Department of the Army awarded $462M for small caliber ammunition, with Alliant Techsystems Operations LLC as the primary contractor

Contract Overview

Contract Amount: $462,378,823 ($462.4M)

Contractor: Alliant Techsystems Operations LLC

Awarding Agency: Department of Defense

Start Date: 2006-10-31

End Date: 2011-03-31

Contract Duration: 1,612 days

Daily Burn Rate: $286.8K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: SMALL CALIBER AMMUNITION

Place of Performance

Location: INDEPENDENCE, JACKSON County, MISSOURI, 64051

State: Missouri Government Spending

Plain-Language Summary

Department of Defense obligated $462.4 million to ALLIANT TECHSYSTEMS OPERATIONS LLC for work described as: SMALL CALIBER AMMUNITION Key points: 1. The contract represents a significant investment in essential military supplies, ensuring readiness and operational capability. 2. Competition dynamics for this contract are crucial for ensuring fair pricing and optimal resource allocation. 3. Performance context suggests a need for reliable and consistent supply chains for defense operations. 4. The sector positioning highlights the critical role of ammunition manufacturing within the broader defense industrial base. 5. Risk indicators may include supply chain vulnerabilities, geopolitical influences on raw material costs, and technological obsolescence.

Value Assessment

Rating: good

Benchmarking the value of this contract requires comparing it against historical ammunition procurements and industry standards for similar caliber rounds. Given the firm fixed-price structure, the Army has a degree of cost certainty, but the overall value is contingent on the quality and timely delivery of the ammunition. Without specific per-unit cost data or comparisons to other contracts for the same or similar ammunition types, a precise value-for-money assessment is challenging. However, the scale of the award suggests a substantial quantity, implying a strategic procurement.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple bidders were likely considered. This approach is designed to foster a competitive environment, encouraging multiple companies to submit proposals. The presence of multiple bidders generally leads to better price discovery and potentially more favorable terms for the government. The specific number of bidders and the evaluation process would provide further insight into the intensity of the competition.

Taxpayer Impact: Full and open competition is beneficial for taxpayers as it drives down prices through market forces, ensuring that the government is not overpaying for essential goods like ammunition.

Public Impact

The primary beneficiaries are the U.S. Army personnel who rely on a consistent supply of small caliber ammunition for training and combat operations. The services delivered include the manufacturing and supply of various types of small caliber ammunition, critical for maintaining military readiness. The geographic impact is national, supporting defense logistics and potentially involving manufacturing facilities across the United States. Workforce implications include employment in defense manufacturing sectors, requiring skilled labor in production, quality control, and logistics.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for supply chain disruptions affecting timely delivery.
Fluctuations in raw material costs could impact long-term affordability.
Ensuring consistent quality control across large production runs is paramount.

Positive Signals

Awarded under full and open competition, suggesting competitive pricing.
Firm fixed-price contract provides cost certainty for the government.
Long-term contract duration indicates a strategic and sustained need for these supplies.

Sector Analysis

The defense sector, particularly the ammunition manufacturing sub-sector, is characterized by high capital investment, stringent quality control requirements, and significant government reliance. This contract fits within the broader defense industrial base strategy, aiming to ensure domestic production capabilities for critical munitions. Comparable spending benchmarks would involve analyzing other large-scale ammunition procurements by the Department of Defense and allied nations, considering factors like caliber, quantity, and specific technical requirements.

Small Business Impact

While the data indicates this contract was not specifically set aside for small businesses (ss: false, sb: false), large defense contracts often have subcontracting requirements. Alliant Techsystems Operations LLC, as a prime contractor, may engage small businesses for specialized components, services, or materials. The extent of small business participation would depend on the specific subcontracting plan negotiated. This can provide opportunities for small businesses to enter the defense supply chain, though direct set-asides are not indicated here.

Oversight & Accountability

Oversight for this contract would typically be managed by the Department of the Army's contracting and program management offices. Accountability measures are embedded in the firm fixed-price contract terms, requiring delivery of specified goods at an agreed-upon price. Transparency is generally maintained through contract award databases and reporting requirements. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse related to the contract.

Related Government Programs

Department of Defense Ammunition Procurement
Small Arms Ammunition Manufacturing
Defense Logistics Agency (DLA) Contracts
Military Readiness and Sustainment Programs

Risk Flags

Supply Chain Vulnerability
Raw Material Price Volatility
Long-Term Contract Risk
Quality Assurance Challenges at Scale

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $462.4 million to ALLIANT TECHSYSTEMS OPERATIONS LLC. SMALL CALIBER AMMUNITION

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 $462.4 million.

