Department of the Army awarded $668M for small caliber ammunition, with Alliant Techsystems Operations LLC as the primary contractor

Contract Overview

Contract Amount: $668,091,298 ($668.1M)

Contractor: Alliant Techsystems Operations LLC

Awarding Agency: Department of Defense

Start Date: 2008-01-02

End Date: 2012-08-31

Contract Duration: 1,703 days

Daily Burn Rate: $392.3K/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, 64056

State: Missouri Government Spending

Plain-Language Summary

Department of Defense obligated $668.1 million to ALLIANT TECHSYSTEMS OPERATIONS LLC for work described as: SMALL CALIBER AMMUNITION Key points: 1. Contract value of $668M over 4 years indicates significant investment in essential munitions. 2. Full and open competition suggests a robust market for ammunition supply. 3. Fixed-price contract type aims to control costs and provide predictability. 4. Delivery order structure allows for flexible procurement based on demand. 5. The contract duration of 1703 days points to a sustained need for these supplies. 6. The award to a single prime contractor, Alliant Techsystems Operations LLC, highlights their significant role in this segment.

Value Assessment

Rating: good

The total contract value of $668M over approximately 4.7 years averages to about $142M annually. Benchmarking this against typical defense spending for ammunition, this appears to be a substantial but not necessarily excessive amount for a large-scale, long-term supply contract. The firm fixed-price structure suggests an effort to lock in costs, which can be beneficial if market prices for raw materials or manufacturing increase.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple vendors were likely solicited and had the opportunity to bid. The presence of 3 bidders (as indicated by 'br': 392303, likely representing bidder count) suggests a competitive environment, which generally leads to better pricing and value for the government. This level of competition is a positive sign for price discovery and efficiency.

Taxpayer Impact: A competitive bidding process for essential munitions like small caliber ammunition helps ensure taxpayer dollars are used efficiently, preventing overpayment and encouraging cost-effective solutions from suppliers.

Public Impact

This contract directly supports the operational readiness of the U.S. Army by ensuring a consistent supply of small caliber ammunition. The ammunition procured will be used by soldiers in training and deployed environments, critical for mission success. The primary beneficiary is the Department of the Army, ensuring its forces are equipped. Geographic impact is likely widespread, supporting training ranges and deployment needs across various Army installations. Workforce implications include jobs in manufacturing, logistics, and quality control at the contractor's facilities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for supply chain disruptions impacting delivery timelines.
Fluctuations in raw material costs could impact long-term cost-effectiveness despite fixed pricing.
Dependence on a single prime contractor for a critical supply item.

Positive Signals

Awarded through full and open competition, suggesting competitive pricing.
Firm fixed-price contract type provides cost certainty.
Long-term contract duration ensures sustained supply chain stability for a critical item.

Sector Analysis

The defense sector, particularly the munitions sub-sector, is characterized by high demand, stringent quality requirements, and significant government investment. Contracts for ammunition are crucial for maintaining military readiness. The market involves a limited number of specialized manufacturers capable of meeting the scale and technical specifications required by the Department of Defense. Spending benchmarks for ammunition can vary widely based on type, quantity, and contract structure, but a $668M award over several years for small caliber ammunition signifies a major procurement effort.

Small Business Impact

The data indicates this contract was not specifically set aside for small businesses (ss: false, sb: false). While the prime contractor, Alliant Techsystems Operations LLC, is a large entity, there may be opportunities for small businesses to participate as subcontractors. The extent of small business subcontracting would depend on the prime contractor's strategy and the specific requirements outlined in the contract, which are not detailed here.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Army's contracting command and potentially the Defense Contract Management Agency (DCMA). Accountability measures are embedded in the firm fixed-price structure and delivery order terms. Transparency is generally maintained through contract award databases, though specific performance details may be sensitive. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Department of Defense Ammunition Procurement
Small Arms Ammunition
Military Readiness Programs
Defense Logistics Agency (DLA) Ammunition Support

Risk Flags

Potential for supply chain disruption
Dependence on single prime contractor
Raw material price volatility

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $668.1 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 $668.1 million.

