DoD awards $223M for advanced armor-piercing ammunition development, with Alliant Techsystems as prime contractor

Contract Overview

Contract Amount: $222,747,675 ($222.7M)

Contractor: Alliant Techsystems Operations LLC

Awarding Agency: Department of Defense

Start Date: 2010-01-27

End Date: 2022-01-21

Contract Duration: 4,377 days

Daily Burn Rate: $50.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Defense

Official Description: EMD PHASE I CPFF THIS BASE AWARD IS FOR THE PHASE I ENGINEERING, MANUFACTURE AND DEVELOPMENT STAGE OF THE M829E4 120MM ARMOR PIERCING, FIN STABILIZED, DISCARDING SABOT TRACER CARTRIDGES.

Place of Performance

Location: MINNEAPOLIS, HENNEPIN County, MINNESOTA, 55442

State: Minnesota Government Spending

Plain-Language Summary

Department of Defense obligated $222.7 million to ALLIANT TECHSYSTEMS OPERATIONS LLC for work described as: EMD PHASE I CPFF THIS BASE AWARD IS FOR THE PHASE I ENGINEERING, MANUFACTURE AND DEVELOPMENT STAGE OF THE M829E4 120MM ARMOR PIERCING, FIN STABILIZED, DISCARDING SABOT TRACER CARTRIDGES. Key points: 1. Contract focuses on Engineering, Manufacture, and Development (EMD) for advanced ammunition. 2. The contract type is Cost Plus Incentive Fee (CPIF), suggesting performance-based incentives. 3. Awarded by the Department of the Army, indicating a focus on ground combat capabilities. 4. The duration of the contract is substantial, spanning over 12 years. 5. The North American Industry Classification System (NAICS) code 332993 points to ammunition manufacturing. 6. This award represents a significant investment in next-generation munitions technology.

Value Assessment

Rating: fair

The total award amount of $222.7 million for the EMD phase of the M829E4 cartridge is substantial. Benchmarking this specific EMD phase cost is challenging without comparable data for similar advanced munition development programs. The CPIF contract type implies that cost efficiencies and performance targets will influence the final expenditure, making a direct value-for-money assessment difficult at this stage. However, the long duration and complexity suggest a significant R&D investment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple potential bidders were allowed to submit proposals. The number of bidders is not specified, but this approach generally fosters a competitive environment, which can lead to better pricing and innovation. The Army's decision to use full and open competition suggests confidence in the market's ability to meet the demanding technical requirements for this advanced munition.

Taxpayer Impact: Full and open competition is generally favorable for taxpayers as it aims to secure the best possible value through market forces, potentially driving down costs and improving quality.

Public Impact

The primary beneficiaries are the U.S. Army ground forces, who will receive enhanced anti-armor capabilities. The contract delivers the development and manufacturing of advanced 120mm armor-piercing ammunition. The geographic impact is primarily within the United States, focusing on defense manufacturing and R&D. Workforce implications include skilled labor in engineering, manufacturing, and quality assurance within the defense industrial base.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Long contract duration (over 12 years) could lead to cost overruns or scope creep if not managed effectively.
The CPIF structure requires careful monitoring to ensure incentives align with cost control and performance goals.
Reliance on a single contractor for EMD phase could limit future competition if alternative technologies emerge.
The complexity of advanced munition development inherently carries technical risks that could impact schedule and cost.

Positive Signals

Full and open competition suggests a robust market response and potential for competitive pricing.
The CPIF contract type incentivizes the contractor to meet performance targets and manage costs.
Awarding to Alliant Techsystems, a known defense contractor, suggests leveraging existing expertise.
Focus on EMD phase indicates a structured approach to developing cutting-edge technology.

Sector Analysis

This contract falls within the defense manufacturing sector, specifically focusing on ammunition production. The market for advanced munitions is characterized by high technological barriers to entry and significant government investment. Comparable spending benchmarks would involve other major defense procurement programs for advanced weapon systems. The size of the ammunition manufacturing market is substantial, driven by global defense spending and the need for continuous technological upgrades.

Small Business Impact

The contract data indicates that small business participation was not a primary set-aside consideration for this specific award, as the prime contractor is a large business and the 'sb' field is false. However, subcontracting opportunities for small businesses within the defense supply chain are likely, particularly for specialized components or services. The impact on the small business ecosystem will depend on the extent to which Alliant Techsystems engages them for subcontracting roles.

Oversight & Accountability

Oversight for this contract would typically be managed by the Department of the Army's contracting and program management offices. Accountability measures are embedded within the CPIF contract structure, linking contractor performance and cost control to fee adjustments. Transparency is generally maintained through contract awards databases and reporting requirements, though specific technical details of the ammunition's development may be sensitive. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Advanced Ammunition Development Programs
120mm Tank Ammunition Procurement
Defense Manufacturing Industrial Base
Cost Plus Incentive Fee Contracts
Engineering, Manufacture, and Development (EMD) Contracts

Risk Flags

Long Contract Duration
Complex Technology Development
CPIF Contract Management
Potential for Cost Overruns

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $222.7 million to ALLIANT TECHSYSTEMS OPERATIONS LLC. EMD PHASE I CPFF THIS BASE AWARD IS FOR THE PHASE I ENGINEERING, MANUFACTURE AND DEVELOPMENT STAGE OF THE M829E4 120MM ARMOR PIERCING, FIN STABILIZED, DISCARDING SABOT TRACER CARTRIDGES.

Who is the contractor on this award?

The obligated recipient is ALLIANT TECHSYSTEMS OPERATIONS 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 $222.7 million.

What is the period of performance?

Start: 2010-01-27. End: 2022-01-21.

What is the historical spending pattern for the M829E4 ammunition program prior to this award?

The provided data focuses solely on the EMD Phase I award of $222.7 million, dated January 27, 2010, with an estimated completion date of January 21, 2022. This suggests that this award represents the initial, significant investment in the development phase of the M829E4 cartridge. Without access to subsequent awards or data on earlier research phases, it's difficult to establish a comprehensive historical spending pattern for the entire program lifecycle. However, the substantial value of this single EMD award indicates a high priority and significant resource allocation towards developing this advanced munition.

How does the cost per unit for the M829E4 compare to previous generations of 120mm ammunition?

The provided data pertains to the Engineering, Manufacture, and Development (EMD) phase of the M829E4 cartridge, with a total award of $222.7 million over a period of approximately 12 years. This phase is focused on research, design, prototyping, and testing, not mass production. Therefore, calculating a meaningful 'per-unit cost' at this stage is not feasible or appropriate. Cost per unit is typically determined during the production phase after design finalization and manufacturing processes are established. Advanced technologies and materials used in next-generation munitions like the M829E4 are generally expected to result in higher per-unit costs compared to older, less sophisticated ammunition, reflecting increased performance and capability.

What are the key performance metrics incentivized under the Cost Plus Incentive Fee (CPIF) structure for this contract?

The Cost Plus Incentive Fee (CPIF) contract structure implies that the contractor, Alliant Techsystems Operations LLC, is reimbursed for allowable costs plus a performance-based incentive fee. While the specific metrics are not detailed in the provided data, typical CPIF incentives for an EMD phase of advanced munition development often include targets related to technical performance (e.g., penetration capability, accuracy, reliability), schedule adherence (meeting key development milestones), and cost control (achieving target costs for development phases). The incentive fee is adjusted based on how well the contractor meets or exceeds these pre-defined targets, aiming to align the contractor's profit motive with the government's objectives for successful and efficient development.

What is the track record of Alliant Techsystems Operations LLC in delivering complex defense manufacturing contracts?

Alliant Techsystems Operations LLC, now part of Northrop Grumman, has a long and extensive track record in defense manufacturing, including significant experience with munitions and advanced weapon systems. They have been a prime contractor on numerous complex programs for the Department of Defense, covering areas such as propulsion systems, advanced materials, and various types of ordnance. Their history includes developing and producing ammunition for different platforms and roles. While specific performance details for every contract are not publicly available, their sustained presence and role as a prime contractor on major programs like this M829E4 EMD phase suggest a demonstrated capability to handle large-scale, technologically demanding defense manufacturing projects.

What are the potential risks associated with the long duration (over 12 years) of this development contract?

The extended duration of over 12 years for the EMD phase of the M829E4 ammunition development presents several potential risks. Firstly, technological obsolescence is a concern; the threat landscape or competing technologies could evolve significantly during this period, potentially diminishing the value of the developed munition by its completion. Secondly, cost escalation is a significant risk, as prolonged contracts are more susceptible to inflation, changes in material costs, and unforeseen technical challenges that require additional funding. Thirdly, maintaining contractor focus and institutional knowledge over such a long period can be challenging, potentially impacting efficiency and quality. Lastly, the government's requirements might shift due to evolving military strategies or budget constraints, necessitating contract modifications that could further extend timelines or alter the program's scope.

Industry Classification

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

Product/Service Code: AMMUNITION AND EXPLOSIVES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: W15QKN09R0600

Offers Received: 2

Pricing Type: COST PLUS INCENTIVE FEE (V)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Corporation

Address: 4700 NATHAN LN N, PLYMOUTH, MN, 55442

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

Financial Breakdown

Contract Ceiling: $223,809,205

Exercised Options: $223,434,379

Current Obligation: $222,747,675

Actual Outlays: $1,428,933

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline