Department of the Army awards $98.7M for 132,073 155mm M795 rounds to American Ordnance LLC

Contract Overview

Contract Amount: $98,673,739 ($98.7M)

Contractor: American Ordnance LLC

Awarding Agency: Department of Defense

Start Date: 2008-10-02

End Date: 2020-12-31

Contract Duration: 4,473 days

Daily Burn Rate: $22.1K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: THIS ACQUISITION IS FOR 132,073 EACH 155MM M795.

Place of Performance

Location: MIDDLETOWN, DES MOINES County, IOWA, 52638

State: Iowa Government Spending

Plain-Language Summary

Department of Defense obligated $98.7 million to AMERICAN ORDNANCE LLC for work described as: THIS ACQUISITION IS FOR 132,073 EACH 155MM M795. Key points: 1. The contract represents a significant investment in artillery ammunition, crucial for military readiness. 2. American Ordnance LLC, a key defense contractor, secured this award through full and open competition. 3. The fixed-price nature of the contract shifts performance risk to the contractor. 4. The duration of the contract suggests a sustained need for these munitions. 5. This award falls within the broader category of Ammunition (except Small Arms) Manufacturing. 6. The contract's value is substantial, indicating a large-scale procurement.

Value Assessment

Rating: good

The total award of $98.7 million for 132,073 units of 155mm M795 ammunition translates to approximately $747 per round. Benchmarking this against historical data for similar artillery rounds is essential for a definitive value assessment. However, given the specialized nature of defense manufacturing and the quantities involved, this price point appears within a reasonable range for such a critical defense article. The firm fixed-price contract structure provides cost certainty for the government.

Cost Per Unit: $747 per round

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple capable sources were solicited and allowed to bid. The presence of two bids suggests a competitive environment, which typically drives better pricing and terms for the government. The specific number of bidders (2) is moderate, and further analysis would be needed to determine if this represented the full spectrum of potential suppliers.

Taxpayer Impact: Full and open competition generally benefits taxpayers by fostering a market that encourages competitive pricing and innovation, leading to potentially lower costs and higher quality goods and services.

Public Impact

The primary beneficiaries are the U.S. Army units requiring 155mm artillery capabilities for training and operational readiness. The contract ensures the supply of essential ammunition, directly supporting national defense objectives. The geographic impact is primarily within the United States, focusing on defense manufacturing and supply chains. This contract supports jobs within the defense manufacturing sector, specifically in ammunition production.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for price escalation in future contracts if competition diminishes.
Dependence on a single contractor for a critical munition could pose supply chain risks.
Long-term contract duration may not fully capture market price fluctuations.

Positive Signals

Awarded through full and open competition, indicating a healthy market.
Firm fixed-price contract provides cost predictability.
Contractor is a known entity in defense manufacturing, suggesting established capabilities.
Sufficient quantity procured to meet anticipated demand over the contract period.

Sector Analysis

The defense sector, particularly the segment focused on munitions manufacturing, is characterized by high barriers to entry due to specialized technology, stringent quality control, and significant capital investment. This contract for 155mm M795 rounds fits within the broader ammunition manufacturing market, which is a critical component of national security. Spending in this area is often driven by military modernization programs, operational tempo, and strategic stockpiling efforts. Comparable spending benchmarks would involve analyzing other large-scale artillery shell procurements by the DoD.

Small Business Impact

The data indicates that small business participation was not a primary focus for this specific award, as the 'sb' field is false. There is no explicit mention of small business set-asides or subcontracting plans within the provided data. This suggests that the prime contractor, American Ordnance LLC, is likely a large business, and the contract was not specifically targeted to encourage small business involvement. Further investigation into subcontracting opportunities would be necessary to assess the impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and program management structures. Accountability measures are embedded in the firm fixed-price contract terms, requiring the contractor to deliver conforming goods within the agreed-upon price. Transparency is facilitated through contract award databases like FPDS. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Artillery Ammunition Procurement
Department of Defense Munitions Contracts
155mm Howitzer Ammunition
Ordnance Manufacturing
Military Readiness Programs

Risk Flags

Potential supply chain vulnerability for critical components.
Long-term contract duration may not capture market efficiencies.
Dependence on a limited number of bidders for critical munitions.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $98.7 million to AMERICAN ORDNANCE LLC. THIS ACQUISITION IS FOR 132,073 EACH 155MM M795.

Who is the contractor on this award?

The obligated recipient is AMERICAN ORDNANCE 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 $98.7 million.

