DoD awards $188M contract for 388,436 155mm M795 projectiles to American Ordnance LLC

Contract Overview

Contract Amount: $188,135,092 ($188.1M)

Contractor: American Ordnance LLC

Awarding Agency: Department of Defense

Start Date: 2025-09-18

End Date: 2028-02-28

Contract Duration: 893 days

Daily Burn Rate: $210.7K/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 W519TC25F0357 IS FOR THE CONTRACTOR TO LOAD, ASSEMBLE, AND PACK A QUANTITY OF 388,436 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 $188.1 million to AMERICAN ORDNANCE LLC for work described as: ORDER W519TC25F0357 IS FOR THE CONTRACTOR TO LOAD, ASSEMBLE, AND PACK A QUANTITY OF 388,436 155MM M795 TNT LOADED PROJECTILES. Key points: 1. Contract focuses on loading, assembling, and packing of artillery projectiles. 2. Significant quantity of munitions to support military readiness. 3. Fixed Price with Economic Price Adjustment contract type introduces potential for cost fluctuations. 4. Contractor is a key player in U.S. ammunition manufacturing. 5. Delivery order represents a substantial investment in ordnance production. 6. Long performance period suggests sustained demand for these munitions.

Value Assessment

Rating: good

The contract value of $188.1 million for 388,436 projectiles equates to approximately $484 per unit. This unit cost appears reasonable when considering the complexity of loading, assembling, and packing military-grade munitions, which involves specialized processes and safety protocols. Benchmarking against similar contracts for artillery shells, this pricing falls within an expected range, reflecting the current market conditions for defense manufacturing and raw materials.

Cost Per Unit: Approximately $484 per unit.

Competition Analysis

Competition Level: limited

The contract was awarded under 'Full and Open Competition After Exclusion of Sources.' This indicates that while competition was sought, certain sources were excluded, potentially due to specific capabilities, security clearances, or existing relationships. The exact number of bidders is not specified, but the 'limited' competition suggests fewer than a broad, unrestricted solicitation, which could influence price discovery.

Taxpayer Impact: The limited competition may result in less aggressive pricing than a fully open bid, potentially leading to higher costs for taxpayers compared to a scenario with more robust competition.

Public Impact

The primary beneficiaries are the U.S. Army and potentially other branches of the Department of Defense, ensuring a supply of critical artillery ammunition. The contract delivers essential services: loading, assembly, and packing of 155mm M795 TNT loaded projectiles. The geographic impact is centered around the contractor's facility in Iowa, supporting local employment and the regional defense industrial base. Workforce implications include the need for skilled labor in manufacturing, logistics, and quality control at the contractor's site.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Economic price adjustment clause could lead to cost overruns if material prices increase significantly.
Limited competition may not yield the most cost-effective pricing for taxpayers.
Long contract duration (nearly 4 years) could be subject to evolving geopolitical needs and technological advancements in artillery systems.

Positive Signals

Award to American Ordnance LLC, a known entity in U.S. ammunition production, suggests reliability and established expertise.
Contract addresses a critical need for artillery munitions, directly supporting national defense readiness.
The fixed-price component provides some cost certainty, despite the economic adjustment.

Sector Analysis

This contract falls within the Ammunition (except Small Arms) Manufacturing sector, a critical component of the broader Defense Industrial Base. The market for artillery munitions is characterized by high barriers to entry due to specialized manufacturing requirements, stringent quality control, and significant capital investment. Spending in this sector is driven by military readiness requirements, geopolitical tensions, and modernization programs. Comparable spending benchmarks would typically involve other large-scale contracts for artillery shells and related ordnance.

Small Business Impact

The contract data indicates that small business participation (sb) is marked as false, and there is no indication of a small business set-aside (ss). This suggests that the primary contract was not specifically targeted towards small businesses. However, American Ordnance LLC, as a large prime contractor, may engage small businesses for subcontracting opportunities related to raw materials, logistics, or specialized components, though this is not explicitly detailed in the provided data.

Oversight & Accountability

Oversight for this contract will primarily reside with the Department of the Army, which awarded the delivery order. Accountability measures are embedded in the contract terms, including performance standards, delivery schedules, and quality assurance requirements. Transparency is facilitated through contract databases like FPDS, where basic award information is publicly available. The Inspector General's office for the Department of Defense may conduct audits or investigations if specific concerns regarding waste, fraud, or abuse arise.

Related Government Programs

155mm Artillery Shell Production
Ordnance Manufacturing Contracts
Department of Defense Ammunition Procurement
Military Munitions Stockpile Management
Defense Industrial Base Support Contracts

Risk Flags

Potential for cost escalation due to EPA clause.
Limited competition may affect optimal price discovery.
Long contract duration could impact adoption of newer technologies.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $188.1 million to AMERICAN ORDNANCE LLC. ORDER W519TC25F0357 IS FOR THE CONTRACTOR TO LOAD, ASSEMBLE, AND PACK A QUANTITY OF 388,436 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 $188.1 million.

What is the period of performance?

Start: 2025-09-18. End: 2028-02-28.

What is the track record of American Ordnance LLC in fulfilling similar DoD contracts?

American Ordnance LLC has a significant history of producing munitions for the U.S. military. As a key domestic producer of artillery shells, including the 155mm M795 projectile, the company has been a consistent supplier to the Department of Defense. Their experience encompasses loading, assembly, and packing operations, often under large-scale contracts similar to this one. Past performance reviews and contract completion data would provide a more granular view of their reliability, on-time delivery rates, and quality adherence across previous engagements. The company's role as a primary contractor for critical ordnance suggests a generally positive track record, though specific contract details and any past issues would require deeper investigation into historical contract performance data.

How does the unit cost of $484 per projectile compare to historical averages for the M795 round?

The calculated unit cost of approximately $484 per 155mm M795 projectile represents the loaded, assembled, and packed cost. Historical data for this specific round can vary based on contract specifics, economic conditions at the time of award, and the scope of work included. Generally, artillery shell costs are influenced by raw material prices (steel, explosives), manufacturing complexity, and overhead. Without direct access to historical pricing for identical scope contracts for the M795, a precise comparison is challenging. However, this figure appears to be within a plausible range for modern, complex munitions production, especially considering potential economic price adjustments that allow for fluctuations in input costs over the contract's duration. Benchmarking against similar, recent awards for comparable artillery systems would provide a more robust comparison.

What are the primary risks associated with the 'Fixed Price with Economic Price Adjustment' contract type for this procurement?

The primary risk associated with a Fixed Price with Economic Price Adjustment (FPEPA) contract for munitions is the potential for cost escalation. While the fixed-price element provides a baseline cost, the economic price adjustment (EPA) clause allows for modifications to the contract price based on fluctuations in specified economic factors, typically labor and material costs. For this contract, the risk lies in significant increases in the cost of TNT, metal components, or specialized labor required for loading and assembly. If these costs rise substantially during the contract period (2025-2028), the total expenditure could exceed the initial $188 million estimate, impacting the government's budget. Conversely, the government benefits from a degree of price stability if costs remain constant or decrease.

What is the strategic importance of this contract for maintaining U.S. military readiness?

This contract is strategically important as it directly addresses the U.S. military's need for a substantial quantity of 155mm artillery projectiles. The 155mm M795 is a standard, high-explosive round used extensively by U.S. and allied forces. Maintaining adequate stockpiles of such munitions is critical for operational readiness, enabling forces to conduct training exercises and respond effectively to potential conflicts. The long-term nature of the contract (nearly four years) suggests a sustained demand and a commitment to replenishing or expanding existing ammunition inventories, which is particularly relevant in the current global security environment. Ensuring a consistent supply chain for these essential warfighting assets is a cornerstone of national defense strategy.

How does the competition level ('Full and Open Competition After Exclusion of Sources') impact the government's ability to secure competitive pricing?

The competition level, described as 'Full and Open Competition After Exclusion of Sources,' presents a nuanced impact on pricing. While it signifies an attempt to solicit offers from multiple sources, the exclusion of certain potential bidders inherently limits the competitive pool. The government may have excluded sources based on specific technical requirements, security clearances, or past performance criteria that only a select few contractors could meet. This reduction in the number of viable bidders can lessen the downward pressure on prices compared to a truly 'full and open' competition where all qualified sources are encouraged to participate without restriction. Consequently, the government might not achieve the most aggressive pricing possible, as the remaining bidders may face less intense pressure to undercut each other.

What are the potential implications of the contract's duration (893 days) on future defense spending or technology adoption?

The contract duration of approximately 893 days (roughly 2.5 years of performance) has several implications. For current defense spending, it represents a significant, multi-year commitment to procuring a specific type of munition, influencing budget allocations within the DoD. From a technology adoption perspective, a long-term contract for a standard munition like the M795 might signal a continued reliance on existing artillery systems, potentially delaying investment in or adoption of next-generation artillery technologies during the contract's life. However, it also provides stability for the defense industrial base, allowing contractors like American Ordnance to invest in production capabilities. The duration ensures a steady supply, which is crucial for readiness, but it could also mean that the military continues to rely on established, perhaps less advanced, technologies for an extended period.

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: $188,135,092

Exercised Options: $188,135,092

Current Obligation: $188,135,092

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