DoD awards $151M contract for 346,478 155mm M795 projectiles to American Ordnance LLC

Contract Overview

Contract Amount: $151,175,281 ($151.2M)

Contractor: American Ordnance LLC

Awarding Agency: Department of Defense

Start Date: 2024-09-24

End Date: 2027-08-30

Contract Duration: 1,070 days

Daily Burn Rate: $141.3K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 2

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Defense

Official Description: ORDER W519TC24F0399 IS FOR THE CONTRACTOR TO LOAD, ASSEMBLE, AND PACK A QUANTITY OF 346,478 155MM M795 TNT LOADED PROJECTILES.

Place of Performance

Location: MIDDLETOWN, DES MOINES County, IOWA, 52638

State: Iowa Government Spending

Plain-Language Summary

Department of Defense obligated $151.2 million to AMERICAN ORDNANCE LLC for work described as: ORDER W519TC24F0399 IS FOR THE CONTRACTOR TO LOAD, ASSEMBLE, AND PACK A QUANTITY OF 346,478 155MM M795 TNT LOADED PROJECTILES. Key points: 1. Significant award for ammunition manufacturing, crucial for military readiness. 2. Competition method indicates potential for price discovery, but exclusion of sources warrants scrutiny. 3. Fixed Price with Economic Price Adjustment contract introduces inflation risk. 4. Sector is dominated by a few large players, limiting broader competition.

Value Assessment

Rating: good

The per-unit cost is approximately $436.50. This is within a reasonable range for specialized munitions, considering manufacturing complexity and material costs.

Cost Per Unit: $436.50

Competition Analysis

Competition Level: limited

The contract was awarded under 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES'. This suggests that while some competition occurred, specific sources were excluded, potentially limiting the breadth of price discovery and innovation.

Taxpayer Impact: Taxpayer funds are being used for a critical defense procurement. The pricing appears reasonable, but the limited competition aspect warrants monitoring for long-term cost-effectiveness.

Public Impact

Ensures supply of essential artillery ammunition for military operations. Supports domestic manufacturing capabilities for defense articles. Potential for price fluctuations due to economic price adjustment clause. Contract award impacts the defense industrial base and supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Economic price adjustment clause may lead to cost overruns.
Limited competition could reduce cost savings.
Reliance on a single contractor for a critical munition.

Positive Signals

Secures a large quantity of vital ammunition.
Supports domestic manufacturing.
Contract duration allows for stable production planning.

Sector Analysis

This contract falls within the Ammunition (except Small Arms) Manufacturing sector, a critical component of the defense industrial base. Spending in this sector is directly tied to military readiness and geopolitical factors, with significant government investment.

Small Business Impact

The contractor, American Ordnance LLC, is not identified as a small business. This award does not appear to directly benefit small businesses through subcontracting opportunities based on the provided data.

Oversight & Accountability

The Department of the Army awarded this contract, indicating established oversight processes. However, the 'exclusion of sources' in the competition method warrants further review to ensure fairness and optimal pricing.

Related Government Programs

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

Risk Flags

Potential for cost escalation due to EPA.
Limited competition may not yield best value.
Lack of small business participation.
Dependence on a single supplier for critical munitions.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $151.2 million to AMERICAN ORDNANCE LLC. ORDER W519TC24F0399 IS FOR THE CONTRACTOR TO LOAD, ASSEMBLE, AND PACK A QUANTITY OF 346,478 155MM M795 TNT LOADED 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 $151.2 million.

What is the period of performance?

Start: 2024-09-24. End: 2027-08-30.

What specific criteria led to the exclusion of certain sources in the competition process, and how did this impact the final price?

The exclusion of sources typically occurs due to specialized capabilities, security requirements, or proprietary technology. Understanding these criteria is crucial to assess if the limited competition resulted in a fair market price or if alternative approaches could have yielded better value for taxpayers. Further investigation into the justification for exclusion is recommended.

What is the projected impact of the economic price adjustment clause on the total contract value given current inflation trends?

The economic price adjustment (EPA) clause allows for modifications to the contract price based on fluctuations in specific economic indicators, such as labor and material costs. Given current inflationary pressures, the EPA could significantly increase the final cost beyond the initial $151 million. A detailed analysis of the EPA formula and historical cost data is needed to forecast potential overruns.

How does the unit cost of these M795 projectiles compare to similar contracts awarded by other government agencies or allied nations?

Benchmarking the unit cost of $436.50 against comparable contracts is essential for value assessment. Variations in material costs, manufacturing processes, and contract terms can influence pricing. A comparative analysis with recent awards for similar munitions, considering geopolitical factors and scale, would provide a clearer picture of whether this contract represents competitive pricing.

Industry Classification

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

Product/Service Code: AMMUNITION AND EXPLOSIVES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 2

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT (K)

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: $151,175,281

Exercised Options: $151,175,281

Current Obligation: $151,175,281

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: W519TC23D0014

IDV Type: IDC

Timeline