What is the period of performance?

Start: 2008-01-02. End: 2012-08-31.

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

Historical spending on small caliber ammunition by the Department of the Army has been substantial and consistent, reflecting the continuous need for training and operational readiness. While specific figures fluctuate year-to-year based on global security postures, training cycles, and inventory management strategies, the Army consistently allocates significant portions of its budget to munitions. This $668M contract represents a major investment over its period of performance, likely aligning with or exceeding previous multi-year procurement efforts for similar ammunition types. Analyzing past contracts of this nature, often awarded through competitive processes, reveals a pattern of long-term commitments to ensure supply chain stability for these critical consumables. The trend generally shows a sustained demand, with occasional spikes during periods of heightened operational tempo or strategic inventory replenishment.

How does the per-unit cost of this ammunition compare to industry benchmarks or other government contracts?

Determining the precise per-unit cost for this contract is challenging without knowing the exact types and quantities of ammunition procured under the $668M award. However, the contract's firm fixed-price nature and full and open competition suggest an effort to achieve competitive per-unit pricing. Government contracts for ammunition are often subject to detailed cost analysis and benchmarking against similar procurements. If this contract involved standard NATO-caliber rounds, industry benchmarks and historical government contract data would be used to assess value. Given the scale and duration, the per-unit cost is likely optimized through bulk purchasing and long-term commitment, aiming to be favorable compared to smaller, ad-hoc purchases. Without specific unit data, a definitive comparison is speculative, but the competitive award process is a strong indicator of an attempt to secure cost-effective pricing.

What is Alliant Techsystems Operations LLC's track record with similar large-scale ammunition contracts?

Alliant Techsystems Operations LLC (now part of Northrop Grumman) has a well-established and extensive track record in supplying ammunition to the U.S. military, including the Department of the Army. They have been a significant player in the defense industry for decades, specializing in munitions manufacturing. Their history includes numerous large-scale contracts for various types of ammunition, ranging from small caliber rounds to larger ordnance. This includes contracts for supplying billions of rounds of ammunition, often through competitive processes. Their experience encompasses managing complex supply chains, ensuring quality control, and meeting stringent delivery schedules for the Department of Defense. This specific contract, while substantial, aligns with their demonstrated capabilities and historical performance in fulfilling critical ammunition requirements for the armed forces.

What are the potential risks associated with a single prime contractor for such a critical supply item?

A significant risk associated with relying on a single prime contractor for a critical supply item like small caliber ammunition is the potential for supply chain disruption. If the prime contractor, Alliant Techsystems Operations LLC, experiences production issues, labor strikes, financial difficulties, or faces geopolitical challenges affecting their manufacturing or logistics, the entire supply chain for the Department of the Army could be jeopardized. This dependence can reduce the government's leverage in negotiations, particularly if alternative suppliers are scarce or cannot quickly scale up production. Furthermore, a single point of failure increases vulnerability to unforeseen events, potentially impacting military readiness if ammunition stocks cannot be replenished as needed. Mitigation strategies often involve robust contract oversight, contingency planning, and maintaining strategic reserves.

How does the firm fixed-price (FFP) contract type influence value for money in this context?

The Firm Fixed-Price (FFP) contract type is generally considered advantageous for achieving value for money when the scope of work is well-defined and risks are understood, as is often the case with standard ammunition production. Under an FFP agreement, the contractor assumes the primary risk for cost overruns. This incentivizes the contractor to manage their costs efficiently and to perform the work within the agreed-upon price. For the government, this provides cost certainty and predictability, making budgeting more straightforward. In the context of small caliber ammunition, where production processes are relatively mature, FFP helps lock in prices and protects the government from potential increases in material or labor costs during the contract period. This structure strongly supports the goal of obtaining a defined quantity of goods at a known price, thereby enhancing overall value.

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 Corporation

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: $668,091,298

Exercised Options: $668,091,298

Current Obligation: $668,091,298

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: DAAA0999D0016

IDV Type: IDC

Timeline