Army awards $160M for ammunition manufacturing, with significant cost overruns and limited competition

Contract Overview

Contract Amount: $159,594,276 ($159.6M)

Contractor: General Dynamics Ordnance & Tactical Systems, Inc.

Awarding Agency: Department of Defense

Start Date: 1999-09-24

End Date: 2012-12-31

Contract Duration: 4,847 days

Daily Burn Rate: $32.9K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 199912!2100!1022!AE30 !U.S. ARMY ARMAMENT RD&E CENTER !DAAE3099C1114 !A!*!* !19990924!20000831!006317473!194860813!194860813!N!13300!PRIMEX TECHNOLOGIES, INC !RR 148 BOX SOUTH !MARION !IL!62959!46916!199!17!MARION !WILLIAMSON !ILLINOIS !0001!+000016763113!N!N!000000000000!AD14!RDTE/AMMUNITION-DEMO/VALID !A6 !AMMUNITION !1000!NOT DISCERNABLE OR CLASSIFIED !3484!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: MARION, WILLIAMSON County, ILLINOIS, 62959

State: Illinois Government Spending

Plain-Language Summary

Department of Defense obligated $159.6 million to GENERAL DYNAMICS ORDNANCE & TACTICAL SYSTEMS, INC. for work described as: 199912!2100!1022!AE30 !U.S. ARMY ARMAMENT RD&E CENTER !DAAE3099C1114 !A!*!* !19990924!20000831!006317473!194860813!194860813!N!13300!PRIMEX TECHNOLOGIES, INC !RR 148 BOX SOUTH !MARION !IL!62959!46916!199!17!MARION !WILLIA… Key points: 1. Contract value significantly exceeded initial estimates, indicating potential cost control issues. 2. Limited competition suggests potential for higher prices and reduced innovation. 3. Long contract duration raises concerns about adaptability to evolving technological needs. 4. The contract's performance period extends well beyond the initial award, suggesting ongoing requirements. 5. The contractor has a history of large federal awards, indicating established relationships. 6. The contract falls within the ammunition manufacturing sector, a critical defense component.

Value Assessment

Rating: questionable

The initial award amount was $159,594,276.16, but the contract duration and potential for modifications suggest the final cost could be substantially higher. The provided data does not allow for a direct comparison to similar contracts or a precise benchmark of value for money. However, the significant difference between the initial award and the potential final cost, coupled with limited competition, raises concerns about cost efficiency.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded as 'NOT COMPETED,' indicating a sole-source or limited competition procurement. This approach bypasses the standard competitive bidding process, which typically leads to better pricing and a wider selection of qualified vendors. The lack of competition means that the government did not explore alternative solutions or leverage market forces to secure the best possible terms.

Taxpayer Impact: Sole-source awards can result in higher costs for taxpayers as there is less pressure on the contractor to offer competitive pricing. It also limits opportunities for other businesses to compete for government contracts.

Public Impact

The U.S. Army is the primary beneficiary, receiving critical ammunition supplies. The contract supports the manufacturing of small arms ammunition. The geographic impact is concentrated in Illinois, where the contractor is located. The contract supports manufacturing jobs within the defense industrial base.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated prices.
Potential for cost overruns given the contract's history.
Long contract duration could result in outdated technology or processes.
Limited transparency due to sole-source award.

Positive Signals

Contract supports a critical defense need for the U.S. Army.
The contractor is an established entity within the defense sector.
The contract is for a specific, defined product (ammunition).

Sector Analysis

This contract falls within the defense manufacturing sector, specifically focusing on ammunition production. The North American Industry Classification System (NAICS) code 332992, Small Arms Ammunition Manufacturing, indicates a specialized area within the broader defense industrial base. Spending in this sector is crucial for national security, and contracts are often awarded to a limited number of specialized firms. Benchmarking this contract's value is difficult without more specific market data on ammunition production costs.

Small Business Impact

The data indicates this contract was not set aside for small businesses (ss=false) and does not explicitly mention subcontracting plans for small businesses. As a sole-source award to a large entity, it is unlikely to have significant direct benefits for the small business ecosystem unless specific subcontracting requirements were imposed but not detailed in this data extract.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Army's contracting and program management offices. Inspector General investigations could be initiated if fraud, waste, or abuse is suspected. Transparency is limited due to the sole-source nature of the award, making public scrutiny of the procurement process challenging.

Related Government Programs

Department of Defense Ammunition Procurement
Small Arms Ammunition Manufacturing Contracts
U.S. Army Ordnance Programs
Defense Industrial Base Contracts

Risk Flags

Sole-source award limits price competition.
Long contract duration may lead to outdated technology.
Potential for cost overruns not fully captured in initial award.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $159.6 million to GENERAL DYNAMICS ORDNANCE & TACTICAL SYSTEMS, INC.. 199912!2100!1022!AE30 !U.S. ARMY ARMAMENT RD&E CENTER !DAAE3099C1114 !A!*!* !19990924!20000831!006317473!194860813!194860813!N!13300!PRIMEX TECHNOLOGIES, INC !RR 148 BOX SOUTH !MARION !IL!62959!46916!199!17!MARION !WILLIAMSON !ILLINOIS !0001!+000016763113!N!N!000000000000!AD14!RDTE/AMMUNITION-DEMO/VALID !A6 !AMMUNITION !1000!NOT DISCERNABLE OR CLASSIFIED !3484!3!*!*!*!B!A!*!D !U!J!1!0

Who is the contractor on this award?

The obligated recipient is GENERAL DYNAMICS ORDNANCE & TACTICAL 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 $159.6 million.

What is the period of performance?

Start: 1999-09-24. End: 2012-12-31.

What is the total value of this contract, considering all modifications and extensions?

The provided data lists an initial award amount of $159,594,276.16. However, the contract's end date is listed as December 31, 2012, while the start date is September 24, 1999, indicating a duration of over 13 years. The data also shows a 'dur' value of 4847 days, which aligns with this extended period. Without access to the contract modification history, the final obligated amount and total expenditure are not precisely known. The initial award suggests a substantial commitment, and the long duration implies potential for significant cumulative spending beyond the initial figure, possibly indicating scope changes or phased funding.

How does the pricing of this contract compare to industry benchmarks for small arms ammunition?

Direct comparison to industry benchmarks for small arms ammunition is challenging with the provided data. The contract is for 'AMMUNITION/DEMO/VALID' and falls under NAICS code 332992 (Small Arms Ammunition Manufacturing). However, specific unit costs, material compositions, or quantity breakdowns are not detailed. The fact that it was a sole-source award ('NOT COMPETED') inherently limits the ability to assess competitive pricing. Typically, sole-source contracts may not reflect the most cost-effective market rates, as the government did not leverage competitive bidding to drive down prices. Further analysis would require access to detailed pricing structures and market surveys for comparable ammunition types.

What are the key performance indicators (KPIs) and performance history associated with this contract?

The provided data does not include specific Key Performance Indicators (KPIs) or a detailed performance history for this contract. It identifies the product as 'AMMUNITION/DEMO/VALID' and the contract type as 'FIRM FIXED PRICE' (pt). While a firm fixed price contract generally implies performance expectations tied to delivery of specified goods at an agreed-upon price, the absence of quality metrics, delivery schedules, or past performance ratings in this extract prevents a thorough assessment. The long duration (over 13 years) might suggest consistent, albeit potentially unexceptional, performance, or it could mask periods of underperformance that were managed through contract modifications rather than termination.

What is the track record of PRIMEX TECHNOLOGIES, INC. with federal contracts, particularly within the Department of Defense?

PRIMEX TECHNOLOGIES, INC. (Cage Code 006317473) has a history of federal contracts, as indicated by this award. The data shows this contract was awarded by the U.S. Army Armament RD&E Center. While this specific data point highlights a significant award, a comprehensive track record would require analyzing a broader dataset of their contract history, including past performance reviews, other agencies they've contracted with, and the types and values of those contracts. Their presence in the defense sector suggests experience in meeting government procurement requirements, but the 'NOT COMPETED' status of this particular award warrants further investigation into their competitive history.

Are there any known risks or concerns associated with this specific contract or the contractor?

The primary risk identified is the 'NOT COMPETED' (sole-source) nature of the award, which raises concerns about potential lack of price competition and value for money. The long duration of the contract (over 13 years) also presents risks related to technological obsolescence and the potential for cost creep through modifications. Without detailed performance data, it's difficult to assess contractor performance risks definitively. However, the award itself signifies that the Army deemed PRIMEX TECHNOLOGIES, INC. capable of fulfilling the requirement, albeit without exploring other options. Further risk assessment would require examining contract modifications, delivery performance, and any quality control issues.

Industry Classification

NAICS: Manufacturing › Other Fabricated Metal Product Manufacturing › Small Arms Ammunition Manufacturing

Product/Service Code: AMMUNITION AND EXPLOSIVES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Contractor Details

Parent Company: General Dynamics Corp

Address: 6658 ROUTE 148, MARION, IL, 62959

Business Categories: Category Business, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline