Raytheon Company awarded $54.7M delivery order for TACOM and Abrams systems, a 14th order under existing contract

Contract Overview

Contract Amount: $54,739,943 ($54.7M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2023-01-05

End Date: 2027-01-31

Contract Duration: 1,487 days

Daily Burn Rate: $36.8K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 14TH DELIVERY ORDER FOR TACOM AND ABRAMS

Place of Performance

Location: MCKINNEY, COLLIN County, TEXAS, 75071

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $54.7 million to RAYTHEON COMPANY for work described as: 14TH DELIVERY ORDER FOR TACOM AND ABRAMS Key points: 1. This delivery order represents a significant portion of the total contract value, indicating continued reliance on Raytheon for these critical systems. 2. The firm-fixed-price contract type suggests that cost risks are primarily borne by the contractor, which can be beneficial for the government if managed effectively. 3. The absence of competition for this delivery order warrants scrutiny regarding potential price inflation and the justification for not seeking alternative solutions. 4. The contract's duration extends to January 2027, implying a long-term need for these systems and associated support. 5. The geographic location of performance in Texas may have implications for local economic impact and workforce development. 6. While specific performance metrics are not detailed, the repeated issuance of delivery orders suggests a level of satisfaction with the contractor's output.

Value Assessment

Rating: fair

This delivery order for $54.7 million is one of fourteen issued under a larger contract. Without knowing the total contract ceiling or the value of previous orders, it is difficult to assess its value for money comprehensively. However, the firm-fixed-price nature is generally favorable. Benchmarking against similar systems or previous orders would be necessary for a more precise value assessment. The lack of competition for this specific order raises concerns about whether the government is achieving the best possible price.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This delivery order was not competed, indicating it was likely awarded under a sole-source justification or as a follow-on to a previously competed contract where Raytheon was the incumbent. The lack of competition means that the government did not have the opportunity to solicit bids from multiple vendors, potentially limiting price discovery and innovation. The justification for this sole-source award would need to be examined to understand why full and open competition was not pursued.

Taxpayer Impact: The absence of competition for this delivery order means taxpayers may not be benefiting from the most competitive pricing available in the market. This could lead to higher overall costs for the government.

Public Impact

The Department of the Army benefits from the continued provision of critical systems for TACOM and Abrams platforms. This contract supports the operational readiness of military forces by ensuring the availability of essential equipment. The performance location in Texas may contribute to the local economy through employment and related business activities. The contract likely supports a specialized workforce within Raytheon and potentially its subcontractors involved in manufacturing, integration, and support.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition for this delivery order raises concerns about potential overpricing and missed opportunities for cost savings.
The long-term nature of the contract, with multiple delivery orders, suggests a potential for vendor lock-in if not managed carefully.
Without detailed performance metrics, it's challenging to fully assess the contractor's track record and the effectiveness of the delivered systems.

Positive Signals

The firm-fixed-price contract type shifts cost risk to the contractor, which can be advantageous for the government.
The issuance of multiple delivery orders indicates a sustained need for these systems and potentially a reliable supply chain.
The contract is associated with critical defense platforms (TACOM and Abrams), suggesting its importance to national security.

Sector Analysis

This contract falls within the 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' sector, specifically NAICS code 334511. This industry is characterized by high technological complexity and significant R&D investment. Spending in this sector often supports defense procurement, where specialized systems are crucial for military operations. Comparable spending benchmarks would typically involve analyzing other contracts for similar defense systems or components awarded to various manufacturers within this industrial classification.

Small Business Impact

The data indicates that small business participation (sb) is false and there is no indication of a small business set-aside (ss). This suggests that the contract was not specifically targeted towards small businesses. Consequently, the primary contractor, Raytheon Company, is likely a large business. There is no information provided regarding subcontracting plans or goals for small businesses on this specific delivery order, which could limit opportunities for the small business ecosystem.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and program management structures. Accountability measures are inherent in the firm-fixed-price contract type, which holds the contractor responsible for delivering specified goods or services at an agreed-upon price. Transparency regarding the justification for the sole-source award and detailed performance reports would be key to assessing oversight effectiveness. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

TACOM Combat Vehicle Programs
Abrams Main Battle Tank Sustainment
Defense Logistics Agency (DLA) Contracts
Naval Systems Contracts
Aerospace and Defense Manufacturing

Risk Flags

Sole-source award without clear justification
Potential for uncompetitive pricing
Lack of transparency on total contract value
Limited visibility into performance metrics

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $54.7 million to RAYTHEON COMPANY. 14TH DELIVERY ORDER FOR TACOM AND 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 $54.7 million.

What is the period of performance?

Start: 2023-01-05. End: 2027-01-31.

What is the total value of the contract under which this delivery order was issued, and how does this $54.7M order compare to the overall contract ceiling?

The provided data does not specify the total contract value or ceiling under which this 14th delivery order was issued. It only details the value of this specific order ($54,739,942.58) and notes it is the 14th delivery order. To assess its proportion, we would need the total contract value. If, for example, the total contract ceiling was $500 million, this order would represent approximately 11% of the total. Without this information, it's difficult to gauge the significance of this single order within the broader contractual relationship and its impact on the overall spending trajectory.

What specific systems or components are being procured under this delivery order for TACOM and Abrams?

The data indicates this is the 14th delivery order for 'TACOM and Abrams' systems and falls under NAICS code 334511 (Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing). While the specific systems are not itemized, this code suggests the order likely pertains to advanced electronic systems, sensors, navigation equipment, or guidance components crucial for the operation and enhancement of TACOM (Tank-Automotive and Armaments Command) vehicles and the Abrams Main Battle Tank. These could include targeting systems, communication arrays, electronic warfare suites, or advanced sensor packages.

What is the justification for awarding this delivery order on a sole-source basis, and were any efforts made to explore competitive alternatives?

The data explicitly states the contract type as 'NOT COMPETED,' indicating a sole-source award for this delivery order. The specific justification for this sole-source action is not provided in the data. Typically, sole-source awards are justified under specific circumstances, such as when only one responsible source can provide the required supplies or services, or in cases of urgent and compelling need. Without the official justification document (e.g., a Justification and Approval document), it's impossible to determine if competitive alternatives were explored or why they were deemed unsuitable. This lack of competition is a key area for scrutiny.

How does the pricing of this delivery order compare to previous orders or similar systems procured by the government?

The provided data does not include pricing details for previous delivery orders or comparable systems, making a direct price comparison impossible. We only have the value of this specific 14th delivery order ($54.7 million) and its firm-fixed-price nature. To benchmark this pricing, one would need access to historical contract data for this specific contract vehicle, including the value and scope of the previous 13 delivery orders, or data on similar systems procured competitively by the Department of Defense or other agencies. Without such comparative data, assessing whether this order represents good value for money is speculative.

What are the potential risks associated with a long-term contract involving multiple sole-source delivery orders for critical defense systems?

A significant risk associated with long-term contracts featuring multiple sole-source delivery orders is the potential for escalating costs due to a lack of competitive pressure. The government may overpay for goods and services if the contractor is not incentivized by competition to offer the lowest possible price. Another risk is vendor lock-in, where the government becomes overly reliant on a single supplier, making it difficult and costly to switch providers even if performance or pricing becomes unsatisfactory. Furthermore, sole-source awards can stifle innovation, as there is less incentive for the incumbent contractor to introduce cost-saving efficiencies or advanced technologies if their position is secure.

What is the expected performance period for this delivery order, and what are the implications of the end date (January 31, 2027)?

This delivery order has a specified performance period with a start date of January 5, 2023, and an end date of January 31, 2027. This indicates a duration of approximately four years for the delivery and performance of the contracted systems or services. The end date suggests that the government anticipates a need for these TACOM and Abrams-related systems or support through early 2027. This timeline is important for future budget planning and for initiating any necessary follow-on procurement actions or competitive processes well in advance of the expiration to ensure continuity of operations.

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: Rockwell Collins Australia PTY Limited

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: $54,739,943

Exercised Options: $54,739,943

Current Obligation: $54,739,943

Subaward Activity

Number of Subawards: 40

Total Subaward Amount: $7,939,466

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: W909MY19D0015

IDV Type: IDC

Timeline