What is the period of performance?

Start: 2006-10-31. End: 2011-03-31.

What is the historical spending trend for small caliber ammunition by the Department of the Army over the last decade?

Analyzing the historical spending trend for small caliber ammunition by the Department of the Army over the last decade reveals a consistent and substantial investment. While specific figures fluctuate year-to-year based on operational tempo, global security concerns, and inventory management strategies, the overall demand remains high. Contracts of this magnitude, like the one awarded to Alliant Techsystems Operations LLC for over $462 million, are indicative of the ongoing need to replenish stocks and support training exercises. Factors such as the duration of conflicts, geopolitical tensions, and modernization efforts influence the annual procurement amounts. Examining data from sources like USAspending.gov or agency budget reports would provide a more granular view of these trends, highlighting periods of increased or decreased spending and the types of ammunition most frequently procured.

How does the awarded price per unit for this ammunition compare to market rates or similar government contracts?

Determining the precise per-unit cost for this contract is challenging without access to the detailed pricing structure within the awarded contract. The provided data indicates a total award of $462,378,822.87 for an unspecified quantity of small caliber ammunition. To compare this to market rates or similar government contracts, one would need to know the exact type and quantity of ammunition procured. Government contracts for ammunition can vary significantly based on caliber, manufacturer, specific technical requirements (e.g., tracer, armor-piercing), and the competitive landscape at the time of award. Industry benchmarks and historical government contract data for comparable ammunition types would be necessary for a thorough analysis. Without this granular data, any comparison remains speculative, though the 'full and open competition' suggests an effort to achieve competitive pricing.

What are the key performance indicators (KPIs) used to evaluate the contractor's performance on this ammunition supply contract?

Key performance indicators (KPIs) for a small caliber ammunition supply contract typically focus on ensuring the timely delivery of high-quality products that meet stringent military specifications. Common KPIs include On-Time Delivery Rate, which measures the percentage of orders delivered by the agreed-upon deadlines; Quality Acceptance Rate, assessing the proportion of ammunition that passes inspection and testing without defects; and Compliance with Specifications, ensuring that all delivered rounds meet the precise technical requirements outlined in the contract. Other potential KPIs might involve production capacity adherence, inventory management responsiveness, and adherence to safety and environmental regulations. The government would monitor these KPIs through regular reporting from the contractor and through government inspections and acceptance testing at delivery points.

What is the potential impact of geopolitical events on the supply chain and cost of this ammunition?

Geopolitical events can significantly impact the supply chain and cost of ammunition. The manufacturing of ammunition relies on various raw materials, including metals like copper, lead, and brass, as well as propellants and primers. Disruptions in the global supply of these materials, often exacerbated by international conflicts, trade disputes, or sanctions, can lead to shortages and price increases. For instance, if a major supplier of copper or a key chemical component for propellants is located in a region experiencing instability, it can directly affect the availability and cost for ammunition manufacturers. Furthermore, increased global demand for defense materials during times of heightened international tension can also drive up prices. The Department of Defense often mitigates these risks through long-term contracts, diversification of suppliers, and maintaining strategic stockpiles.

How does the duration of this contract (1612 days) influence the overall value and risk for the government?

The duration of this contract, approximately 1612 days (over 4 years), significantly influences its overall value and risk profile for the government. A longer duration provides greater certainty of supply for a critical item like small caliber ammunition, which is essential for sustained military operations and training. This extended period allows for better production planning and potentially economies of scale for the contractor, which could translate into more stable or even reduced per-unit costs over the contract's life compared to multiple shorter-term contracts. However, a longer duration also introduces risks, such as potential price escalation if raw material costs increase significantly over time (though mitigated by a firm fixed-price structure), the risk of technological obsolescence if new ammunition types emerge, and the contractor's financial stability over an extended period. The government's ability to lock in a supplier for a substantial period offers strategic advantages in readiness planning.

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Offers Received: 3

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Innovation Systems LLC (UEI: 618705925)

Address: HWY 7 & 78 LAKE CITY ARMY AMUNITION PLANT, INDEPENDENCE, MO, 05

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $462,378,823

Exercised Options: $462,378,823

Current Obligation: $462,378,823

Contract Characteristics

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: DAAA0999D0016

IDV Type: IDC

Timeline