Department of the Army awards $223.6M contract for advanced multi-purpose 120mm ammunition to Alliant Techsystems

Contract Overview

Contract Amount: $223,619,804 ($223.6M)

Contractor: Alliant Techsystems Operations LLC

Awarding Agency: Department of Defense

Start Date: 2015-07-28

End Date: 2027-02-13

Contract Duration: 4,218 days

Daily Burn Rate: $53.0K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 4

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: IGF::OT::IGF CARTRIDGE, 120MM, ADVANCED MULTI-PURPOSE (AMP), XM1147, HIGH EXPLOSIVE MULTI-PURPOSE WITH TRACER (HEMP-T)

Place of Performance

Location: MINNEAPOLIS, HENNEPIN County, MINNESOTA, 55442

State: Minnesota Government Spending

Plain-Language Summary

Department of Defense obligated $223.6 million to ALLIANT TECHSYSTEMS OPERATIONS LLC for work described as: IGF::OT::IGF CARTRIDGE, 120MM, ADVANCED MULTI-PURPOSE (AMP), XM1147, HIGH EXPLOSIVE MULTI-PURPOSE WITH TRACER (HEMP-T) Key points: 1. Contract awarded through full and open competition after exclusion of sources, indicating a competitive process with specific justifications. 2. The contract type is Cost Plus Fixed Fee, which can lead to cost overruns if not managed carefully. 3. The duration of the contract is substantial at 4218 days, suggesting a long-term need for this ammunition. 4. The awardee, Alliant Techsystems Operations LLC, is a significant defense contractor, implying established capabilities. 5. The North American Industry Classification System (NAICS) code 332993 points to the Ammunition (except Small Arms) Manufacturing sector. 6. The contract value of $223.6 million represents a significant investment in advanced ordnance capabilities for the Army.

Value Assessment

Rating: good

The contract value of $223.6 million for advanced multi-purpose 120mm ammunition appears to be within a reasonable range for specialized defense procurement. Benchmarking against similar contracts for advanced ordnance requires access to proprietary pricing data, but the scale of the award suggests a substantial quantity and technological sophistication. The Cost Plus Fixed Fee (CPFF) contract type allows for cost reimbursement plus a fixed fee, which can be appropriate for development or production where costs are uncertain, but it necessitates robust oversight to ensure value for money.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded under 'Full and Open Competition After Exclusion of Sources.' This designation implies that while the competition was intended to be open, specific sources were excluded, likely due to unique capabilities, proprietary technology, or national security considerations. The number of bidders is not explicitly stated, but the 'exclusion of sources' suggests a potentially limited pool of qualified offerors. This type of competition can sometimes lead to higher prices compared to unrestricted full and open competition if the excluded sources represent significant competitive alternatives.

Taxpayer Impact: Taxpayers may face higher costs due to the exclusion of potential competitors, as the government may not have benefited from the full spectrum of market competition. However, the exclusion might be justified if it ensures access to critical, specialized technology or capabilities essential for national defense.

Public Impact

The primary beneficiaries are the U.S. Army's ground forces, who will receive advanced, multi-purpose ammunition for their 120mm cannons. The services delivered include the manufacturing and supply of XM1147 High Explosive Multi-Purpose (HEMP-T) rounds, enhancing combat effectiveness. The geographic impact is primarily national, with production likely occurring at Alliant Techsystems facilities and distribution to Army units. Workforce implications include job creation and sustainment within the defense manufacturing sector, particularly in areas related to ordnance production.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Fixed Fee contract type necessitates vigilant oversight to prevent cost overruns and ensure fair pricing.
The 'exclusion of sources' in competition could limit price discovery and potentially increase the overall cost to the government.
Long contract duration (over 11 years) requires ongoing monitoring for performance, technological relevance, and potential obsolescence.

Positive Signals

Award to a known, established defense contractor like Alliant Techsystems suggests a high likelihood of successful delivery and technical capability.
The contract is for advanced, multi-purpose ammunition, indicating investment in modernizing and enhancing warfighter capabilities.
The specific nature of the ammunition (XM1147 HEMP-T) suggests a focus on critical, high-demand ordnance.

Sector Analysis

This contract falls within the Ammunition (except Small Arms) Manufacturing sector, a critical component of the broader defense industrial base. The market for advanced ordnance is characterized by high barriers to entry due to specialized technology, rigorous testing, and significant capital investment. Spending in this sector is driven by military modernization efforts, geopolitical demands, and the need to replace expended munitions. Comparable spending benchmarks would typically be found within other large-scale defense procurement contracts for similar weapon systems or ammunition types.

Small Business Impact

The data indicates that small business participation is not a primary focus for this specific contract, as the 'sb' field is false. There is no explicit mention of small business set-asides or subcontracting goals. This suggests that the prime contractor, Alliant Techsystems, is expected to fulfill the majority of the requirements directly. The impact on the small business ecosystem is likely minimal unless the prime contractor actively engages small businesses as subcontractors for specific components or services, which is not detailed in the provided data.

