DoD awards $63.77M for M829A4 Armor Piercing Ammunition, a sole-source contract to Northrop Grumman

Contract Overview

Contract Amount: $63,770,700 ($63.8M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2021-11-15

End Date: 2023-12-29

Contract Duration: 774 days

Daily Burn Rate: $82.4K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: PRODUCTION YEAR 5 OF THE M829A4 CARTRIDGE, 120MM, ARMOR PIERCING, FIN STABILIZED, DISCARDING SABOT WITH TRACER (APFSDS-T)

Place of Performance

Location: MINNEAPOLIS, HENNEPIN County, MINNESOTA, 55442

State: Minnesota Government Spending

Plain-Language Summary

Department of Defense obligated $63.8 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: PRODUCTION YEAR 5 OF THE M829A4 CARTRIDGE, 120MM, ARMOR PIERCING, FIN STABILIZED, DISCARDING SABOT WITH TRACER (APFSDS-T) Key points: 1. This contract represents a significant investment in advanced armor-piercing ammunition capabilities. 2. The sole-source nature of this award warrants scrutiny regarding potential price inflation and limited innovation. 3. Production is slated for completion by late 2023, indicating a relatively short-term need for this specific lot. 4. The contract's value, while substantial, needs to be benchmarked against historical M829A4 procurement and similar advanced munitions. 5. Northrop Grumman's established role as a defense contractor suggests existing expertise but also raises questions about market competition. 6. The absence of small business subcontracting goals on this award may limit opportunities for smaller defense suppliers.

Value Assessment

Rating: fair

The contract value of $63.77 million for the M829A4 cartridge is substantial. Without direct comparisons to recent, similar sole-source awards for this specific munition, a precise value-for-money assessment is challenging. However, the lack of competition inherently limits the government's ability to secure the lowest possible price. Benchmarking against the unit cost of previous M829A4 procurements or comparable advanced kinetic energy penetrators would be necessary for a more definitive value assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis to Northrop Grumman Systems Corporation. The data does not provide justification for this sole-source award, such as a specific technological requirement or a lack of alternative sources. The absence of a competitive bidding process means that the government did not benefit from price discovery through multiple offers, potentially leading to a higher overall cost.

Taxpayer Impact: Taxpayers may be paying a premium due to the lack of competition. Without competitive pressure, there is less incentive for the contractor to offer the most cost-effective solution.

Public Impact

This contract directly supports the U.S. Army's armored warfare capabilities by providing advanced ammunition. The M829A4 cartridge is designed to defeat modern armored threats, enhancing soldier survivability and mission effectiveness. Production will occur in Minnesota, contributing to the regional defense industrial base and associated workforce. The availability of this munition is critical for maintaining readiness and deterrence posture for armored units.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potential cost savings.
Lack of transparency in the justification for sole-sourcing.
Potential for price escalation without competitive pressure.
No explicit small business subcontracting goals noted.

Positive Signals

Procurement of advanced, critical defense capability.
Contract awarded to an established defense manufacturer with relevant expertise.
Production year 5 indicates ongoing program maturity and potential for efficiency.

Sector Analysis

The defense sector, particularly ammunition manufacturing, is characterized by high barriers to entry due to specialized technology, stringent quality control, and significant capital investment. Northrop Grumman is a major player in this space. This contract for the M829A4 cartridge fits within the broader category of advanced munitions, which are essential for maintaining a technological edge in armored warfare. Spending on such specialized ammunition is often concentrated among a few key suppliers due to the complexity and strategic importance of the products.

Small Business Impact

This contract does not appear to have small business set-aside provisions, as indicated by 'sb': false. Furthermore, the absence of explicit subcontracting goals for small businesses means that opportunities for smaller defense contractors to participate in this specific award are not guaranteed. While Northrop Grumman may engage small businesses in its supply chain, the lack of formal requirements limits direct impact and oversight on small business inclusion for this particular contract.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Army's contracting and program management offices. The firm fixed-price nature of the contract provides some cost control, but the sole-source award necessitates careful monitoring of performance and pricing. Transparency regarding the justification for the sole-source award and ongoing cost analysis would be key oversight elements. Inspector General involvement would typically be triggered by allegations of fraud, waste, or abuse.

Related Government Programs

Other Ammunition Manufacturing Contracts
Department of Defense Weapons Systems Procurement
Army Combat Vehicle Ammunition
Northrop Grumman Defense Contracts

Risk Flags

Sole-source award requires careful justification review.
Potential for price escalation due to lack of competition.
Dependency on a single supplier for critical defense capability.
Limited transparency on specific performance metrics and unit costs.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $63.8 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. PRODUCTION YEAR 5 OF THE M829A4 CARTRIDGE, 120MM, ARMOR PIERCING, FIN STABILIZED, DISCARDING SABOT WITH TRACER (APFSDS-T)

Who is the contractor on this award?

The obligated recipient is NORTHROP GRUMMAN SYSTEMS CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Army).

What is the total obligated amount?

The obligated amount is $63.8 million.

What is the period of performance?

Start: 2021-11-15. End: 2023-12-29.

What is the historical spending trend for the M829A4 cartridge, and how does this award compare?

Analyzing the historical spending trend for the M829A4 cartridge requires access to historical contract data. Typically, advanced munitions like the M829A4 are procured in tranches over several years as production lines mature and operational needs evolve. This $63.77 million award represents a specific procurement lot, likely for Production Year 5. Without prior award data for this specific munition, it's difficult to establish a precise trend. However, defense spending on advanced ammunition is generally consistent, driven by modernization efforts and threat assessments. If previous awards were significantly higher or lower, it could indicate changes in unit costs, quantities ordered, or program phasing. A comparison would involve looking at the number of units procured and the average unit price across different contract awards over time to identify any significant deviations or patterns.

What is the justification for this contract being awarded on a sole-source basis?

The provided data indicates this contract was awarded on a 'NOT COMPETED' basis, signifying a sole-source procurement. The specific justification for this sole-source award is not detailed in the provided data. Typically, sole-source contracts are justified under specific circumstances outlined in federal acquisition regulations, such as when only one responsible source can provide the required supplies or services, there is a public exigency, or the contract is a follow-on to a competitively awarded contract where only the original contractor can provide the supplies or services. For advanced munitions like the M829A4, justifications often relate to unique technical capabilities, proprietary manufacturing processes, or the need for compatibility with existing platforms where only one manufacturer possesses the necessary expertise and tooling. A thorough review of the contract file would be required to ascertain the official justification.

What are the key performance metrics and delivery timelines associated with this contract?

This contract has a duration of 774 days, with a start date of November 15, 2021, and an end date of December 29, 2023. This timeframe covers the production and delivery of the M829A4 cartridges. Key performance metrics would likely include adherence to stringent quality control standards for ammunition, ensuring reliability and effectiveness in operational conditions. Delivery timelines are critical, as the Army relies on a steady supply of munitions to maintain readiness. Failure to meet delivery schedules could impact training exercises and operational deployment capabilities. Specific quality assurance provisions and delivery schedules would be detailed within the contract's statement of work and associated clauses.

How does the unit cost of the M829A4 cartridge compare to other similar advanced kinetic energy penetrators?

Determining the precise unit cost requires dividing the total contract value ($63,770,700.20) by the number of units procured. However, the number of units is not explicitly provided in the data. Assuming this is a single lot award, the unit cost would be a critical benchmark. Comparing this unit cost to other advanced kinetic energy penetrators (KEPs) is essential for assessing value. KEPs vary significantly in complexity, materials, and performance characteristics, which directly influence their cost. For instance, newer generation KEPs designed for enhanced penetration against advanced armor will naturally be more expensive than older models or those with less sophisticated designs. Benchmarking would involve identifying contracts for comparable KEPs from different manufacturers or for different systems and comparing their unit prices, adjusted for factors like quantity, contract type, and year of award.

What is Northrop Grumman's track record with producing advanced munitions for the Department of Defense?

Northrop Grumman Systems Corporation is a major defense contractor with a long-standing history of producing a wide array of defense systems, including advanced munitions. They have been involved in the development and production of various missile systems, warheads, and ammunition components. Their experience with complex defense programs suggests a strong capability in manufacturing, quality assurance, and program management. For specific munitions like the M829 series, Northrop Grumman's involvement indicates a deep understanding of the technical requirements and production processes. Their track record generally includes successful delivery of critical defense articles, though like any large contractor, specific program performance can vary. Past performance evaluations and contract awards would provide more granular detail on their specific successes and challenges in munitions production.

What are the potential risks associated with relying on a single supplier for this critical munition?

Relying on a single supplier for a critical munition like the M829A4 cartridge presents several risks. Firstly, it creates a dependency that can be exploited through price increases, as the government has limited leverage without alternative sources. Secondly, it can stifle innovation, as the sole supplier may have less incentive to invest in process improvements or next-generation technologies if their market share is guaranteed. Thirdly, supply chain disruptions, such as manufacturing issues, natural disasters, or geopolitical events affecting the sole supplier, could lead to significant shortages and impact military readiness. Finally, the lack of competition can lead to complacency in quality or delivery performance, as the contractor faces no direct market pressure from competitors.

Industry Classification

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

Product/Service Code: AMMUNITION AND EXPLOSIVES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: W15QKN20R0098

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

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, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $63,770,700

Exercised Options: $63,770,700

Current Obligation: $63,770,700

Subaward Activity

Number of Subawards: 21

Total Subaward Amount: $31,173,709

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline