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Looks like Barrett is $8M richer
- Thread starter busykngt
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Richer is richer... helps keep employees with salaries and health insurance, some disposable income {hopefully}, possibly {probably} pays for new capital equipment (CNC machines), guy on the ‘back dock’ can now buy some new tires so his car can pass inspection, hard working single mom front office secretary can now provide a Christmas for her kids...
richer is richer...
richer is richer...
But you said they were $8 million dollars richer and that is just not true.
Not sure what the GP margin is or even what they will bring down to net, but it won’t be anywhere near $8 Million.
Yes, the contract will be good for them, otherwise they wouldn’t have put in a bid.
Depends on how you define richer. They’ll now immediately show an $8M backlog on the books. (And more, depending on how they account for the maintenance contract). Hardware deliveries through 2023.
But in your way of thinking (profit to the company), they’re still “richer” - even in net profit to the company. If it was a FFP (Firm Fixed Price) contract, as I expect it was, a typical profit margin on such a contract would still be in the 10% - 12% range and that’s pure profit (after G&A has covered all their allowable costs of doing business; utility bills and virtually all their other overhead costs). That would be $800K (minimum) in pure profit.
And if it was a CPFF contract - which I’m guessing it wasn’t since it’s mostly COTS hardware - their profit margin would have been negotiated more in the 15% - 18% range.
The maintenance contract was most likely an IDIQ contract and would have had most likely a CPIF (cost plus incentive fee) contract awarded which would easily put them up over a million dollars in pure net profit to the company. Richer is richer, no matter how you count the ‘greenbacks’.
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C_Hallbert
Color Commentator
‘Air Farce’ weapons contracts are measured in increments of Billions..... LOL
Sent from my iPhone using Tapatalk
Sent from my iPhone using Tapatalk
Depends on if you are confusing sales revenue with gross/net profit
It reminds me of someone who goes to the casino and loses $300 one day and then wins $300 the next day and claims says “I won $300 this weekend!”
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I'll bet the CEO did pretty well tho.
And another DoD contract* win for Barrett. This time in .300 PRC caliber (Hornsby). Good on them and good for Tennessee!
https://www.guns.com/news/2018/12/04/barrett-gets-u-s-military-contract-for-mrad-rifles-in-300-prc
ETA
Looks like details of this contract award are being a little more closely held by the military. The .50-cal win was through Solider Systems, Picatinny Arsenal. This contract is through SOCOM (MacDill AFB, Tampa). This one looks like a five year IDIQ contract with submittal of three evaluation units for either a ‘down select’ or sole source award. Contract value TBD - based on number of production units ordered. Quantity-based stepped pricing was required to be submitted.
https://www.guns.com/news/2018/12/04/barrett-gets-u-s-military-contract-for-mrad-rifles-in-300-prc
ETA
Looks like details of this contract award are being a little more closely held by the military. The .50-cal win was through Solider Systems, Picatinny Arsenal. This contract is through SOCOM (MacDill AFB, Tampa). This one looks like a five year IDIQ contract with submittal of three evaluation units for either a ‘down select’ or sole source award. Contract value TBD - based on number of production units ordered. Quantity-based stepped pricing was required to be submitted.
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Some good comments here, but lots of wild assumptions being made as well (to be fair - those assumptions seem based on experience; however, there still appears to be a huge helping of confirmation bias mixed in as well).
tl;dr - Good for them! Not enough info to draw any conclusions, but nobody's getting rich off an $8M manufacturing contract. Also, from what I understand, Barret is a stand-up company and solid 2A backer, including their "none-for-me; none-for-thee" policies. Lots of opportunity for them, will be interesting to see how they handle it.
longer version:
Figured I'd put out a few brief points to consider (in simplified form), for those who may be interested:
1. Based on the information present in the linked article(s) -for both contracts- there is absolutely no way to determine projected GP (gross profit) or Profit Margin (%) involved, and any guesses are just that; wild... Determining these would require reviewing the RFP documents (possibly available, but don't really feel like digging), and in any case, the projections would be different for each bidder/manufacturer (more on this below).
1.1 - Actual GP/PM details would not be available until after completion, but lots of factors in play here. In fact, the comparison of projected with actual GP/Profit Margin (including TCV/GP/NP breakouts, etc.) is a fantastic composite metric which can reveal volumes about a business.
1.2 - Just using the OP for example, article stated 5-year term, but didn't specify unit volume or costing model. Could be $8M for 100 units, or 100,000 - no way to tell from info given (or any details on required accessories, tuning, etc.)
1.3 - Similarly, that $8M could represent the capped full contract size excluding maintenance (article indicated fixed-cost), or could have any number of conditions allowing for supplemental modification (or early termimation) based on xyz, etc...
2. PM can be a difficult thing to pin down, and even harder to track against. It's often treated as a "fuzzy" number (at best), but is often far more quantifiable & targetable than is assumed. Also, without seeing the RFP, I would strongly wager that (unless this was single sourced) - while all bidders did the PM calculations as part of their price modeling and submissions, that was not how the contract was structured/awarded, and likely wasn't even shared in the bid process.
2.1 - All that being said, PM is all about predictability, cost efficiency, and waste reduction; e.g - A well managed company with their shit together, and an effective (educated) leadership & mature operations management (which doesn't happen organically) will often be able to do far more with far less, at a higher level of quality, than a suboptimally managed one, which is an enormous strategic advantage. It allows wiggle room to make more money, undercut competitors, innovation/R&D, whatever.... In other words, Profit Margin can be very high, very low, or anything in-between (to include non-existent), just depends on how smart one is about these things (this notwithstanding the occasional shady bastard doing shady shit...)
