Army Awards $618.7M Contract for 75mm-125mm Ammunition to Alliant Techsystems

Contract Overview

Contract Amount: $147,918,744 ($147.9M)

Contractor: Northrop Grumman Innovation Systems LLC

Awarding Agency: Department of Defense

Start Date: 1998-08-21

End Date: 2010-09-16

Contract Duration: 4,409 days

Daily Burn Rate: $33.5K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 2

Pricing Type: COST PLUS INCENTIVE

Sector: Defense

Official Description: 199812!2100!0718!AE30 !U.S. ARMY ARMAMENT RD&E CENTER !DAAE3098C1094 !A!*!* !19980821!19990712!618705925!618705925!618705925!N!06424!ALLIANT TECHSYSTEMS INC !600 2ND ST NE !HOPKINS !MN!55343!18188!053!27!EDINA !HENNEPIN !MINNESOTA !0001!+000002906000!N!N!000000000000!1315!AMMUNITION, 75 MM THROUGH 125 MM !A6 !AMMUNITION !1000!NOT DISCERNABLE OR CLASSIFIED !8731!3!*!*!*!B!A!*!A !N!V!2!002!N!1G!A!Y!Z!* !* !N!C!*!A!A!A!A!A!*!* !*!N!A!B!N!*!*!*!*!*!

Place of Performance

Location: MINNEAPOLIS, HENNEPIN County, MINNESOTA, 55442

State: Minnesota Government Spending

Plain-Language Summary

Department of Defense obligated $147.9 million to NORTHROP GRUMMAN INNOVATION SYSTEMS LLC for work described as: 199812!2100!0718!AE30 !U.S. ARMY ARMAMENT RD&E CENTER !DAAE3098C1094 !A!*!* !19980821!19990712!618705925!618705925!618705925!N!06424!ALLIANT TECHSYSTEMS INC !600 2ND ST NE !HOPKINS !MN!55343!18188!053!27!EDINA !HENNEP… Key points: 1. The contract, awarded in 1998, is for ammunition in the 75mm through 125mm range. 2. Alliant Techsystems Inc. secured the significant award, valued at over $618 million. 3. The contract type was Cost Plus Incentive, suggesting performance-based incentives. 4. The awarding agency was the U.S. Army Armament R&D Center, indicating a defense-specific need. 5. Competition was conducted under 'Full and Open Competition After Exclusion of Sources'.

Value Assessment

Rating: questionable

The contract value of $618.7 million for ammunition is substantial. Without specific unit counts or detailed specifications, a direct pricing comparison is difficult. However, the Cost Plus Incentive fee structure can sometimes lead to higher costs if not tightly managed.

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 implies that while competition was sought, certain sources were excluded, potentially limiting the breadth of price discovery and innovation.

Taxpayer Impact: The large contract value suggests a significant taxpayer investment. The effectiveness of the competition method in securing the best value for taxpayer funds is a key consideration.

Public Impact

Taxpayers funded a substantial contract for essential military ammunition. The award impacts the defense industrial base, specifically in ammunition manufacturing. The long duration of the contract (from 1998 to 2010) indicates a sustained need for these munitions. The specific type of ammunition (75mm-125mm) suggests use in artillery or vehicle-mounted cannons.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition due to source exclusion.
Cost Plus Incentive fee structure can inflate costs.
Lack of detailed unit cost data for benchmarking.
Long contract duration may not reflect current market prices.

Positive Signals

Awarded to a known defense contractor.
Contract addresses a critical military need.
Competition was sought, albeit with exclusions.

Sector Analysis

This contract falls within the Defense sector, specifically focusing on the procurement of ammunition. Spending benchmarks in this area are highly dependent on the specific type and quantity of munitions required, as well as geopolitical factors influencing demand.

Small Business Impact

The data does not indicate whether small businesses were involved as subcontractors or prime contractors. Further investigation would be needed to assess small business participation in this large defense contract.

Oversight & Accountability

The awarding agency is the U.S. Army Armament R&D Center, implying internal oversight. However, the long duration and specific competition method warrant scrutiny to ensure accountability and value for money throughout the contract lifecycle.

Related Government Programs

Department of Defense Contracting
Defense Contract Management Agency Programs

Risk Flags

Potential for inflated costs due to CPIF structure.
Limited competition may have reduced price discovery.
Lack of transparency on source exclusion rationale.
Long contract duration raises questions about adaptability to market changes.
Absence of unit cost data hinders detailed value assessment.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $147.9 million to NORTHROP GRUMMAN INNOVATION SYSTEMS LLC. 199812!2100!0718!AE30 !U.S. ARMY ARMAMENT RD&E CENTER !DAAE3098C1094 !A!*!* !19980821!19990712!618705925!618705925!618705925!N!06424!ALLIANT TECHSYSTEMS INC !600 2ND ST NE !HOPKINS !MN!55343!18188!053!27!EDINA !HENNEPIN !MINNESOTA !0001!+000002906000!N!N!000000000000!1315!AMMUNITION, 75 MM THROUGH 125 MM !A6 !AMMUNITION !1000!NOT DISCERNABLE OR CLASSIFIED !8731!3!*!*!*!B!A!*!A !N!V!2!0

Who is the contractor on this award?

The obligated recipient is NORTHROP GRUMMAN INNOVATION SYSTEMS LLC.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $147.9 million.

What is the period of performance?

Start: 1998-08-21. End: 2010-09-16.

What was the rationale for excluding certain sources in the 'Full and Open Competition After Exclusion of Sources' process, and how did this impact the final price?

The rationale for excluding sources is not detailed in the provided data. Typically, such exclusions might be based on specific technical capabilities, security clearances, or prior performance issues. However, excluding potential bidders can limit competitive pressure, potentially leading to higher prices than if a broader range of companies had competed.

How did the 'Cost Plus Incentive' fee structure influence the final cost of the ammunition, and were performance targets met?

The 'Cost Plus Incentive' (CPIF) contract type aims to control costs by incentivizing the contractor to meet or beat target costs. If the contractor achieves cost savings, both the government and the contractor share in the savings. Conversely, if costs exceed targets, the contractor bears a larger share. Without data on target costs, actual costs, and achieved performance metrics, it's difficult to definitively assess if the CPIF structure was effective in this case or if it led to cost overruns.

Given the contract's award in 1998 and end date in 2010, how does the awarded price compare to current market rates for similar ammunition, and what is the potential impact on current defense budgets?

Comparing a 1998-2010 contract price to current market rates is challenging due to inflation, technological advancements, and shifts in production scale. Ammunition costs can fluctuate significantly. If the historical price was high relative to current production costs, it suggests potential inefficiencies or a less competitive market at the time. This historical spending informs current budget planning by highlighting the long-term cost of maintaining munition stockpiles.

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Offers Received: 2

Pricing Type: COST PLUS INCENTIVE (V)

Contractor Details

Address: 600 2ND ST NE, HOPKINS, MN, 03

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Cost or Pricing Data: NO

Timeline