DoD awards $48.8M for ammunition manufacturing, with American Ordnance LLC securing the contract

Contract Overview

Contract Amount: $48,788,658 ($48.8M)

Contractor: American Ordnance LLC

Awarding Agency: Department of Defense

Start Date: 2023-03-30

End Date: 2026-12-30

Contract Duration: 1,371 days

Daily Burn Rate: $35.6K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: MICLIC OP2

Place of Performance

Location: MIDDLETOWN, DES MOINES County, IOWA, 52638

State: Iowa Government Spending

Plain-Language Summary

Department of Defense obligated $48.8 million to AMERICAN ORDNANCE LLC for work described as: MICLIC OP2 Key points: 1. The contract value represents a significant investment in maintaining and producing essential munitions. 2. Full and open competition was utilized, suggesting a potentially competitive bidding process. 3. The fixed-price contract type shifts performance risk to the contractor. 4. The duration of the contract indicates a long-term need for these services. 5. The specific North American Industry Classification System (NAICS) code points to a specialized manufacturing sector. 6. The contract is a delivery order, implying it's part of a larger indefinite-delivery contract.

Value Assessment

Rating: good

Benchmarking the value of this contract requires detailed cost breakdowns and comparisons to similar ammunition manufacturing contracts. However, the firm fixed-price structure generally indicates that the contractor has a strong incentive to manage costs effectively. Without specific per-unit cost data or historical pricing for similar munitions, a precise value-for-money assessment is challenging, but the competitive award process is a positive indicator.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, suggesting that multiple bidders were likely solicited and evaluated. This approach is generally favored as it allows for the widest possible range of potential suppliers to compete, which can lead to better pricing and innovation. The number of bidders and the specific evaluation criteria would provide further insight into the intensity of the competition.

Taxpayer Impact: Taxpayers benefit from full and open competition through potentially lower prices and a wider selection of qualified contractors, fostering a more efficient use of public funds.

Public Impact

The Department of the Army benefits from a secured supply of essential ammunition. This contract supports the defense industrial base and national security. The manufacturing activities will likely occur in Iowa, potentially creating or sustaining jobs in that region. The services delivered are critical for military readiness and operational capabilities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for supply chain disruptions impacting delivery timelines.
Reliance on a single contractor for a critical defense component could pose a risk if not managed proactively.
Fluctuations in raw material costs could impact the contractor's profitability and potentially lead to future price adjustments if not adequately addressed in the contract.

Positive Signals

The firm fixed-price contract type incentivizes contractor efficiency and cost control.
Awarding under full and open competition suggests a robust market and potential for competitive pricing.
The multi-year duration provides stability for both the government and the contractor in planning and execution.

Sector Analysis

This contract falls within the defense manufacturing sector, specifically focusing on ammunition production. The market for defense munitions is characterized by high barriers to entry due to specialized technology, stringent quality control requirements, and long-term government procurement cycles. Spending in this area is driven by military readiness needs, geopolitical factors, and the lifecycle of existing weapon systems. Comparable spending benchmarks would involve analyzing aggregate defense procurement data for similar ordnance categories.

Small Business Impact

The data indicates that small business participation was not a specific set-aside for this contract (sb: false). While this contract itself may not directly benefit small businesses through a set-aside, the prime contractor, American Ordnance LLC, may engage small businesses as subcontractors for specialized components or services. Further investigation into subcontracting plans would be needed to assess the broader impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would typically be managed by the Department of the Army contracting and program management offices. Accountability measures are embedded in the firm fixed-price contract terms, requiring the contractor to meet specified quality and delivery standards. Transparency is facilitated through contract award databases, though detailed performance metrics and cost audits are generally not publicly disclosed. Inspector General (IG) jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Ordnance and Ammunition Manufacturing
Department of Defense Procurement
Military Ammunition Production
Defense Industrial Base Support

Risk Flags

Potential for supply chain vulnerabilities
Long-term reliance on a single source
Fluctuations in raw material costs

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $48.8 million to AMERICAN ORDNANCE LLC. MICLIC OP2

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 $48.8 million.

What is the period of performance?

Start: 2023-03-30. End: 2026-12-30.

