DoD Awards $192.6M Multi-Year Delivery Order to American Ordnance for M1128 Projectiles

Contract Overview

Contract Amount: $192,591,077 ($192.6M)

Contractor: American Ordnance LLC

Awarding Agency: Department of Defense

Start Date: 2023-09-27

End Date: 2027-10-31

Contract Duration: 1,495 days

Daily Burn Rate: $128.8K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: UKRAINE: MULTI-YEAR, UCA DELIVERY ORDER FOR M1128 LAP PROJECTILES

Place of Performance

Location: MIDDLETOWN, DES MOINES County, IOWA, 52638

State: Iowa Government Spending

Plain-Language Summary

Department of Defense obligated $192.6 million to AMERICAN ORDNANCE LLC for work described as: UKRAINE: MULTI-YEAR, UCA DELIVERY ORDER FOR M1128 LAP PROJECTILES Key points: 1. Significant investment in critical ammunition manufacturing for Ukraine support. 2. Sole-source award to American Ordnance LLC raises questions about competition and pricing. 3. Long-term contract (1495 days) provides production stability but limits market flexibility. 4. Focus on defense manufacturing sector, specifically ammunition production.

Value Assessment

Rating: fair

The contract is a firm fixed price delivery order. Without competitive bids, it's difficult to assess if the $192.6 million price represents optimal value. Benchmarking against similar ammunition contracts would be necessary for a definitive assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award to American Ordnance LLC. This lack of competition may have limited price discovery and potentially resulted in a higher cost to the government.

Taxpayer Impact: Taxpayer funds are being used for a sole-source contract, which warrants scrutiny to ensure fair pricing and efficient use of resources, especially given the significant dollar amount.

Public Impact

Ensures continued supply of critical munitions for U.S. allies. Supports a key domestic defense industrial base manufacturer. Long-term commitment may impact availability of similar munitions for other government needs. Potential for price increases due to lack of competitive bidding.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award
Lack of competitive bidding
Long-term commitment

Positive Signals

Supports Ukraine
Secures critical munition supply
Invests in domestic defense industry

Sector Analysis

This contract falls within the defense manufacturing sector, specifically ammunition production. The award amount is substantial for this niche, highlighting the significant investment in supporting allied defense capabilities through specialized manufacturing.

Small Business Impact

The awardee, American Ordnance LLC, is not identified as a small business. This contract does not appear to include specific provisions or set-asides for small business participation.

Oversight & Accountability

The Department of the Army awarded this delivery order. Oversight will be crucial to ensure performance, quality, and adherence to the firm fixed price throughout the contract's duration, especially given the sole-source nature.

Related Government Programs

Ammunition (except Small Arms) Manufacturing
Department of Defense Contracting
Department of the Army Programs

Risk Flags

Sole-source award lacks competition
Potential for inflated pricing
Long-term commitment may reduce flexibility
Limited transparency on price justification

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $192.6 million to AMERICAN ORDNANCE LLC. UKRAINE: MULTI-YEAR, UCA DELIVERY ORDER FOR M1128 LAP PROJECTILES

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 $192.6 million.

What is the period of performance?

Start: 2023-09-27. End: 2027-10-31.

What is the justification for the sole-source award, and how was the price determined to be fair and reasonable without competition?

The justification for a sole-source award typically stems from unique capabilities, urgent needs, or lack of viable alternatives. The government would have conducted a price analysis, potentially using historical data, commercial pricing, or cost breakdowns from the contractor, to determine if the $192.6 million price was fair and reasonable. Further details on this justification and analysis are not provided in the data.

What are the potential risks associated with a multi-year, sole-source contract for ammunition, particularly concerning long-term cost and supply chain flexibility?

A multi-year, sole-source contract carries risks of escalating costs over time due to the absence of competitive pressure. It can also reduce supply chain flexibility, making it harder to adapt to changing requirements or incorporate technological advancements. Furthermore, reliance on a single supplier can create vulnerabilities if that supplier faces production issues or financial instability.

How does this significant investment in M1128 projectiles align with broader U.S. defense strategy and support for Ukraine's ongoing needs?

This substantial award indicates a strategic commitment to equipping Ukraine with essential munitions, reflecting U.S. foreign policy objectives and defense industrial base readiness. It ensures a consistent supply of a specific type of projectile deemed critical for current battlefield demands, bolstering Ukraine's defensive capabilities and signaling long-term U.S. support.

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

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 17575 DMC HIGHWAY 79, MIDDLETOWN, IA, 52638

Business Categories: Category Business, Limited Liability Corporation, Manufacturer of Goods, Not Designated a Small Business, Partnership or Limited Liability Partnership, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $864,433,107

Exercised Options: $192,591,077

Current Obligation: $192,591,077

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: W15QKN23D0056

IDV Type: IDC

Timeline