DoD's Army Obligates $584M for 5.56mm Ammunition, Awarded Sole-Source to Alliant Techsystems
Contract Overview
Contract Amount: $584,249,511 ($584.2M)
Contractor: Alliant Techsystems Operations LLC
Awarding Agency: Department of Defense
Start Date: 2010-11-10
End Date: 2013-09-30
Contract Duration: 1,055 days
Daily Burn Rate: $553.8K/day
Competition Type: NOT COMPETED
Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT
Sector: Defense
Official Description: OBLIGATE FUNDING FOR THE IMPROVED 5.56MM COMMERCIAL PACK PHASE III (PROJECT EXECUTION PHASE).
Place of Performance
Location: INDEPENDENCE, JACKSON County, MISSOURI, 64056
State: Missouri Government Spending
Plain-Language Summary
Department of Defense obligated $584.2 million to ALLIANT TECHSYSTEMS OPERATIONS LLC for work described as: OBLIGATE FUNDING FOR THE IMPROVED 5.56MM COMMERCIAL PACK PHASE III (PROJECT EXECUTION PHASE). Key points: 1. Significant funding ($584M) allocated for ammunition procurement. 2. Sole-source award to Alliant Techsystems raises competition concerns. 3. Project execution phase indicates a mature, ongoing program. 4. Fixed Price with Economic Price Adjustment contract type carries inflation risk.
Value Assessment
Rating: questionable
The $584M obligation for ammunition is substantial. Without competitive bidding, it's difficult to assess if this price represents fair value compared to similar contracts or market rates for 5.56mm ammunition.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
The contract was not competed, indicating a sole-source award to Alliant Techsystems Operations LLC. This lack of competition limits price discovery and potentially leads to higher costs for taxpayers.
Taxpayer Impact: The sole-source nature of this large award means taxpayers may not be receiving the best possible price for this ammunition.
Public Impact
Ensures supply of critical 5.56mm ammunition for military operations. Potential for higher costs due to lack of competitive bidding. Supports a specific defense contractor, Alliant Techsystems Operations LLC. Long-term contract duration (1055 days) impacts budget predictability.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award
- Economic price adjustment clause
- Lack of competition
Positive Signals
- Addresses a critical defense need
- Clear project execution phase
Sector Analysis
This contract falls within the Defense sector, specifically Small Arms Ammunition Manufacturing. Spending benchmarks for ammunition procurement can vary widely based on quantity, specifications, and market conditions. The $584M obligation is a significant investment.
Small Business Impact
The data indicates this award went to Alliant Techsystems Operations LLC, a large business. There is no indication of small business participation in this specific contract award.
Oversight & Accountability
The sole-source nature of this award warrants scrutiny. Further oversight is needed to ensure the pricing is justified and that future procurements are competed whenever possible to maximize value.
Related Government Programs
- Small Arms Ammunition Manufacturing
- Department of Defense Contracting
- Department of the Army Programs
Risk Flags
- Sole-source award limits competition.
- Economic price adjustment clause introduces cost uncertainty.
- Lack of transparency regarding justification for sole-source.
- Potential for overpayment without competitive benchmarking.
Tags
small-arms-ammunition-manufacturing, department-of-defense, mo, delivery-order, 100m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $584.2 million to ALLIANT TECHSYSTEMS OPERATIONS LLC. OBLIGATE FUNDING FOR THE IMPROVED 5.56MM COMMERCIAL PACK PHASE III (PROJECT EXECUTION PHASE).
Who is the contractor on this award?
The obligated recipient is ALLIANT TECHSYSTEMS OPERATIONS LLC.
Which agency awarded this contract?
Awarding agency: Department of Defense (Department of the Army).
What is the total obligated amount?
The obligated amount is $584.2 million.
What is the period of performance?
Start: 2010-11-10. End: 2013-09-30.
What is the justification for the sole-source award, and what steps were taken to ensure fair and reasonable pricing without competition?
The justification for a sole-source award typically involves specific circumstances like unique capabilities, urgent needs, or lack of viable alternatives. Without further documentation, it's impossible to confirm the exact reason. However, the contracting agency should have conducted a price analysis to ensure the awarded price was fair and reasonable, even without competitive bids. This might involve comparing historical prices or using cost-plus methodologies.
What is the potential impact of the 'Economic Price Adjustment' clause on the final cost to taxpayers?
The Economic Price Adjustment (EPA) clause allows for adjustments to the contract price based on fluctuations in specific economic factors, such as labor or material costs. While intended to protect contractors from unforeseen cost increases, it shifts some of that risk to the government. This means the final cost to taxpayers could be higher than the initially obligated amount, especially in periods of high inflation or supply chain volatility.
How does this $584M obligation compare to historical spending on similar ammunition procurements by the Department of the Army?
Comparing this $584M obligation requires access to historical procurement data for 5.56mm ammunition. Factors like quantity, specific technical requirements, and market conditions at the time of award are crucial. Without this comparative data, it's difficult to definitively state whether this represents an increase or decrease in spending relative to past procurements. However, the scale of the obligation suggests a significant, ongoing demand.
Industry Classification
NAICS: Manufacturing › Other Fabricated Metal Product Manufacturing › Small Arms Ammunition Manufacturing
Product/Service Code: AMMUNITION AND EXPLOSIVES
Competition & Pricing
Extent Competed: NOT COMPETED
Solicitation Procedures: ONLY ONE SOURCE
Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT (K)
Evaluated Preference: NONE
Contractor Details
Parent Company: Northrop Grumman Corporation (UEI: 967356127)
Address: HWY 7 & 78 LAKE CITY ARMY AMUNITION PLANT, INDEPENDENCE, MO, 64056
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: $584,249,511
Exercised Options: $584,249,511
Current Obligation: $584,249,511
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: YES
Parent Contract
Parent Award PIID: W52P1J09D0027
IDV Type: IDC
Timeline
Start Date: 2010-11-10
Current End Date: 2013-09-30
Potential End Date: 2013-09-30 12:09:00
Last Modified: 2018-09-27
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