What is the historical spending pattern for ammunition manufacturing contracts awarded by the Department of the Army?

Analyzing historical spending patterns for ammunition manufacturing by the Department of the Army reveals a consistent and substantial investment driven by national defense requirements. Over the past decade, annual spending has fluctuated based on global security postures, specific military campaigns, and modernization efforts. Contracts often involve long-term production runs for standard munitions, as well as research and development for next-generation ordnance. Key factors influencing spending include the lifecycle of weapon systems requiring specific ammunition types, inventory replenishment strategies, and the strategic importance of maintaining a robust domestic industrial base. For instance, periods of heightened geopolitical tension or active deployment often correlate with increased contract awards and values. The data suggests a sustained commitment to ensuring adequate ammunition stocks, with significant portions allocated to large-scale production contracts awarded through competitive processes.

How does the awarded price per unit for this ammunition compare to industry benchmarks or similar government contracts?

A precise comparison of the per-unit cost for the ammunition produced under this contract against industry benchmarks or similar government contracts is challenging without access to detailed cost breakdowns and specific product specifications. Ammunition costs can vary significantly based on caliber, explosive fill, guidance systems, and production volume. Contracts awarded under full and open competition, especially those with firm fixed-price terms, generally aim to achieve competitive pricing. However, the specialized nature of defense manufacturing and the proprietary processes involved can limit direct comparability. To conduct a thorough benchmark, one would need to identify contracts for identical or highly similar ammunition types, analyze their award prices, and account for differences in contract duration, quantity, and any specific technical requirements. Publicly available data often aggregates spending, making granular per-unit cost analysis difficult without further inquiry.

What is the track record of American Ordnance LLC in fulfilling defense manufacturing contracts, particularly for ammunition?

American Ordnance LLC has a significant track record in the defense manufacturing sector, particularly in the production of ammunition. As a key player in the U.S. defense industrial base, the company has been involved in manufacturing a range of ordnance, including large-caliber munitions. Their history often includes fulfilling substantial government contracts awarded through competitive processes. Performance evaluations for such contracts typically assess adherence to delivery schedules, quality standards, and cost control. While specific details of past performance on individual contracts are often proprietary or require access to government performance databases, American Ordnance's continued success in securing major contracts from agencies like the Department of the Army suggests a generally positive performance history. Their expertise is critical for maintaining the nation's munition readiness.

What are the potential risks associated with relying on a single contractor for this specific type of ammunition manufacturing?

Relying on a single contractor, even one with a strong track record like American Ordnance LLC, for critical ammunition manufacturing presents several potential risks. Foremost among these is the risk of supply chain disruption. Any issue affecting the contractor's facility, workforce, or key suppliers could halt production, impacting military readiness. Secondly, a lack of direct competition for follow-on contracts could potentially lead to less favorable pricing or reduced innovation over time, although the initial award was competitive. There's also the risk of knowledge or capability loss within the broader industrial base if other potential manufacturers are not kept viable through opportunities. Finally, dependence on a single source can create vulnerabilities in the event of unforeseen geopolitical events or national emergencies that might require surge production capabilities beyond the contractor's capacity.

How does the duration of this contract (ending in 2026) align with typical munition procurement cycles and inventory management strategies?

The contract duration, ending in December 2026, aligns with typical munition procurement cycles that often span several years to ensure consistent supply and leverage economies of scale. Defense agencies manage inventories based on strategic needs, threat assessments, and budget allocations, often requiring multi-year production contracts. This duration suggests that the ammunition being produced is intended for sustained use or strategic stockpiling rather than immediate, short-term deployment needs. It allows the Department of the Army to plan its logistical requirements and budget effectively, while providing American Ordnance LLC with the necessary lead time and production volume to optimize manufacturing processes. Such multi-year awards are common for critical defense materiel where production lead times are significant and consistent availability is paramount.

Industry Classification

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

Product/Service Code: WEAPONS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

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, 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: $48,788,658

Exercised Options: $48,788,658

Current Obligation: $48,788,658

Subaward Activity

Number of Subawards: 1

Total Subaward Amount: $936,600

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: W52P1J21D0035

IDV Type: IDC

Timeline