DoD awards $203M for 155mm M795 metal parts, with limited competition and fixed-price incentive terms

Contract Overview

Contract Amount: $202,931,645 ($202.9M)

Contractor: General Dynamics Ordnance & Tactical Systems, Inc.

Awarding Agency: Department of Defense

Start Date: 2024-09-26

End Date: 2026-08-31

Contract Duration: 704 days

Daily Burn Rate: $288.3K/day

Competition Type: NOT COMPETED

Pricing Type: FIXED PRICE INCENTIVE

Sector: Defense

Official Description: THE PURPOSE OF THIS DELIVERY ORDER FOR THE MANUFACTURE, ASSEMBLY, INSPECTION, PACKAGE, AND DELIVERY OF 155MM M795 METAL PARTS ASSEMBLIES ON BEHALF OF PROJECT MANAGER COMBAT AMMUNITION SYSTEMS.

Place of Performance

Location: MESQUITE, DALLAS County, TEXAS, 75149

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $202.9 million to GENERAL DYNAMICS ORDNANCE & TACTICAL SYSTEMS, INC. for work described as: THE PURPOSE OF THIS DELIVERY ORDER FOR THE MANUFACTURE, ASSEMBLY, INSPECTION, PACKAGE, AND DELIVERY OF 155MM M795 METAL PARTS ASSEMBLIES ON BEHALF OF PROJECT MANAGER COMBAT AMMUNITION SYSTEMS. Key points: 1. This contract focuses on the manufacturing and delivery of critical ammunition components, highlighting the defense sector's reliance on specialized industrial capabilities. 2. The fixed-price incentive contract type suggests a shared risk between the government and contractor, aiming to balance cost control with performance incentives. 3. The absence of a small business set-aside indicates the scale and specialized nature of this requirement, likely favoring large, established defense manufacturers. 4. The contract duration of approximately two years points to a steady demand for these essential munitions. 5. The award to a single, known entity suggests a concentrated market for this specific type of ammunition component.

Value Assessment

Rating: fair

The total contract value of $203 million for 155mm M795 metal parts assemblies appears substantial, reflecting the specialized manufacturing processes and materials involved. Benchmarking this against similar defense contracts for ammunition components is challenging without more granular data on unit quantities and specific configurations. However, the fixed-price incentive structure implies that cost efficiencies are intended, though the ultimate realized cost will depend on performance against targets. The base award amount of $288,255 for initial efforts seems disproportionately low compared to the total potential value, suggesting significant future funding or a phased approach to the delivery order.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple potential suppliers. This approach is typically used when only one contractor possesses the necessary specialized capabilities, technology, or security clearances required for the product. The lack of competition means that the government did not benefit from a bidding process that could drive down prices through market forces. This raises questions about whether alternative suppliers could have met the requirements or if the sole-source justification is robust.

Taxpayer Impact: For taxpayers, a sole-source award means the absence of competitive pressure to secure the best possible price. This can potentially lead to higher costs compared to a fully competed contract, as the government relies on negotiation and oversight to ensure fair pricing.

Public Impact

The primary beneficiaries are the U.S. Army and potentially other branches of the Department of Defense, ensuring a supply of essential 155mm artillery ammunition. The contract delivers manufactured metal parts assemblies for the M795 projectile, a key component in modern artillery systems. The geographic impact is primarily within Texas, where the contractor is located, potentially supporting local manufacturing jobs and supply chains. Workforce implications include employment for skilled manufacturing labor, engineers, and quality control personnel at the contractor's facility.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potentially overlooks alternative suppliers.
Fixed-price incentive contracts can lead to cost overruns if targets are not met or if incentives are structured unfavorably.
Reliance on a single supplier for critical defense components poses a supply chain risk.
The significant total value without clear unit pricing makes value-for-money assessment difficult.

Positive Signals

Contract ensures a critical supply of ammunition components for national defense.
Fixed-price incentive structure aims to align contractor and government interests for efficient production.
Award to an established entity suggests proven manufacturing capability and reliability.
The contract duration provides a predictable demand signal for the manufacturer.

Sector Analysis

The defense manufacturing sector, particularly ammunition production, is characterized by high barriers to entry due to specialized technology, stringent quality control, and significant capital investment. This contract falls within the broader industrial base supporting military readiness. The market for 155mm ammunition components is relatively concentrated, with a few key players holding the primary contracts. Spending in this area is driven by geopolitical factors and military modernization efforts, making it a stable but sensitive segment of the defense budget. Comparable spending benchmarks are difficult to ascertain without specific details on the M795 variant and quantity.

Small Business Impact

This contract was not set aside for small businesses, nor does it appear to have specific subcontracting requirements for small businesses mentioned in the provided data. The nature of manufacturing specialized defense components like 155mm ammunition parts often requires large-scale facilities and advanced technological capabilities that are typically held by larger defense contractors. This suggests that the primary awardee is likely a major defense industrial firm, and any small business involvement would be indirect through the prime contractor's supply chain, rather than through direct set-aside awards.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Army's contracting and program management offices, responsible for ensuring delivery, quality, and adherence to contract terms. The fixed-price incentive structure necessitates close monitoring of performance metrics and cost targets to manage potential overruns. Transparency is generally maintained through contract award databases and reporting requirements, though specific details of performance and cost may be sensitive. Inspector General (IG) jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Department of Defense Ammunition Procurement
155mm Artillery Systems
Combat Ammunition Systems
Defense Industrial Base Manufacturing
Ordnance Manufacturing

Risk Flags

Sole-source award
Potential for higher costs due to lack of competition
Supply chain concentration risk
Complexity of fixed-price incentive contracts

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $202.9 million to GENERAL DYNAMICS ORDNANCE & TACTICAL SYSTEMS, INC.. THE PURPOSE OF THIS DELIVERY ORDER FOR THE MANUFACTURE, ASSEMBLY, INSPECTION, PACKAGE, AND DELIVERY OF 155MM M795 METAL PARTS ASSEMBLIES ON BEHALF OF PROJECT MANAGER COMBAT AMMUNITION SYSTEMS.

Who is the contractor on this award?

The obligated recipient is GENERAL DYNAMICS ORDNANCE & TACTICAL SYSTEMS, INC..

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $202.9 million.

What is the period of performance?

Start: 2024-09-26. End: 2026-08-31.

What is the historical spending pattern for 155mm M795 metal parts assemblies by the Department of the Army?

Analyzing historical spending for specific components like the 155mm M795 metal parts assemblies requires access to detailed procurement databases. General Dynamics Ordnance & Tactical Systems, Inc. has been a significant supplier of ammunition to the U.S. military for many years. Without specific contract history for this exact component, it's difficult to provide precise figures. However, the Department of the Army consistently procures large quantities of artillery shells and their components to maintain readiness and support ongoing operations. Spending in this category can fluctuate based on global security environments, modernization programs, and inventory replenishment needs. The current $203 million award suggests a substantial, ongoing requirement for these parts, aligning with sustained investment in artillery capabilities.

How does the fixed-price incentive (FPI) contract type typically function in defense manufacturing, and what are its implications for this specific award?

A Fixed-Price Incentive (FPI) contract is a type of cost-reimbursement contract where the contractor and the government share the risks and rewards of cost savings or overruns. It establishes an initial target cost, a target profit, and a price ceiling. If the final cost is below the target cost, both parties share in the savings according to a predetermined formula. Conversely, if the final cost exceeds the target cost, the contractor absorbs a larger portion of the overrun up to the price ceiling. For this $203 million award, the FPI structure aims to incentivize General Dynamics to control manufacturing costs for the M795 metal parts while ensuring quality and timely delivery. The specific sharing ratio and price ceiling are critical details that would determine the ultimate cost to the government and the profit potential for the contractor.

What are the specific risks associated with a sole-source award for critical defense components like 155mm ammunition parts?

Sole-source awards for critical defense components carry several inherent risks. Firstly, the absence of competition can lead to higher prices than might be achieved in a competitive bidding process, as market pressures to offer the lowest cost are removed. Secondly, it can foster complacency in the awarded contractor, potentially reducing incentives for innovation or efficiency improvements over time. Thirdly, it creates a single point of failure in the supply chain; if the sole-source provider experiences production issues, quality control failures, or financial instability, the government's ability to procure these essential parts could be severely jeopardized. This reliance also limits the government's flexibility to switch suppliers if performance becomes unsatisfactory.

What is the typical performance track record of General Dynamics Ordnance & Tactical Systems, Inc. in fulfilling defense manufacturing contracts?

General Dynamics Ordnance & Tactical Systems, Inc. (GD-OTS) is a well-established and significant player in the defense industry, with a long history of manufacturing a wide range of munitions and ordnance systems for the U.S. military and allied nations. They are known for producing artillery shells, mortar rounds, tank ammunition, and related components. Historically, GD-OTS has generally demonstrated a strong capability to meet production demands and quality standards for complex defense contracts. While specific performance metrics for every contract are not publicly available, their continued success in securing large, critical contracts from the Department of Defense suggests a consistent track record of reliability and technical proficiency in fulfilling demanding manufacturing requirements.

How does the manufacturing of 155mm M795 metal parts contribute to overall military readiness and operational capability?

The 155mm M795 projectile is a standard, high-explosive artillery round used extensively by the U.S. Army and Marine Corps. The metal parts assemblies are fundamental structural components of this round, requiring precise manufacturing to ensure proper function, safety, and ballistic performance. A consistent and reliable supply of these parts is crucial for maintaining adequate stockpiles of ammunition, which directly impacts military readiness. Artillery provides essential indirect fire support, enabling ground forces to engage targets at range, suppress enemy positions, and conduct offensive operations. Therefore, the uninterrupted production and delivery of these components are vital for sustaining the operational capabilities of artillery units in training, deployment, and combat scenarios.

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: FIXED PRICE INCENTIVE (L)

Evaluated Preference: NONE

Contractor Details

Parent Company: Wico Limited

Address: 19850 INTERSTATE HIGHWAY 635, MESQUITE, TX, 75149

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: $202,931,645

Exercised Options: $202,931,645

Current Obligation: $202,931,645

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: W15QKN24D0037

IDV Type: IDC

Timeline