Army Awards $23.4M for 108M 5.56mm Cartridges, Cites Audit Findings for 5% Withhold
Contract Overview
Contract Amount: $235,990,479 ($236.0M)
Contractor: Alliant Techsystems Operations LLC
Awarding Agency: Department of Defense
Start Date: 2016-01-19
End Date: 2018-09-30
Contract Duration: 985 days
Daily Burn Rate: $239.6K/day
Competition Type: FULL AND OPEN COMPETITION
Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT
Sector: Defense
Official Description: (1) ESTABLISH DELIVERY ORDER 0004 FOR FISCAL YEAR 2016 PRODUCTION ORDERS. (2) AWARD 5.56MM FAMILY CARTRIDGES IN THE AMOUNT OF 107,979,440 EACH, AT A TOTAL PRICE OF $23,362,656.97. (3) PROVIDE PROGRESS PAYMENT INSTRUCTIONS TO INCLUDE A 5% WITHHOLD DUE TO CURRENT DCAA ACCOUNTING SYSTEM AUDIT FINDINGS AND PENDING CONTRACTOR CORRECTIVE ACTION AND FINAL RESOLUTION.
Place of Performance
Location: INDEPENDENCE, JACKSON County, MISSOURI, 64056
State: Missouri Government Spending
Plain-Language Summary
Department of Defense obligated $236.0 million to ALLIANT TECHSYSTEMS OPERATIONS LLC for work described as: (1) ESTABLISH DELIVERY ORDER 0004 FOR FISCAL YEAR 2016 PRODUCTION ORDERS. (2) AWARD 5.56MM FAMILY CARTRIDGES IN THE AMOUNT OF 107,979,440 EACH, AT A TOTAL PRICE OF $23,362,656.97. (3) PROVIDE PROGRESS PAYMENT INSTRUCTIONS TO INCLUDE A 5% WITHHOLD DUE TO CURRENT DCAA ACCOUNTING SY… Key points: 1. Significant quantity of ammunition procured for military readiness. 2. Competition method indicates a potentially competitive market for small arms ammunition. 3. Progress payment withhold highlights accounting system audit findings and corrective action needs. 4. Sector is critical for defense operations, with potential for ongoing demand.
Value Assessment
Rating: good
The price per unit is approximately $0.216. Benchmarking against similar contracts for bulk ammunition purchases is necessary to fully assess value, but this appears within a reasonable range for large-scale production.
Cost Per Unit: $0.216
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, suggesting a robust bidding process. This method generally promotes competitive pricing and ensures the government receives fair market value.
Taxpayer Impact: The procurement of essential ammunition at a competitive price supports military readiness without undue burden on taxpayers.
Public Impact
Ensures supply of critical ammunition for military operations. Potential for follow-on orders based on production and readiness needs. Highlights the importance of contractor financial system compliance. Supports domestic manufacturing capabilities for defense articles.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- DCAA accounting system audit findings
- Pending contractor corrective action
Positive Signals
- Full and open competition
- Large quantity procurement
Sector Analysis
The defense sector, particularly ammunition manufacturing, is characterized by specialized production and stringent quality requirements. Spending benchmarks for similar large-scale ammunition contracts would provide further context for this award.
Small Business Impact
The data indicates this contract was awarded to Alliant Techsystems Operations LLC, a large business. There is no specific indication of small business participation in this particular delivery order.
Oversight & Accountability
The inclusion of a 5% withhold due to DCAA audit findings suggests active oversight of the contractor's financial systems. This mechanism aims to ensure accountability and prompt resolution of identified issues.
Related Government Programs
- Small Arms Ammunition Manufacturing
- Department of Defense Contracting
- Department of the Army Programs
Risk Flags
- Contractor accounting system deficiencies
- Potential for payment delays
- Need for ongoing DCAA oversight
- Dependence on contractor's corrective action
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 $236.0 million to ALLIANT TECHSYSTEMS OPERATIONS LLC. (1) ESTABLISH DELIVERY ORDER 0004 FOR FISCAL YEAR 2016 PRODUCTION ORDERS. (2) AWARD 5.56MM FAMILY CARTRIDGES IN THE AMOUNT OF 107,979,440 EACH, AT A TOTAL PRICE OF $23,362,656.97. (3) PROVIDE PROGRESS PAYMENT INSTRUCTIONS TO INCLUDE A 5% WITHHOLD DUE TO CURRENT DCAA ACCOUNTING SYSTEM AUDIT FINDINGS AND PENDING CONTRACTOR CORRECTIVE ACTION AND FINAL RESOLUTION.
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 $236.0 million.
What is the period of performance?
Start: 2016-01-19. End: 2018-09-30.
What specific accounting system deficiencies were identified by DCAA, and what is the timeline for the contractor's corrective actions?
The specific deficiencies are not detailed in this award notice. However, the 5% withhold implies significant findings related to the contractor's accounting system's ability to comply with federal regulations. The timeline for corrective action is pending final resolution, suggesting ongoing engagement between the contractor and DCAA to address these issues before the full payment is released.
How does the unit price of $0.216 per 5.56mm cartridge compare to historical averages and current market rates for similar bulk procurements?
A comprehensive comparison requires access to historical contract data and current market intelligence for small arms ammunition. However, $0.216 per round is generally considered a competitive price for large-scale, fixed-price production orders of this nature, especially when factoring in manufacturing costs, quality control, and economic price adjustments. Further analysis against specific benchmarks is recommended.
What is the projected impact of the 5% payment withhold on the contractor's cash flow and ability to meet production timelines?
The 5% withhold, amounting to approximately $1.17 million on this $23.4 million order, could impact the contractor's immediate cash flow. However, given the large scale of the contract and the typical financial structures of major defense contractors, it is unlikely to critically jeopardize production timelines unless the underlying accounting issues are severe and prolonged. The contractor's ability to resolve these issues promptly is key.
Industry Classification
NAICS: Manufacturing › Other Fabricated Metal Product Manufacturing › Small Arms Ammunition Manufacturing
Product/Service Code: AMMUNITION AND EXPLOSIVES
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION
Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE
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: $235,990,479
Exercised Options: $235,990,479
Current Obligation: $235,990,479
Subaward Activity
Number of Subawards: 4
Total Subaward Amount: $394,378
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: W52P1J12D0078
IDV Type: IDC
Timeline
Start Date: 2016-01-19
Current End Date: 2018-09-30
Potential End Date: 2018-09-30 12:09:00
Last Modified: 2021-05-11
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