Air Force awards $69.5M for ammunition manufacturing, with limited competition and fixed-price incentive terms

Contract Overview

Contract Amount: $69,491,053 ($69.5M)

Contractor: Dynetics, Inc.

Awarding Agency: Department of Defense

Start Date: 2021-04-08

End Date: 2024-03-31

Contract Duration: 1,088 days

Daily Burn Rate: $63.9K/day

Competition Type: NOT COMPETED

Pricing Type: FIXED PRICE INCENTIVE

Sector: Defense

Official Description: SMALL GLIDE MINITIONS IDIQ

Place of Performance

Location: HUNTSVILLE, MADISON County, ALABAMA, 35806

State: Alabama Government Spending

Plain-Language Summary

Department of Defense obligated $69.5 million to DYNETICS, INC. for work described as: SMALL GLIDE MINITIONS IDIQ Key points: 1. The contract utilizes a fixed-price incentive pricing structure, which aims to balance cost control with contractor performance. 2. Limited competition was identified for this award, potentially impacting price discovery and value for taxpayer dollars. 3. The contract duration spans nearly three years, indicating a significant commitment for ammunition supply. 4. The award is a delivery order under an IDIQ contract, suggesting a broader framework for ongoing procurement needs. 5. The geographic location of the contractor in Alabama may have implications for regional economic impact and supply chain logistics.

Value Assessment

Rating: fair

Benchmarking the value for this specific delivery order is challenging without detailed cost breakdowns and comparisons to similar ammunition manufacturing contracts. The fixed-price incentive structure suggests an attempt to manage costs, but the lack of robust competition raises questions about whether the government secured the best possible price. Further analysis of the contractor's historical performance and pricing on similar contracts would be needed to provide a more definitive value assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded under a "NOT COMPETED" status, indicating that full and open competition was not utilized. This suggests that either a specific justification for other than full and open competition was applied, or it was awarded under a pre-existing contract vehicle that itself had limited competition. The lack of a broad competitive process limits the ability to assess the range of pricing and technical solutions available in the market.

Taxpayer Impact: Limited competition can lead to higher prices for taxpayers as the government may not benefit from the cost savings typically driven by a competitive bidding process.

Public Impact

The Department of the Air Force is the primary beneficiary, ensuring a supply of ammunition. This contract supports the manufacturing of ammunition, crucial for military readiness and operations. The geographic impact is concentrated in Alabama, where the contractor, Dynetics, Inc., is located. The contract supports jobs within the defense manufacturing sector, particularly in ammunition production.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition may result in suboptimal pricing for the government.
The fixed-price incentive structure requires careful monitoring to ensure contractor performance aligns with cost objectives.
Reliance on a single awardee for critical ammunition components could pose supply chain risks if not managed proactively.

Positive Signals

The IDIQ contract structure allows for flexibility in addressing future ammunition needs.
The fixed-price incentive contract aims to incentivize efficient performance and cost control.
The contractor, Dynetics, Inc., is a known entity in the defense sector, potentially bringing established expertise.

Sector Analysis

The defense manufacturing sector, specifically focusing on ammunition production, is a critical component of national security. This contract falls within the broader category of defense industrial base support. Spending in this area is often driven by operational requirements and modernization efforts. Comparable spending benchmarks would typically involve analyzing other contracts for similar types of ammunition or manufacturing services awarded by various branches of the military.

Small Business Impact

The data indicates that small business participation (sb) is false, and there is no indication of a small business set-aside (ss). This suggests that the contract was not specifically targeted towards small businesses, and subcontracting opportunities for small businesses are not explicitly detailed in this award notice. The impact on the small business ecosystem is likely minimal unless subcontracting plans are not captured in this summary.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and program management structures. Accountability measures are embedded within the fixed-price incentive contract terms, requiring the contractor to meet performance targets within agreed-upon cost parameters. Transparency is facilitated through contract award databases, though detailed cost breakdowns and performance reviews may not always be publicly available.

Related Government Programs

Ammunition Procurement
Defense Manufacturing Contracts
Air Force Supply Chain Management
Indefinite Delivery Indefinite Quantity (IDIQ) Contracts

Risk Flags

Limited Competition
Potential for Cost Overruns (inherent in FPI if not managed)
Supply Chain Concentration Risk

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $69.5 million to DYNETICS, INC.. SMALL GLIDE MINITIONS IDIQ

Who is the contractor on this award?

The obligated recipient is DYNETICS, INC..

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Air Force).

What is the total obligated amount?

The obligated amount is $69.5 million.

What is the period of performance?

Start: 2021-04-08. End: 2024-03-31.

What is Dynetics, Inc.'s track record with the Department of Defense, particularly in ammunition manufacturing?

Dynetics, Inc. has a history of working with the Department of Defense across various programs, including research, development, and manufacturing. While specific details on their ammunition manufacturing track record require deeper database searches, their presence as a defense contractor suggests experience in producing defense-related articles. Analyzing past performance metrics, contract modifications, and any past performance evaluations would provide a clearer picture of their reliability and expertise in this specific domain. It's important to note that this contract is a delivery order under an IDIQ, implying a pre-existing relationship or qualification.

How does the pricing of this $69.5 million contract compare to similar ammunition manufacturing contracts awarded by the Air Force or other branches?

Direct comparison of the total contract value ($69.5 million) to similar ammunition manufacturing contracts is difficult without access to detailed cost breakdowns, specific ammunition types, quantities, and contract terms (e.g., fixed-price incentive vs. firm-fixed-price). The 'NOT COMPETED' status also complicates direct value-for-money assessments, as competitive bidding often drives down prices. To benchmark effectively, one would need to analyze contracts for comparable ammunition types, considering factors like production volume, complexity, and the specific performance requirements. A unit cost analysis, if available, would be more insightful than the total award amount.

What are the primary risks associated with a 'NOT COMPETED' contract for ammunition manufacturing?

The primary risk associated with a 'NOT COMPETED' contract for ammunition manufacturing is the potential for inflated pricing due to the absence of market competition. This can lead to reduced value for taxpayer dollars. Additionally, limited competition might restrict the government's access to innovative solutions or alternative suppliers that could offer better quality, faster delivery, or more advanced technology. There's also a risk of complacency from the awarded contractor, as the lack of competitive pressure might reduce the incentive to continuously improve efficiency and cost-effectiveness. Ensuring robust oversight and performance management becomes even more critical in such scenarios.

How effective is the fixed-price incentive (FPI) contract type in ensuring program effectiveness for ammunition manufacturing?

The Fixed-Price Incentive (FPI) contract type is designed to provide a middle ground between Firm-Fixed-Price (FFP) and Cost-Plus contracts. For ammunition manufacturing, FPI can be effective by establishing a target cost, target profit, and a price ceiling. The contractor is incentivized to control costs below the target, sharing in the savings with the government up to a certain point. Conversely, if costs exceed the target, both the contractor and the government share the overrun, up to the price ceiling. This structure encourages efficiency and cost consciousness while providing some flexibility for unforeseen production challenges. Its effectiveness hinges on realistic target setting and diligent government oversight to ensure the contractor is meeting performance and quality standards.

What are the historical spending patterns for ammunition manufacturing by the Department of Defense, and how does this contract fit in?

Historical spending on ammunition manufacturing by the Department of Defense is substantial and fluctuates based on geopolitical events, operational tempo, and strategic modernization initiatives. The DoD consistently procures vast quantities of various munitions. This $69.5 million contract, awarded as a delivery order under an IDIQ, represents a specific procurement action within this larger spending landscape. It likely contributes to fulfilling ongoing operational requirements or replenishing stocks. Analyzing broader DoD spending trends in this category would reveal whether this award is part of a larger increase or decrease in procurement activity and how it aligns with strategic priorities.

What are the implications of this contract being awarded to a single entity in Alabama for the broader defense industrial base?

Awarding this contract to a single entity, Dynetics, Inc., located in Alabama, has several implications. It strengthens the defense industrial base within that specific region, potentially creating or sustaining jobs and supporting local economies. However, concentrating critical manufacturing capabilities with one supplier can also introduce supply chain vulnerabilities. If Dynetics faces production issues, the entire supply of this specific ammunition could be jeopardized. For the broader industrial base, it highlights the role of established contractors in fulfilling essential defense needs, but also underscores the importance of maintaining a diverse supplier base to mitigate risks and foster innovation across the sector.

Industry Classification

NAICS: Manufacturing › Other Fabricated Metal Product Manufacturing › Ammunition (except Small Arms) Manufacturing

Product/Service Code: GUIDED MISSLES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: FIXED PRICE INCENTIVE (L)

Evaluated Preference: NONE

Contractor Details

Address: 1002 EXPLORER BLVD, HUNTSVILLE, AL, 35806

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: $69,491,053

Exercised Options: $69,491,053

Current Obligation: $69,491,053

Subaward Activity

Number of Subawards: 4

Total Subaward Amount: $2,799,576

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA865617D0073

IDV Type: IDC

Timeline