Pentagon Awards $21 Billion In New Contracts

In the biggest day of contract awards in months, the U.S. Department of Defense awarded an astounding $21.1 billion in new defense contracts Tuesday — the bulk of which were contained in one single deal. However, the $20.9 billion was very short on detail. Here is what we do know.

In total, 25 separate companies will be involved in this multi-party, indefinite delivery, and indefinite quantity contract. These include some of the biggest names in defense contracting, including Cubic Corp (NYSE: CUB), Raytheon (NYSE: RTN), Textron (NYSE: TXT), Boeing, Northrop Grumman, and CSC (plus a handful of federally defined “small businesses”).

That $20.9 billion is the “ceiling value” on all task orders to be awarded, and these 25 companies will bid against each other to perform them. Companies not on the Pentagon list will not be permitted to bid, and as for those that did make the list, no single company is guaranteed to receive more than $1,000 under this agreement, though they are likely to make much more.

The contract covers the U.S. Air Force Training Systems Acquisition III project. The companies will perform “analysis, design, development, production, installation, integration, test, and sustainment for Air Force training systems encompassing complex aircrew, maintenance, and system-specific training systems in support of warfighter training at operating locations worldwide.”

As you can see, the range of task orders that may be necessary is very wide as is the time span. The Air Force expects the term of this contract to stretch for 10 years, only to wrap up in August 2025.