Oversight & Accountability

Oversight for this Cost Plus Fixed Fee contract will likely involve the Department of the Army Contracting Command and potentially the Defense Contract Management Agency (DCMA). Accountability measures will focus on tracking costs, ensuring adherence to the fixed fee, monitoring performance against delivery schedules, and verifying the quality of the manufactured ammunition. Transparency is typically managed through contract reporting mechanisms and public contract databases, though detailed cost breakdowns may be considered sensitive. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Department of Defense Ammunition Procurement
Army Ground Combat Systems
Ordnance Manufacturing Contracts
Advanced Weapon Systems Procurement
Defense Industrial Base Contracts

Risk Flags

Potential for cost overruns due to CPFF contract type.
Limited competition due to exclusion of sources may impact price.
Risk of technological obsolescence over the long contract duration.
Need for robust government oversight to ensure value for money.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $223.6 million to ALLIANT TECHSYSTEMS OPERATIONS LLC. IGF::OT::IGF CARTRIDGE, 120MM, ADVANCED MULTI-PURPOSE (AMP), XM1147, HIGH EXPLOSIVE MULTI-PURPOSE WITH TRACER (HEMP-T)

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 $223.6 million.

What is the period of performance?

Start: 2015-07-28. End: 2027-02-13.

What is the track record of Alliant Techsystems Operations LLC in delivering similar defense contracts, particularly for ammunition?

Alliant Techsystems Operations LLC, now part of Northrop Grumman's defense sector, has a long and established history of delivering complex defense systems and munitions to the U.S. military. They are a significant producer of various types of ammunition, including artillery shells, small arms ammunition, and advanced ordnance. Their track record includes numerous large-scale contracts with the Department of Defense, often involving complex manufacturing processes and stringent quality requirements. While specific performance metrics for past contracts are not publicly detailed, their continued success in winning major defense awards suggests a consistent ability to meet technical specifications, delivery schedules, and quality standards. The company's experience in handling Cost Plus Fixed Fee contracts also indicates familiarity with the associated oversight and reporting requirements.

How does the pricing structure (Cost Plus Fixed Fee) of this contract compare to industry standards for similar advanced ammunition production?

The Cost Plus Fixed Fee (CPFF) pricing structure is common in defense contracting, especially for programs involving development, complex manufacturing, or where costs are difficult to estimate precisely upfront. For advanced ammunition like the XM1147, where technological sophistication and specialized materials are involved, CPFF can be an appropriate choice. It allows the contractor to recover incurred costs while earning a predetermined profit (the fixed fee). However, this structure places a significant emphasis on government oversight to ensure costs are reasonable and allocable. Compared to fixed-price contracts, CPFF generally carries a higher risk of cost growth for the government if not managed diligently. Industry standards often involve a mix of contract types depending on program maturity; however, for new or advanced munitions, CPFF is a recognized and utilized model, albeit one that requires robust cost control measures.

What are the primary risks associated with the 'Full and Open Competition After Exclusion of Sources' award type for this contract?

The primary risk associated with 'Full and Open Competition After Exclusion of Sources' is the potential for reduced price competition. By excluding certain sources, the government may limit the number of qualified bidders, potentially leading to less aggressive pricing than if all capable sources were allowed to compete. This exclusion is typically justified by specific technical requirements, proprietary technology, or national security concerns that only a limited number of contractors can meet. Another risk is that the excluded sources might have offered innovative solutions or more cost-effective approaches. For taxpayers, this can translate to higher acquisition costs. Effective risk mitigation involves ensuring the exclusion is well-documented, justified, and that the remaining competitive pool is sufficiently robust to drive a reasonable price.

What is the expected impact of this contract on the modernization of U.S. Army ground combat capabilities?

This contract is expected to have a significant positive impact on the modernization of U.S. Army ground combat capabilities by providing advanced, multi-purpose 120mm ammunition. The XM1147 HEMP-T round is designed to offer enhanced lethality and versatility compared to older ammunition types, capable of engaging a wider range of targets with a single munition. This reduces the logistical burden of carrying multiple specialized rounds and increases the effectiveness of Abrams tanks and other 120mm-equipped platforms. By ensuring a steady supply of this cutting-edge ammunition, the contract directly supports the Army's objective of maintaining a technological advantage on the battlefield and improving the survivability and combat effectiveness of its armored and mechanized forces.

How does the contract duration of over 11 years (4218 days) influence the assessment of value for money and potential obsolescence?

The extended contract duration of over 11 years (4218 days) presents a dual-edged sword for value-for-money assessment. On one hand, it provides long-term supply chain stability and predictability for a critical munition, potentially allowing for economies of scale and more efficient production planning by the contractor, which could translate to better pricing over time. It also ensures sustained availability for the warfighter. On the other hand, such a long duration increases the risk of technological obsolescence. Military technology evolves rapidly, and ammunition developed today might face challenges from newer threats or countermeasures within a decade. Assessing value for money requires continuous monitoring to ensure the ammunition remains relevant and effective throughout its lifecycle, and potentially incorporating clauses for mid-term reviews or technology refreshes if feasible.

Industry Classification

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

Product/Service Code: RESEARCH AND DEVELOPMENT › DEFENSE (OTHER) R&D

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: W15QKN14R0192

Offers Received: 4

Pricing Type: COST PLUS FIXED FEE (U)

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: $364,963,208

Exercised Options: $223,619,804

Current Obligation: $223,619,804

Subaward Activity

Number of Subawards: 185

Total Subaward Amount: $60,672,126

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline