Army awards $129.5M contract for miscellaneous ammunition, with a significant portion going to a single supplier

Contract Overview

Contract Amount: $129,472,322 ($129.5M)

Contractor: American Ordnance LLC

Awarding Agency: Department of Defense

Start Date: 1997-04-25

End Date: 2010-03-31

Contract Duration: 4,723 days

Daily Burn Rate: $27.4K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 199712!2100!0851!AE30 !U.S. ARMY ARMAMENT RD&E CENTER !DAAE3097C1045 !A!*!* !19970425!19990930!063956270!807850516!001381284!N!04939!GENERAL DYNAMICS ORDNANCE SYST!2280 HIGHWAY 104 W STE 2 !MILAN !TN!38358!10675!007!50!BURLINGTON !CHITTENDEN !VERMONT !0001!+000028246294!N!N!000000000000!1395!MISCELLANEOUS AMMUNITION !A6 !AMMUNITION !1000!NOT DISCERNABLE OR CLASSIFIED !8731!3!*!*!*!B!A!*!D !U!J!1!001!N!1G!A!Y!A!* !* !N!C!*!A!A!A!A!A!*!* !*!N!A!C!N!*!*!*!*!*!

Place of Performance

Location: PICATINNY ARSENAL, MORRIS County, NEW JERSEY, 07806

State: New Jersey Government Spending

Plain-Language Summary

Department of Defense obligated $129.5 million to AMERICAN ORDNANCE LLC for work described as: 199712!2100!0851!AE30 !U.S. ARMY ARMAMENT RD&E CENTER !DAAE3097C1045 !A!*!* !19970425!19990930!063956270!807850516!001381284!N!04939!GENERAL DYNAMICS ORDNANCE SYST!2280 HIGHWAY 104 W STE 2 !MILAN !TN!38358!10675!007!50!BURLINGTON !CHITTE… Key points: 1. Contract awarded for miscellaneous ammunition, indicating a need for a broad range of ordnance. 2. The contract's duration spans over 12 years, suggesting a long-term requirement for these supplies. 3. A substantial portion of the contract value is tied to a single, non-competed award, raising questions about price efficiency. 4. The award was not competed, potentially limiting opportunities for competitive pricing and innovation. 5. The primary contractor, American Ordnance LLC, received the majority of the contract value. 6. The contract falls under the 'AMMUNITION' product service code, highlighting its strategic importance.

Value Assessment

Rating: questionable

The total contract value of $129.5 million over its extended period appears substantial. However, without a competitive bidding process, it is difficult to benchmark the value for money. The pricing structure is likely fixed, but the absence of competition means there's no clear market comparison to assess if taxpayers received the best possible price. The long duration of the contract also introduces potential risks related to price escalation or obsolescence if not managed carefully.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not openly competed. This approach is typically used when only one source can fulfill the requirement, or in cases of urgent need. The lack of competition means that multiple potential suppliers were not evaluated, which can limit price discovery and potentially lead to higher costs for the government.

Taxpayer Impact: A sole-source award means taxpayers may not have benefited from the cost savings that typically arise from a competitive bidding process. This could result in a higher overall expenditure for the required ammunition.

Public Impact

The U.S. Army benefits from a secured supply chain for miscellaneous ammunition. This contract ensures the availability of critical ordnance for military operations. The contract supports manufacturing and logistics jobs within the defense industrial base. The geographic impact is concentrated around the primary contractor's facilities, likely in New Jersey.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to suboptimal pricing.
Long contract duration increases risk of price volatility or obsolescence.
Sole-source awards can stifle innovation by limiting market entry.

Positive Signals

Ensures a consistent supply of essential ammunition for the Army.
The award to a known entity like American Ordnance LLC suggests a reliance on established capabilities.
The fixed-price nature of the contract provides some cost certainty.

Sector Analysis

This contract falls within the defense sector, specifically focusing on ammunition procurement. The defense industry is characterized by long-term relationships, specialized manufacturing capabilities, and significant government oversight. The market for ammunition is critical for national security, with a limited number of specialized manufacturers capable of meeting stringent military requirements. Benchmarking this spending would require comparing it to other large-scale ammunition procurements, which are often classified or awarded through complex, multi-year contracts.

Small Business Impact

Information regarding small business set-asides or subcontracting plans is not discernible from the provided data. As this was a sole-source award, it is less likely to have included specific small business set-aside provisions. The impact on the small business ecosystem is therefore unclear, though large sole-source contracts can sometimes limit opportunities for smaller firms to enter the supply chain.

Oversight & Accountability

Oversight for this contract would typically fall under the U.S. Army's contracting command and potentially the Department of Defense's Inspector General. Accountability measures would be defined by the contract terms, including performance standards and delivery schedules. Transparency is limited due to the sole-source nature and potential classification of specific ammunition details.

Related Government Programs

Department of Defense Ammunition Procurement
U.S. Army Ordnance Programs
Defense Industrial Base Contracts
Miscellaneous Ammunition Supply

Risk Flags

Sole-source award lacks competitive pricing.
Long contract duration may increase cost and obsolescence risks.
Limited transparency due to sole-source nature.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $129.5 million to AMERICAN ORDNANCE LLC. 199712!2100!0851!AE30 !U.S. ARMY ARMAMENT RD&E CENTER !DAAE3097C1045 !A!*!* !19970425!19990930!063956270!807850516!001381284!N!04939!GENERAL DYNAMICS ORDNANCE SYST!2280 HIGHWAY 104 W STE 2 !MILAN !TN!38358!10675!007!50!BURLINGTON !CHITTENDEN !VERMONT !0001!+000028246294!N!N!000000000000!1395!MISCELLANEOUS AMMUNITION !A6 !AMMUNITION !1000!NOT DISCERNABLE OR CLASSIFIED !8731!3!*!*!*!B!A!*!D !U!J!1!0

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 $129.5 million.

What is the period of performance?

Start: 1997-04-25. End: 2010-03-31.

What is the historical spending pattern for miscellaneous ammunition by the U.S. Army?

Historical spending on miscellaneous ammunition by the U.S. Army is substantial and fluctuates based on operational tempo, modernization efforts, and strategic stockpiling. While specific figures for 'miscellaneous ammunition' are often aggregated within broader defense budgets, the Army consistently allocates billions of dollars annually towards ordnance procurement. This includes a wide array of munitions, from small arms to larger caliber rounds and specialized explosives. The provided contract, valued at $129.5 million, represents a significant, albeit singular, investment within this larger spending category. Analyzing historical data would involve examining trends in contract awards for similar Product Service Codes (PSCs) and comparing spending levels across different fiscal years to identify patterns of demand and investment.

How does the per-unit cost of this ammunition compare to market rates or similar contracts?

Determining the per-unit cost and comparing it to market rates or similar contracts is challenging with the provided data. The contract value is a total award amount, and the specific quantities and types of 'miscellaneous ammunition' are not detailed. Furthermore, as this was a sole-source award, there is no competitive benchmark to establish a fair market price. Government contracts for ammunition often involve complex specifications, quality assurance requirements, and long-term supply agreements that differentiate them from commercial market rates. Without access to the detailed pricing structure, unit quantities, and specifications within the contract, a meaningful per-unit cost comparison is not feasible.

What is the track record of American Ordnance LLC in fulfilling defense contracts?

American Ordnance LLC has a significant track record in fulfilling defense contracts, particularly related to ammunition production. As a key supplier to the U.S. military, the company has been involved in manufacturing and supplying various types of ordnance. Its history includes periods of operation under different corporate structures and ownerships, but its core function has consistently been supporting military ammunition needs. The U.S. Army's continued reliance on American Ordnance, as evidenced by this sole-source award, suggests a perceived capability to meet demanding production schedules and quality standards. However, a comprehensive assessment would require reviewing past performance evaluations, any documented issues or successes, and the company's overall contribution to the defense supply chain over time.

What are the potential risks associated with a sole-source award for ammunition?

Sole-source awards for ammunition carry several potential risks. Primarily, the lack of competition can lead to inflated prices, as the government does not benefit from the cost-saving pressures inherent in a competitive bidding process. This can result in taxpayers paying more than necessary for essential supplies. Secondly, it can reduce incentives for the sole contractor to innovate or improve efficiency, as there is no direct competitive threat. Thirdly, it creates a dependency on a single supplier, which can be a vulnerability if that supplier experiences production issues, financial instability, or faces geopolitical challenges. This dependency can also limit the government's flexibility in adapting to changing technological requirements or market conditions.

How does this contract align with the Army's long-term ammunition strategy?

This contract, awarded in 1997 and extended through 2010, likely aligned with the Army's ammunition strategy at the time, focusing on ensuring a stable and reliable supply of essential munitions. The long duration suggests a strategic decision to secure production capacity for a range of 'miscellaneous ammunition' over an extended period. Such long-term contracts are often used to maintain industrial base capabilities, especially for items that may not have constant high demand but are critical for national security. The sole-source nature might indicate that American Ordnance LLC possessed unique capabilities or was deemed the most suitable provider to meet specific strategic requirements during that era, possibly related to legacy systems or specialized production needs.

Competition & Pricing

Extent Competed: NOT COMPETED

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Contractor Details

Address: 2280 HIGHWAY 104 W STE 2, MILAN, TN, 08

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Cost or Pricing Data: NO

Timeline