Raytheon Company awarded $24.6M delivery order for Abrams tank components, a sole-source acquisition

Contract Overview

Contract Amount: $24,584,152 ($24.6M)

Contractor: Raytheon Company

Awarding Agency: Department of Defense

Start Date: 2023-02-24

End Date: 2025-04-30

Contract Duration: 796 days

Daily Burn Rate: $30.9K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 15TH DELIVER ORDER FOR TACOM, ABRAMS, AND DLA.

Place of Performance

Location: MCKINNEY, COLLIN County, TEXAS, 75071

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $24.6 million to RAYTHEON COMPANY for work described as: 15TH DELIVER ORDER FOR TACOM, ABRAMS, AND DLA. Key points: 1. This contract represents a significant investment in armored vehicle sustainment. 2. The sole-source nature of this award warrants scrutiny regarding price reasonableness. 3. Performance risk appears moderate given the established nature of Abrams production. 4. This order falls within the broader defense sector's ongoing modernization efforts. 5. The award is concentrated within a single contractor, limiting broader market engagement.

Value Assessment

Rating: questionable

Benchmarking the value of this specific delivery order is challenging without detailed cost breakdowns. However, given the sole-source nature, there is a heightened risk of the government not achieving the best possible price. Comparing it to similar sole-source awards for specialized defense components would be necessary to assess if the pricing is within an acceptable range. The absence of competition inherently limits the government's ability to drive down costs through market forces.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award. This typically occurs when only one vendor possesses the necessary technical capabilities, proprietary knowledge, or when urgent needs preclude a competitive process. The lack of competition means that price discovery was not driven by market forces, potentially leading to higher costs for the government compared to a competed scenario.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive bidding. Without multiple offers, the government has less leverage to negotiate favorable pricing, potentially increasing the overall cost of defense procurement.

Public Impact

The U.S. Army benefits from the continued availability of critical components for Abrams main battle tanks. This contract ensures the sustainment and operational readiness of a key armored fighting vehicle. The primary geographic impact is within the defense supply chain, with potential downstream effects in Texas where the contractor operates. Workforce implications are likely concentrated within Raytheon's facilities involved in manufacturing these components.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source procurement limits opportunities for other businesses and potentially increases costs.
Lack of competition raises concerns about price reasonableness and value for taxpayer money.
Dependence on a single supplier for critical components can introduce supply chain risks.

Positive Signals

Ensures continued availability of essential parts for a critical defense asset.
Leverages the specialized expertise of an established defense contractor.
Supports the operational readiness of U.S. Army armored forces.

Sector Analysis

This contract falls within the "Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing" sector, specifically related to defense applications. The broader defense industrial base relies on specialized manufacturers like Raytheon for critical components. Spending in this area is often driven by national security priorities and the need to maintain aging but vital military platforms like the Abrams tank. Comparable spending benchmarks would involve analyzing other sole-source or limited-competition awards for similar high-value, specialized military hardware.

Small Business Impact

This contract does not appear to include a small business set-aside. As a sole-source award to a large prime contractor, there are limited direct opportunities for small businesses through this specific contract. However, Raytheon may engage small businesses as subcontractors, the extent of which is not detailed here. The impact on the small business ecosystem is indirect, depending on Raytheon's subcontracting practices.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Army and the Defense Contract Management Agency (DCMA). Accountability measures are inherent in the contract terms, including delivery schedules and quality specifications. Transparency is limited due to the sole-source nature and the proprietary information typically involved in defense manufacturing. Inspector General (IG) jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Abrams Main Battle Tank Sustainment Program
Department of Defense Ammunition Procurement
Tactical Wheeled Vehicle Contracts
Defense Logistics Agency (DLA) Support Contracts

Risk Flags

Sole-source award lacks competitive pricing pressure.
Potential for cost overruns due to lack of competition.
Supply chain dependency on a single contractor.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $24.6 million to RAYTHEON COMPANY. 15TH DELIVER ORDER FOR TACOM, ABRAMS, AND DLA.

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 $24.6 million.

What is the period of performance?

Start: 2023-02-24. End: 2025-04-30.

What is Raytheon Company's track record with similar sole-source defense contracts?

Raytheon Company, now RTX, has a long history of securing sole-source and limited-competition contracts with the Department of Defense across various platforms and systems. Their extensive experience in defense manufacturing, including components for armored vehicles, often positions them as a primary or sole provider for specialized equipment. Analyzing past sole-source awards to Raytheon for similar high-value components would reveal patterns in pricing, delivery performance, and any historical issues related to cost overruns or schedule delays. Publicly available contract data often shows a significant portion of their revenue derived from non-competitively awarded contracts, reflecting the specialized nature of their offerings and the government's reliance on established, high-capability suppliers in critical defense areas.

How does the $24.6 million value compare to previous awards for Abrams tank components?

Directly comparing this $24.6 million delivery order to previous awards for Abrams tank components requires access to historical contract data specific to the exact nature of the components being procured. Delivery orders under larger indefinite-delivery/indefinite-quantity (IDIQ) contracts can vary significantly in value. However, given the scale of the Abrams program and the ongoing sustainment needs, $24.6 million is a substantial but not necessarily outlier amount for specialized parts. To provide a precise comparison, one would need to identify prior delivery orders for the same or similar components (e.g., fire control systems, engine parts, armor plating) issued to Raytheon or other authorized suppliers under relevant contracts. Analyzing the frequency and value of such orders over the past 5-10 years would offer context on current spending trends for Abrams sustainment.

What are the primary risks associated with this sole-source contract?

The primary risks associated with this sole-source contract revolve around cost and supply chain. Without competition, there's a significant risk that the government is not achieving the most favorable pricing, potentially leading to cost overruns or inefficient use of taxpayer funds. The government has less leverage to negotiate price reductions. Furthermore, relying on a single supplier for critical components introduces supply chain vulnerability. Any disruption at Raytheon's facility, such as production issues, labor disputes, or unforeseen global events, could directly impact the availability of essential parts for the Abrams fleet, potentially affecting military readiness. Ensuring robust oversight and clear performance metrics becomes crucial to mitigate these risks.

How effective is the Department of the Army in ensuring value for money on sole-source awards like this?

The Department of the Army employs several mechanisms to ensure value for money on sole-source awards, though inherent challenges remain. These mechanisms include rigorous cost and price analysis, requiring contractors to submit detailed cost breakdowns and justifying their proposed prices. They also utilize should-cost and will-cost management techniques to scrutinize contractor estimates. Furthermore, the Army relies on technical experts to validate the necessity and scope of the procurement. However, the effectiveness can be limited by the availability of independent cost data, the complexity of the technology, and the urgency of the requirement, which can sometimes reduce negotiation leverage. The presence of Defense Contract Audit Agency (DCAA) audits and contract close-out reviews also serves as oversight.

What is the historical spending pattern for Abrams tank sustainment and modernization?

Historical spending on Abrams tank sustainment and modernization has been substantial and consistent, reflecting the platform's long service life and its central role in U.S. Army ground operations. Annual spending fluctuates based on modernization programs, upgrades, and routine maintenance requirements. Over the past decade, billions of dollars have been allocated towards keeping the Abrams fleet operational, including upgrades to its firepower, protection, and situational awareness systems. This includes funding for new production, remanufacturing of older tanks, spare parts, training, and contractor logistics support. The specific allocation for components like those in this delivery order fits within the broader sustainment budget, which is critical for maintaining combat readiness across numerous Army divisions.

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: $24,584,152

Exercised Options: $24,584,152

Current Obligation: $24,584,152

Subaward Activity

Number of Subawards: 14

Total Subaward Amount: $1,981,477

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