DoD awards $214.5M for small arms ammunition manufacturing, with a significant portion for fuses and primers

Contract Overview

Contract Amount: $214,480,149 ($214.5M)

Contractor: L3harris Fuzing and Ordnance Systems, Inc.

Awarding Agency: Department of Defense

Start Date: 2003-05-21

End Date: 2010-07-31

Contract Duration: 2,628 days

Daily Burn Rate: $81.6K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 200308!000710!2100!AE30 !TACOM - PICATINNY !DAAE3003C1121 !A!N! !N! !20030521!20090930!041603077!041603077!008898843!N!KDI PRECISION PRODUCTS, INC !3975 MCMANN ROAD !CINCINNATI !OH!45245!15000!061!39!CINCINNATI !HAMILTON !OHIO !+000018505947!N!N!000000000000!1390!FUSES AND PRIMERS !A6 !AMMUNITION !1000!NOT DISCERNABLE OR CLASSIFIED !332992!E! !3! ! ! ! ! !99990909!B! ! !B! !A!N!J!2!002!N!3A!A!N!A! ! !N!C!N! ! ! !A!A!A!A!000!A!C!N! ! ! ! ! ! !0001! !

Place of Performance

Location: CINCINNATI, CLERMONT County, OHIO, 45245

State: Ohio Government Spending

Plain-Language Summary

Department of Defense obligated $214.5 million to L3HARRIS FUZING AND ORDNANCE SYSTEMS, INC. for work described as: 200308!000710!2100!AE30 !TACOM - PICATINNY !DAAE3003C1121 !A!N! !N! !20030521!20090930!041603077!041603077!008898843!N!KDI PRECISION PRODUCTS, INC !3975 MCMANN ROAD !CINCINNATI !OH!45245!15000!061!39!CINCINNATI !HAMIL… Key points: 1. Contract value of $214.5M for ammunition manufacturing indicates substantial demand for related components. 2. The contract was awarded under full and open competition after exclusion of sources, suggesting a competitive process with specific criteria. 3. A long performance period of over 8 years (May 2003 - July 2010) suggests a need for sustained supply and potential for long-term contractor relationships. 4. The primary product service code (PSC) for Small Arms Ammunition Manufacturing (NAICS 332992) highlights a critical defense supply chain segment. 5. The contract's focus on fuses and primers points to specialized, high-reliability components essential for ordnance function. 6. The award to KDI Precision Products, Inc. represents a significant investment in a specific defense manufacturing capability.

Value Assessment

Rating: good

The total contract value of $214.5 million over approximately 8 years suggests a substantial but not necessarily excessive annual spend for critical defense components. Benchmarking against similar large-scale ammunition production contracts would be necessary for a precise value-for-money assessment. However, the firm fixed-price nature of the contract implies that the contractor bears the risk of cost overruns, which is generally favorable for the government.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under 'Full and Open Competition After Exclusion of Sources.' This indicates that while the competition was open, specific criteria or requirements may have led to the exclusion of certain potential bidders. The presence of two bidders (as indicated by 'no': 2) suggests a degree of competition, but the exact number of proposals received and the rationale for excluding other sources would provide a clearer picture of the competitive landscape and its impact on price discovery.

Taxpayer Impact: A competitive process, even with exclusions, generally benefits taxpayers by encouraging multiple firms to offer their best pricing and capabilities. The fact that there were at least two bidders suggests that the government received multiple offers, potentially leading to a more favorable price than a sole-source award.

Public Impact

The primary beneficiaries are the U.S. Department of Defense, specifically the Army, ensuring a supply of essential ammunition components. The contract delivers critical components (fuses and primers) for small arms ammunition, vital for military operations and readiness. The geographic impact is primarily within the United States, supporting domestic defense manufacturing capabilities. Workforce implications include job creation and maintenance within the defense manufacturing sector, particularly at KDI Precision Products, Inc. and its supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The 'exclusion of sources' in the competition type warrants further investigation to ensure no viable small businesses were unfairly excluded.
The long contract duration could potentially lead to complacency or reduced innovation if not actively managed.
Reliance on a single primary contractor for such critical components could pose a supply chain risk if that contractor faces disruptions.

Positive Signals

The use of 'Full and Open Competition' indicates an effort to leverage market forces for the best value.
The firm fixed-price contract structure shifts cost risk to the contractor, which is a positive indicator for government cost control.
The award to a specific company suggests a successful vetting process for capability and reliability in producing specialized ordnance components.

Sector Analysis

This contract falls within the broader defense manufacturing sector, specifically focusing on ammunition and ordnance components. The market for such specialized defense goods is often characterized by a limited number of highly qualified suppliers due to stringent quality and security requirements. Comparable spending benchmarks would involve analyzing other large-scale contracts for ammunition, explosives, and related components awarded by the Department of Defense or allied nations.

Small Business Impact

The data indicates this contract was not specifically set aside for small businesses ('sb': false). Given the substantial value and specialized nature of ammunition manufacturing, it is unlikely that small businesses would be the primary awardees without specific subcontracting requirements. Further analysis would be needed to determine if KDI Precision Products, Inc. has a robust subcontracting plan that includes opportunities for small businesses within its supply chain.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Army's contracting and program management offices. Accountability measures are inherent in the firm fixed-price contract, requiring delivery of specified goods. Transparency is generally maintained through contract award databases like FPDS, though specific performance details and quality assurance reports may be less publicly accessible due to national security considerations. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Department of Defense Ammunition Procurement
Ordnance Component Manufacturing
Small Arms Ammunition Production
Defense Industrial Base Support
Tactical Ammunition Contracts

Risk Flags

Potential for limited competition due to 'exclusion of sources'
Risk of technological obsolescence over the long contract duration
Supply chain vulnerability if contractor faces disruptions
Need for ongoing oversight to ensure sustained performance and quality

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $214.5 million to L3HARRIS FUZING AND ORDNANCE SYSTEMS, INC.. 200308!000710!2100!AE30 !TACOM - PICATINNY !DAAE3003C1121 !A!N! !N! !20030521!20090930!041603077!041603077!008898843!N!KDI PRECISION PRODUCTS, INC !3975 MCMANN ROAD !CINCINNATI !OH!45245!15000!061!39!CINCINNATI !HAMILTON !OHIO !+000018505947!N!N!000000000000!1390!FUSES AND PRIMERS !A6 !AMMUNITION !1000!NOT DISCERNABLE OR CLASSIFIED !332992!E! !3! ! ! ! ! !99990909!B

Who is the contractor on this award?

The obligated recipient is L3HARRIS FUZING AND ORDNANCE SYSTEMS, INC..

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Army).

What is the total obligated amount?

The obligated amount is $214.5 million.

What is the period of performance?

Start: 2003-05-21. End: 2010-07-31.

What is the historical spending pattern for fuses and primers by the Department of the Army?

Analyzing historical spending patterns for fuses and primers by the Department of the Army would involve reviewing contract awards over several fiscal years. This would require querying databases like FPDS-NG or SAM.gov for contracts with relevant Product Service Codes (PSCs) or North American Industry Classification System (NAICS) codes related to ammunition components. The goal would be to identify trends in contract values, awardees, and contract types to understand the typical investment in these critical items. For instance, a consistent high level of spending might indicate ongoing operational needs or a strategic effort to build inventory. Conversely, fluctuating spending could suggest shifts in procurement strategies, budget allocations, or operational tempo. Understanding these patterns provides context for the $214.5 million award, helping to determine if it represents a typical, increased, or decreased level of investment for this category of defense materiel.

How does the price per unit for fuses and primers in this contract compare to market rates or similar government contracts?

Determining the price per unit for fuses and primers within this $214.5 million contract requires access to detailed line-item data, which is often not publicly available in summary award information. If such data were accessible, a comparison could be made against industry benchmarks for similar components or against prices paid under other government contracts for comparable items. Factors influencing price include material costs, manufacturing complexity, quality assurance requirements, and volume discounts. A higher-than-market price could indicate unique specifications, limited competition, or potential inefficiencies. Conversely, a lower price might suggest strong negotiation, economies of scale, or efficient production processes. Without specific unit cost data, a precise benchmark is not feasible, but the overall contract value provides a scale for the procurement.

What is the track record of KDI Precision Products, Inc. in fulfilling defense contracts, particularly for ammunition components?

KDI Precision Products, Inc. has a history of receiving defense contracts, as evidenced by this significant award. To assess their track record, one would need to examine past contract performance data, including on-time delivery rates, quality compliance, and any instances of contract disputes or terminations. Information on their experience with fuses, primers, and other ammunition components would be crucial. A review of past performance evaluations, if publicly accessible, could provide insights into their reliability and capability. A strong track record with similar components suggests a lower risk for this contract, while a history of issues might raise concerns about potential performance problems or delays. Their longevity in the defense sector also implies a degree of established capability and government trust.

What are the potential risks associated with the long duration of this contract (May 2003 - July 2010)?

The extended duration of this contract, spanning over eight years, presents several potential risks. Firstly, there's the risk of price escalation if the contract terms do not adequately account for inflation or fluctuations in raw material costs, although the firm fixed-price nature mitigates this to some extent. Secondly, technological obsolescence is a concern; over such a long period, advancements in ammunition technology could render the contracted components less effective or outdated. Thirdly, contractor performance can degrade over time due to complacency or changes in management and workforce. Finally, a prolonged contract can reduce flexibility for the government to adapt to changing strategic needs or to incorporate newer, potentially superior technologies that emerge during the contract period. Active contract management and oversight are crucial to mitigate these risks.

How does the competition level ('Full and Open Competition After Exclusion of Sources') impact the overall value for taxpayers?

The competition level, described as 'Full and Open Competition After Exclusion of Sources,' suggests a process that aimed for broad participation but ultimately narrowed the field based on specific criteria. While 'Full and Open' generally implies a competitive environment beneficial to taxpayers, the 'exclusion of sources' element requires scrutiny. If the exclusions were based on legitimate, objective criteria related to capability, security, or specific technical requirements, then the competition likely still yielded competitive pricing. However, if the exclusions were arbitrary or overly restrictive, it could limit the number of bidders, potentially leading to less aggressive pricing. The fact that there were two bidders indicates some level of competition, but understanding the rationale behind the exclusions is key to fully assessing the impact on taxpayer value. A more robust competition with more bidders would typically be expected to drive prices down further.

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 AFTER EXCLUSION OF SOURCES

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Contractor Details

Parent Company: L-3 Communications Holdings, Inc. (UEI: 008898843)

Address: 3975 MCMANN ROAD, CINCINNATI, OH, 90

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Cost or Pricing Data: NO

Timeline