Raytheon Company awarded $35.6M for Abrams tank components, a sole-source contract for critical defense systems

Contract Overview

Contract Amount: $35,567,754 ($35.6M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2021-12-22

End Date: 2024-01-31

Contract Duration: 770 days

Daily Burn Rate: $46.2K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: DELIVERY ORDER FOR CITV COMPONENTS TO ABRAMS

Place of Performance

Location: MCKINNEY, COLLIN County, TEXAS, 75071

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $35.6 million to RAYTHEON COMPANY for work described as: DELIVERY ORDER FOR CITV COMPONENTS TO ABRAMS Key points: 1. Contract awarded on a sole-source basis, limiting competitive price discovery. 2. Focus on critical components for Abrams tanks highlights strategic defense importance. 3. Delivery order structure suggests ongoing need for specific system parts. 4. Texas-based award may have implications for regional defense industrial base. 5. Firm fixed-price contract shifts cost risk to the contractor. 6. No small business set-aside indicates focus on specialized capabilities.

Value Assessment

Rating: fair

Benchmarking the value of this specific delivery order is challenging without comparable sole-source awards for Abrams components. The firm fixed-price nature provides cost certainty for the government, but the lack of competition raises concerns about whether the pricing reflects optimal value. Further analysis would require understanding the specific components and their market value, as well as Raytheon's cost structure for this specialized item.

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. This typically occurs when only one vendor possesses the necessary technical expertise, proprietary technology, or capability to fulfill the requirement. The lack of competition means the government did not benefit from multiple bids, which could have driven down prices through a competitive bidding process.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as there is no competitive pressure to ensure the lowest possible price. It also limits opportunities for other capable businesses to secure government contracts.

Public Impact

Benefits the U.S. Army's armored vehicle fleet readiness. Delivers essential components for the M1 Abrams main battle tank. Primarily impacts the defense industrial base, specifically in Texas. Supports specialized manufacturing jobs within Raytheon's operations.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may result in inflated pricing.
Sole-source nature limits opportunities for other suppliers.
Dependence on a single supplier for critical components poses a risk.

Positive Signals

Firm fixed-price contract provides cost certainty.
Award supports critical defense modernization efforts.
Contractor is a known entity with established defense capabilities.

Sector Analysis

This contract falls within the Defense Industrial Base sector, specifically focusing on the manufacturing of components for armored vehicles. The market for such specialized military hardware is often characterized by limited suppliers due to high barriers to entry, including technological expertise, security clearances, and established relationships with defense agencies. Spending in this area is driven by military modernization programs and readiness requirements.

Small Business Impact

The absence of a small business set-aside and the sole-source nature of this award indicate that the primary focus was on securing specialized capabilities from a large, established contractor. This contract does not appear to directly benefit small businesses through set-asides. However, Raytheon, as a prime contractor, may engage small businesses as subcontractors, though this is not explicitly detailed in the provided data.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Army's contracting and program management offices. The firm fixed-price nature provides some cost control, but the sole-source award necessitates careful monitoring of performance and delivery to ensure value. Inspector General investigations could be initiated if performance issues or potential fraud arise. Transparency is limited due to the non-competitive nature.

Related Government Programs

Abrams Tank Systems
Defense Component Manufacturing
Armored Vehicle Production
Military Hardware Procurement

Risk Flags

Sole-source award
Potential for cost overruns
Supply chain dependency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $35.6 million to RAYTHEON COMPANY. DELIVERY ORDER FOR CITV COMPONENTS TO ABRAMS

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 $35.6 million.

What is the period of performance?

Start: 2021-12-22. End: 2024-01-31.

What is the specific nature of the 'CITV components' being procured for the Abrams tank, and why are they considered sole-source?

CITV likely refers to the Commander's Independent Thermal Viewer, a critical component of the Abrams tank's fire control system that allows the commander to independently search for targets. These components often involve highly specialized technology, proprietary designs, or unique manufacturing processes that may only be available from a single source, such as Raytheon, which has a long history of developing and integrating advanced sensor systems for military platforms. The sole-source justification would typically detail the specific technological requirements or existing system integration that necessitates procurement from this particular contractor.

How does the $35.6 million award compare to historical spending on similar Abrams tank components, particularly from Raytheon?

Without access to historical spending databases for specific Abrams components, a direct comparison is difficult. However, $35.6 million for a delivery order suggests a significant quantity or high-value nature of the CITV components. Raytheon is a major defense contractor with extensive experience in producing systems for the Abrams. Annual spending on Abrams modernization and sustainment can run into hundreds of millions or even billions of dollars, encompassing various systems. This award represents a portion of that larger defense budget allocated to maintaining and upgrading the Abrams fleet.

What are the primary risks associated with a sole-source contract for critical defense components like CITV?

The primary risks associated with a sole-source contract include potential overpricing due to the lack of competitive bidding, reduced incentive for the contractor to innovate or improve efficiency, and a lack of supply chain resilience. If Raytheon faces production issues or supply chain disruptions, the U.S. Army's ability to procure these critical components could be severely hampered, impacting Abrams tank readiness. Furthermore, the government has less leverage to negotiate favorable terms compared to a competitive environment.

What performance metrics or oversight mechanisms are likely in place for this delivery order to ensure value and timely delivery?

For a firm fixed-price delivery order, oversight typically focuses on ensuring adherence to the contract's technical specifications, delivery schedule, and quality standards. Performance metrics might include on-time delivery rates, defect rates, and compliance with technical data packages. The Department of the Army's contracting officer and quality assurance representatives would monitor Raytheon's performance. While the price is fixed, the government would still ensure the delivered goods meet all contractual requirements. Any deviations could lead to contract modifications or disputes.

What is Raytheon's track record with the Department of Defense, particularly concerning Abrams tank systems and sole-source awards?

Raytheon Technologies (now RTX Corporation) has a long and extensive track record as a prime contractor for the Department of Defense, including significant contributions to the M1 Abrams program. They are known for producing advanced systems, including sensors, electronics, and weapon components. While they engage in competitive bidding for many contracts, sole-source awards are not uncommon for highly specialized or proprietary systems where they are the sole qualified provider. Their overall performance record with the DoD is generally considered strong, though like any large contractor, they have faced scrutiny on specific contracts regarding cost and delivery.

How does this contract fit into the broader context of U.S. Army modernization efforts for the Abrams tank?

This contract for CITV components is likely part of the ongoing modernization and sustainment efforts for the Abrams tank fleet. The U.S. Army continually invests in upgrading its platforms to maintain technological superiority and operational effectiveness. Enhancements to the fire control system, such as improved thermal imagers, are crucial for situational awareness and target acquisition in various combat environments. This award signifies the Army's commitment to ensuring its Abrams tanks are equipped with state-of-the-art technology to meet current and future threats.

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

Pricing Type: FIRM FIXED PRICE (J)

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

Financial Breakdown

Contract Ceiling: $35,567,754

Exercised Options: $35,567,754

Current Obligation: $35,567,754

Subaward Activity

Number of Subawards: 71

Total Subaward Amount: $12,684,905

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: W909MY19D0015

IDV Type: IDC

Timeline