3. Finally, even with suboptimal efficiency and a slim profit margin, you can't discount the value inherent to & associated with any significant revenue stream. The simple existence of that revenue (assuming real; e.g. actual cashflow), can be a monumental asset to business growth, investment, etc...(and a topic far beyond the scope of this post).
tl;dr - Good for them! Not enough info to draw any conclusions, but nobody's getting rich off an $8M manufacturing contract. Also, from what I understand, Barret is a stand-up company and solid 2A backer, including their "none-for-me; none-for-thee" policies. Lots of opportunity for them, will be interesting to see how they handle it.
longer version:
Figured I'd put out a few brief points to consider (in simplified form), for those who may be interested:
1. Based on the information present in the linked article(s) -for both contracts- there is absolutely no way to determine projected GP (gross profit) or Profit Margin (%) involved, and any guesses are just that; wild... Determining these would require reviewing the RFP documents (possibly available, but don't really feel like digging), and in any case, the projections would be different for each bidder/manufacturer (more on this below).
1.1 - Actual GP/PM details would not be available until after completion, but lots of factors in play here. In fact, the comparison of projected with actual GP/Profit Margin (including TCV/GP/NP breakouts, etc.) is a fantastic composite metric which can reveal volumes about a business.
1.2 - Just using the OP for example, article stated 5-year term, but didn't specify unit volume or costing model. Could be $8M for 100 units, or 100,000 - no way to tell from info given (or any details on required accessories, tuning, etc.)
1.3 - Similarly, that $8M could represent the capped full contract size excluding maintenance (article indicated fixed-cost), or could have any number of conditions allowing for supplemental modification (or early termimation) based on xyz, etc...
2. PM can be a difficult thing to pin down, and even harder to track against. It's often treated as a "fuzzy" number (at best), but is often far more quantifiable & targetable than is assumed. Also, without seeing the RFP, I would strongly wager that (unless this was single sourced) - while all bidders did the PM calculations as part of their price modeling and submissions, that was not how the contract was structured/awarded, and likely wasn't even shared in the bid process.
2.1 - All that being said, PM is all about predictability, cost efficiency, and waste reduction; e.g - A well managed company with their shit together, and an effective (educated) leadership & mature operations management (which doesn't happen organically) will often be able to do far more with far less, at a higher level of quality, than a suboptimally managed one, which is an enormous strategic advantage. It allows wiggle room to make more money, undercut competitors, innovation/R&D, whatever.... In other words, Profit Margin can be very high, very low, or anything in-between (to include non-existent), just depends on how smart one is about these things (this notwithstanding the occasional shady bastard doing shady shit...)
3. Finally, even with suboptimal efficiency and a slim profit margin, you can't discount the value inherent to & associated with any significant revenue stream. The simple existence of that revenue (assuming real; e.g. actual cashflow), can be a monumental asset to business growth, investment, etc...(and a topic far beyond the scope of this post).
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Cyber Wolf, I don’t disagree with the points you made. I did look up the contract award types and they were as I was guessing. For the 50-cal purchase, the Army issued a FFP contract for the hardware acquisition and an IDIQ for the maintenance contract. The PMs I mentioned are typical targeted margins associated with those contract types (in my experience). And since the onus will be on Barrett to perform on said FFP contract, as you mentioned, the final and ultimate realized profit will be determined by how good a job they do on that contract. As far as I can tell, Barrett was the sole awardee for that contract.
The SOCOM .300PRC contract was a set aside for a ‘small business’ award and has both a FFP component and a cost-type award associated with the contract. IDIQ production hardware is to be quoted IAW range pricing they defined over a five year period. The three upfront “Product Samples” (their term in the RFP) are to be delivered for what is effectively a T&E. The early RFP said up to five awards could be made with ‘down selects’ to follow. As far as I can tell, Barrett was the sole awardee on this contract too. But as I said, SOCOM is being fairly tight-lipped about the final awarded contract. I note their range breaks were for mostly less than 200 units on this contract. So it undoubtedly will have a much smaller contract value than the .50-cal contract.
—
[Note] Information related to the SOCOM RFP/Contract/Award was gleaned from the open internet/web and not from any Confidential classified source. (Just to be clear).
The SOCOM .300PRC contract was a set aside for a ‘small business’ award and has both a FFP component and a cost-type award associated with the contract. IDIQ production hardware is to be quoted IAW range pricing they defined over a five year period. The three upfront “Product Samples” (their term in the RFP) are to be delivered for what is effectively a T&E. The early RFP said up to five awards could be made with ‘down selects’ to follow. As far as I can tell, Barrett was the sole awardee on this contract too. But as I said, SOCOM is being fairly tight-lipped about the final awarded contract. I note their range breaks were for mostly less than 200 units on this contract. So it undoubtedly will have a much smaller contract value than the .50-cal contract.
—
[Note] Information related to the SOCOM RFP/Contract/Award was gleaned from the open internet/web and not from any Confidential classified source. (Just to be clear).
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Wildcat Diva
TGT Addict
- Aug 26, 2016
- 3,040
- 96
Good grief, just go back and slightly reword the first post and title so it doesn’t set anybody off.
Just say, ‘contract is good news’. Or call it a ‘boon’ or something like that.
But then we will all have to argue over whether 8M coming in is a boon or not, by definition.
Just say, ‘contract is good news’. Or call it a ‘boon’ or something like that.
But then we will all have to argue over whether 8M coming in is a boon or not, by definition.
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