What is the period of performance?

Start: 2008-10-02. End: 2020-12-31.

What is the track record of American Ordnance LLC in fulfilling defense contracts, particularly for ammunition?

American Ordnance LLC has a significant history as a defense contractor, specializing in the production of munitions. As a key player in the defense industrial base, the company has been involved in manufacturing various types of ammunition for the U.S. military. Their track record typically includes fulfilling large-scale contracts for artillery shells, mortar rounds, and other ordnance. While specific performance metrics for every contract are not publicly detailed, their continued selection for substantial awards by agencies like the Department of the Army suggests a consistent ability to meet production requirements and quality standards. It is advisable to review contract performance reports and any publicly available CPARS (Contractor Performance Assessment Reporting System) data, if accessible, for a more granular understanding of their past performance.

How does the per-unit cost of $747 for the 155mm M795 compare to similar contracts or market rates?

The per-unit cost of approximately $747 for the 155mm M795 ammunition is a critical data point for value assessment. To benchmark this effectively, one would need to compare it against historical awards for the same or similar munitions, considering factors like contract date, quantity, and specific configuration. For instance, comparing it to other recent procurements of 155mm shells by the U.S. military or allied nations would provide context. Market rates can also be inferred from industry analyses and defense budget justifications. Without direct comparative data readily available in this summary, it's challenging to definitively label the price as high or low. However, the fact that it was awarded under full and open competition suggests that the price was deemed competitive among the bidders at the time of award.

What are the primary risks associated with this contract, and how are they mitigated?

The primary risks associated with this contract include potential supply chain disruptions, manufacturing quality issues, and cost overruns (though mitigated by the fixed-price structure). Supply chain risks could arise from the availability of raw materials or components essential for producing the M795 rounds. Manufacturing quality is paramount for munitions, and any deviation could render the shells ineffective or dangerous. The firm fixed-price (FFP) contract type is a key mitigation strategy, placing the financial risk of cost overruns on American Ordnance LLC. The government's mitigation efforts also include robust quality assurance and inspection processes throughout the manufacturing and delivery phases. Furthermore, the duration of the contract and the quantity awarded suggest a planned, sustained demand, which can help stabilize production and potentially reduce per-unit costs over time.

How effective is the 'full and open competition' strategy in ensuring value for taxpayer money in this specific ammunition procurement?

The 'full and open competition' strategy is generally considered highly effective in ensuring value for taxpayer money, especially for standardized or widely produced items like artillery ammunition. By allowing all responsible sources to submit bids, the government maximizes the pool of potential suppliers, thereby increasing the likelihood of receiving competitive pricing. In this case, with two bidders, the competition likely drove American Ordnance LLC to offer its most competitive price. This approach fosters a market dynamic where contractors are incentivized to be efficient and cost-conscious. While two bidders represent a degree of competition, a larger number of bidders would typically indicate even stronger price discovery and potentially greater savings for the government. The firm fixed-price nature further enhances value by capping the government's financial exposure.

What are the historical spending patterns for 155mm M795 ammunition or similar items by the Department of Defense?

Historical spending patterns for 155mm M795 ammunition and similar items by the Department of Defense (DoD) are typically characterized by cyclical demand influenced by operational tempo, geopolitical events, and modernization programs. The DoD consistently procures large quantities of artillery ammunition to maintain readiness and support ongoing military operations. Spending can fluctuate significantly year-over-year based on specific service requirements, end-of-life replacements for older munitions, and strategic decisions to increase or decrease stockpiles. Contracts for items like the M795 are often awarded through multi-year procurements or multiple delivery orders against a single contract, reflecting the sustained need. Analyzing historical data from sources like the Federal Procurement Data System (FPDS) would reveal trends in contract values, quantities, and pricing over time, highlighting periods of increased or decreased investment in this category.

Industry Classification

NAICS: Manufacturing › Other Fabricated Metal Product Manufacturing › Ammunition (except Small Arms) Manufacturing

Product/Service Code: AMMUNITION AND EXPLOSIVES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 2280 HIGHWAY 104 W STE 2, MILAN, TN, 38358

Business Categories: Category Business, Manufacturer of Goods, Not Designated a Small Business, Partnership or Limited Liability Partnership, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $98,673,739

Exercised Options: $98,673,739

Current Obligation: $98,673,739

Contract Characteristics

Consolidated Contract: Yes

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: W52P1J09D0001

IDV Type: IDC

Timeline