is reduced. Additionally, relying on a single supplier for critical long-lead components creates a vulnerability; any disruption in Raytheon's production, supply chain, or financial stability could significantly delay the Abrams tank conversion program. Managing these risks requires robust government oversight, clear performance metrics, and proactive communication with the contractor to ensure timely delivery and quality.

How effective is the firm-fixed-price (FFP) contract type in managing costs for these specialized components?

The firm-fixed-price (FFP) contract type is generally considered effective for managing costs when the scope of work is well-defined and the risks of cost overruns are relatively low or can be reasonably estimated. For specialized components like those in this contract, FFP provides cost certainty to the government, as the contractor assumes the risk of cost overruns. This incentivizes the contractor to control expenses efficiently. However, in sole-source situations, the initial price negotiated is crucial. If the baseline price is too high, the FFP structure locks in that higher cost. The effectiveness here hinges on the thoroughness of the initial price negotiation and the contractor's ability to meet the defined specifications within the agreed-upon budget.

What are the historical spending patterns for Abrams tank modernization components, and how does this contract fit?

Historical spending on Abrams tank modernization components has been substantial, reflecting the platform's long service life and continuous upgrade requirements. The U.S. Army consistently invests in upgrades to maintain the Abrams' combat effectiveness against evolving threats. This contract, valued at $41.6 million for long-lead items, represents a specific investment within a broader modernization effort. It fits into a pattern of procuring advanced subsystems, such as improved fire control, situational awareness (like the CITV), and power systems, necessary for keeping the tank relevant. While this single award is significant, it's likely one of many contracts supporting the overall Abrams upgrade program, which collectively represents billions of dollars in spending over the years.

Industry Classification

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

Product/Service Code: ENGINES AND TURBINES AND COMPONENT

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

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, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $41,625,832

Exercised Options: $41,625,832

Current Obligation: $41,625,832

Subaward Activity

Number of Subawards: 32

Total Subaward Amount: $17,120,025

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline