DoD's $101.9M contract for training cartridges awarded to American Ordnance LLC shows strong competition

Contract Overview

Contract Amount: $101,909,878 ($101.9M)

Contractor: American Ordnance LLC

Awarding Agency: Department of Defense

Start Date: 2015-06-25

End Date: 2021-11-30

Contract Duration: 2,350 days

Daily Burn Rate: $43.4K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 7

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 40MM HIGH VELOCITY DAY NIGHT THERMAL TRAINING CARTRIDGES

Place of Performance

Location: MIDDLETOWN, DES MOINES County, IOWA, 52638

State: Iowa Government Spending

Plain-Language Summary

Department of Defense obligated $101.9 million to AMERICAN ORDNANCE LLC for work described as: 40MM HIGH VELOCITY DAY NIGHT THERMAL TRAINING CARTRIDGES Key points: 1. Contract value of $101.9 million over 6 years suggests significant demand for training munitions. 2. Full and open competition after exclusion of sources indicates a deliberate effort to ensure fair pricing. 3. The contract's duration and scope point to a critical role in supporting military readiness. 4. Fixed-price contract type shifts risk to the contractor, potentially stabilizing costs. 5. Awarded to a single contractor, American Ordnance LLC, highlighting specialized manufacturing capabilities. 6. Geographic concentration in Iowa may indicate regional economic impact and specialized workforce.

Value Assessment

Rating: good

The total contract value of $101.9 million over approximately six years averages to about $17 million annually. Benchmarking this against similar contracts for training munitions is challenging without more specific data on unit quantities and specifications. However, the fixed-price nature of the contract suggests that the government has negotiated a price that includes anticipated costs and profit, aiming for cost certainty. The number of bids received (7) in a competitive process also provides a positive signal regarding the reasonableness of the pricing.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under 'Full and Open Competition After Exclusion of Sources,' indicating that while the initial solicitation may have had some restrictions, the final award was made after a broad competitive process. Seven bids were received, suggesting a healthy level of interest and competition among potential suppliers for these specialized training cartridges. This level of competition is generally favorable for price discovery and can lead to more competitive pricing for the government.

Taxpayer Impact: The robust competition for this contract is beneficial for taxpayers as it likely drove down the price compared to a sole-source award. Multiple bidders ensure that the government receives proposals from various sources, increasing the likelihood of securing the best value.

Public Impact

The primary beneficiaries are the U.S. Army personnel who receive essential training ammunition. The contract delivers high-velocity day/night thermal training cartridges, crucial for realistic combat simulations. The contract's performance is geographically centered in Iowa, where American Ordnance LLC is located, potentially impacting the local economy and workforce. This contract supports specialized manufacturing jobs within the defense industrial base.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for supply chain disruptions if American Ordnance LLC faces production issues.
Reliance on a single contractor for a critical training munition could pose a risk if alternatives are not readily available.
Long-term sustainability of production capacity for specialized training cartridges needs ongoing monitoring.

Positive Signals

Awarded through a competitive process, indicating potential for good value.
Fixed-price contract type provides cost certainty for the government.
The contractor, American Ordnance LLC, likely possesses specialized expertise in munition manufacturing.
The contract duration suggests a stable supply chain for essential training materials.

Sector Analysis

The defense sector, specifically ammunition manufacturing, is characterized by high barriers to entry due to specialized knowledge, stringent quality control, and regulatory requirements. This contract falls under the 'Ammunition (except Small Arms) Manufacturing' category (NAICS 332993). The market for military training munitions is driven by defense spending priorities and the need for realistic training environments. Comparable spending benchmarks would depend on the specific type and quantity of cartridges, but large-scale contracts for training aids are common within the Department of Defense.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). American Ordnance LLC is likely a large business. There is no explicit information regarding subcontracting plans for small businesses within this data. Therefore, the direct impact on the small business ecosystem from this specific contract award appears limited, though the prime contractor's own supply chain may involve small businesses.

Oversight & Accountability

Oversight for this contract would typically be managed by the Department of the Army contracting and program management offices. As a definitive contract, it likely involves periodic reviews and performance monitoring. Transparency is generally maintained through contract award databases like FPDS. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse. The fixed-price nature of the contract itself serves as a form of cost oversight by setting definitive payment terms.

Related Government Programs

Department of Defense Ammunition Procurement
Military Training Equipment
Ordnance Manufacturing
Defense Logistics Agency (DLA) Contracts
Army Combat Ammunition Systems

Risk Flags

Contract Duration
Single Source Award (Post-Competition)
Specialized Munitions Manufacturing
Supply Chain Dependency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $101.9 million to AMERICAN ORDNANCE LLC. 40MM HIGH VELOCITY DAY NIGHT THERMAL TRAINING CARTRIDGES

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 $101.9 million.

What is the period of performance?

Start: 2015-06-25. End: 2021-11-30.

What is the historical spending pattern for similar training cartridges by the Department of Defense?

Analyzing historical spending requires access to comprehensive contract databases beyond the provided data. However, the Department of Defense consistently procures large volumes of training munitions to maintain soldier proficiency. Spending patterns are influenced by deployment tempos, training doctrine changes, and budget allocations. Contracts for training cartridges can range from millions to hundreds of millions of dollars annually, depending on the specific type of munition, quantity, and the duration of the contract. The $101.9 million awarded to American Ordnance LLC over approximately six years suggests a significant, but not unprecedented, level of investment in this specific type of training aid. Fluctuations in geopolitical events and readiness requirements often drive year-to-year variations in spending for such items.

How does the unit cost of these training cartridges compare to market rates or similar government contracts?

The provided data does not include the quantity of cartridges or the unit price, making a direct comparison impossible. 'High Velocity Day Night Thermal Training Cartridges' can vary significantly in cost based on their complexity, materials, and intended use. Without knowing the specific number of units procured under this $101.9 million contract, calculating a precise per-unit cost for benchmarking is not feasible. Government contracts often aim for competitive pricing, and the 'full and open competition' aspect suggests an effort to achieve market-based rates. However, specialized military-grade training munitions may command higher prices than commercial equivalents due to stringent performance and safety requirements.

What is American Ordnance LLC's track record with similar defense contracts?

American Ordnance LLC has a history of producing munitions for the U.S. military. While specific details of past contracts are not provided here, the company is known for its capabilities in manufacturing ammunition. Its selection for a significant contract like this suggests a positive performance history and established expertise in meeting the Department of the Army's requirements. Companies in this sector often undergo rigorous vetting and performance evaluations before being awarded large-scale contracts. Further investigation into their contract performance ratings and past delivery records would provide a more complete picture of their track record.

What are the key performance indicators (KPIs) used to evaluate the success of this contract?

Key performance indicators for this contract would likely focus on several critical areas. These typically include on-time delivery of munitions, adherence to quality specifications (e.g., reliability, safety, performance characteristics), and compliance with contract terms. For training munitions, the effectiveness in simulating live-fire scenarios and contributing to soldier readiness would also be paramount. Cost control, as defined by the fixed-price agreement, is another crucial KPI. The government would monitor the contractor's ability to meet production targets and maintain supply chain integrity throughout the contract's duration.

Are there any identified risks associated with the contractor or the nature of the product?

Potential risks associated with this contract include supply chain vulnerabilities, as the production of specialized munitions can be dependent on specific raw materials or components. Contractor performance is always a consideration; any production delays or quality issues at American Ordnance LLC could impact military training schedules. Furthermore, the nature of munitions, even training rounds, involves inherent safety considerations during manufacturing, transportation, and use. The long duration of the contract (over 6 years) also introduces risks related to potential changes in technology, military requirements, or the contractor's financial stability over time.

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 AFTER EXCLUSION OF SOURCES

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: W15QKN14R0039

Offers Received: 7

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: DAY & Zimmermann Group Inc., the

Address: 17575 HIGHWAY 79, MIDDLETOWN, IA, 52638

Business Categories: Category Business, Manufacturer of Goods, Partnership or Limited Liability Partnership, Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $430,275,515

Exercised Options: $101,909,878

Current Obligation: $101,909,878

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline