Army awards $41.3M contract for small arms ammunition, highlighting manufacturing capabilities

Contract Overview

Contract Amount: $41,296,955 ($41.3M)

Contractor: General Dynamics Ordnance & Tactical Systems, Inc.

Awarding Agency: Department of Defense

Start Date: 2006-07-28

End Date: 2010-12-31

Contract Duration: 1,617 days

Daily Burn Rate: $25.5K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 200610!001670!2100!W52P1J!U.S. ARMY INDUSTRIAL OPERATIONS !W52P1J06C0040 !A!N! !N! ! !20060728!20070930!006317473!194860813!001381284!N!GENERAL DYNAMICS ORDNANCE AND !8820 ROUTE 148 !MARION !IL!62959!46916!199!17!MARION !WILLIAMSON !ILLINOIS !+000008575849!N!N!000000000000!1305!AMMUNITION, THROUGH 30 MM !A6 !AMMUNITION !000 !NOT DISCERNABLE !332992!E! !3! ! ! ! ! !99990909!B! ! !A! !A!N!J!2!002!N!3A!A!N!A! ! !N!C!N! ! ! !A!A!A!A!000!A!C!N! ! ! ! ! ! !0001! !

Place of Performance

Location: MARION, WILLIAMSON County, ILLINOIS, 62959

State: Illinois Government Spending

Plain-Language Summary

Department of Defense obligated $41.3 million to GENERAL DYNAMICS ORDNANCE & TACTICAL SYSTEMS, INC. for work described as: 200610!001670!2100!W52P1J!U.S. ARMY INDUSTRIAL OPERATIONS !W52P1J06C0040 !A!N! !N! ! !20060728!20070930!006317473!194860813!001381284!N!GENERAL DYNAMICS ORDNANCE AND !8820 ROUTE 148 !MARION !IL!62959!46916!199!17!MARION !WILL… Key points: 1. Contract awarded for ammunition manufacturing, indicating a need for sustained supply. 2. The contract was competed, suggesting potential for competitive pricing. 3. Performance period spans over four years, implying a long-term requirement. 4. The awardee has a significant presence in ammunition production. 5. Geographic location of the contractor is in Illinois, potentially impacting regional employment. 6. The contract falls under the manufacturing of ammunition, a critical defense component.

Value Assessment

Rating: good

The contract value of $41.3 million for small arms ammunition manufacturing appears reasonable given the duration and scope. Benchmarking against similar contracts for ammunition production would provide a more precise value-for-money assessment. However, the firm fixed-price nature of the contract shifts risk to the contractor, which can be favorable for the government if costs are managed effectively. The total award amount is within expected ranges for this type of defense procurement.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under 'Full and Open Competition After Exclusion of Sources,' indicating that while competition was sought, certain sources were excluded. The presence of two bidders suggests a degree of competition, which generally aids in price discovery. The specific exclusion of sources warrants further investigation to understand its impact on the competitive landscape and final pricing.

Taxpayer Impact: The competitive process, even with exclusions, likely resulted in a more favorable price for taxpayers than a sole-source award. Understanding the rationale behind source exclusion is key to ensuring maximum taxpayer value.

Public Impact

The U.S. Army benefits from a secured supply of small arms ammunition. Services delivered include the manufacturing of ammunition, crucial for military operations. The geographic impact is primarily in Illinois, where the contractor is located, potentially supporting local jobs and the regional economy. Workforce implications include employment opportunities in the defense manufacturing sector in Illinois.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for limited competition due to source exclusions.
Reliance on a single contractor for a critical supply chain component.
Long performance period could lead to price increases if market conditions change significantly.

Positive Signals

Firm fixed-price contract structure limits cost overruns for the government.
Awardee is an established entity in defense manufacturing.
Competition, even if limited, provides some price leverage.
Contract duration ensures supply stability for the Army.

Sector Analysis

This contract falls within the defense manufacturing sector, specifically focusing on ammunition production. The market for small arms ammunition is driven by military demand and is characterized by specialized manufacturing processes and stringent quality requirements. Comparable spending benchmarks for ammunition contracts can vary widely based on type, quantity, and technological sophistication. The North American Industry Classification System (NAICS) code 332992, Small Arms Ammunition Manufacturing, represents a niche but critical segment of the broader industrial base.

Small Business Impact

This contract was not set aside for small businesses, and there is no indication of subcontracting requirements for small businesses within the provided data. The awardee, General Dynamics Ordnance and Tactical Systems, is a large corporation, suggesting that the primary economic benefits will accrue to larger entities rather than the small business ecosystem. Further analysis of subcontracting plans would be needed to determine any indirect impact on small businesses.

Oversight & Accountability

Oversight for this contract would typically be managed by the U.S. Army Contracting Command, with potential involvement from the Defense Contract Management Agency (DCMA) for quality assurance and delivery monitoring. Transparency is facilitated through contract award databases like FPDS. Accountability measures are embedded in the firm fixed-price contract terms, penalizing the contractor for cost overruns. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Small Arms Ammunition
Defense Ammunition Procurement
Army Ammunition Industrial Base
Tactical Ammunition Manufacturing
Ordnance Manufacturing Contracts

Risk Flags

Potential for limited competition due to source exclusions.
Long contract duration may expose government to price volatility.
Dependence on a single contractor for critical supplies.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $41.3 million to GENERAL DYNAMICS ORDNANCE & TACTICAL SYSTEMS, INC.. 200610!001670!2100!W52P1J!U.S. ARMY INDUSTRIAL OPERATIONS !W52P1J06C0040 !A!N! !N! ! !20060728!20070930!006317473!194860813!001381284!N!GENERAL DYNAMICS ORDNANCE AND !8820 ROUTE 148 !MARION !IL!62959!46916!199!17!MARION !WILLIAMSON !ILLINOIS !+000008575849!N!N!000000000000!1305!AMMUNITION, THROUGH 30 MM !A6 !AMMUNITION !000 !NOT DISCERNABLE !332992!E! !3! ! ! ! ! !999

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 $41.3 million.

What is the period of performance?

Start: 2006-07-28. End: 2010-12-31.

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

General Dynamics Ordnance & Tactical Systems, Inc. (GD-OTS) has a long-standing history and significant experience in manufacturing ammunition and ordnance for the U.S. military and allied nations. They are a major producer of small caliber ammunition, medium caliber ammunition, and mortar rounds. Their track record includes numerous contracts with the Department of Defense, often involving large quantities and complex production requirements. While specific performance metrics for past contracts are not detailed here, GD-OTS is generally considered a reliable supplier within the defense industrial base. Their expertise spans various ammunition types, ensuring they possess the technical capabilities to meet the demands of this specific contract. Past performance evaluations, if available through government databases, would offer a more granular view of their reliability and quality.

How does the awarded price of $41.3 million compare to market rates for similar small arms ammunition contracts?

Directly comparing the $41.3 million total award to market rates for small arms ammunition is challenging without specific details on the types, quantities, and calibers of ammunition produced under this contract. However, the duration of the contract (July 2006 to December 2010, approximately 4.5 years) suggests an average annual value of roughly $9.2 million. This figure needs to be considered in the context of the scale of production. The firm fixed-price nature of the contract implies that the government has locked in a price, and the contractor bears the risk of cost fluctuations. To benchmark effectively, one would need to compare the per-unit cost of specific ammunition types (e.g., 5.56mm, 7.62mm) against historical contract awards for similar quantities and quality standards from other manufacturers or for different branches of the military. The number of bidders (two) also suggests a degree of competition that should theoretically drive pricing towards market efficiency.

What are the primary risks associated with this contract for the U.S. Army?

The primary risks for the U.S. Army in this contract revolve around supply chain reliability, potential quality control issues, and the long-term sustainability of the manufacturing capability. Given that this is a firm fixed-price contract, the risk of cost overruns is primarily on the contractor, but the Army faces the risk of delivery delays or substandard quality if the contractor struggles with production. Dependence on a single source for a critical component like ammunition, even with some competition during the award phase, can create vulnerabilities. Furthermore, the manufacturing facility's long-term viability and its ability to adapt to evolving technological requirements or geopolitical shifts represent a strategic risk. Ensuring consistent adherence to stringent military specifications throughout the contract's extended performance period is crucial to mitigate quality-related risks.

What is the expected program effectiveness and impact of this ammunition supply?

The effectiveness of this contract is measured by the reliable and timely supply of small arms ammunition to the U.S. Army, ensuring operational readiness. This supply directly supports troop deployment, training exercises, and combat missions where small arms are essential. The program's impact is significant, as ammunition is a consumable, high-demand item critical for force projection and sustainment. By securing a supply through this contract, the Army can maintain its operational tempo and fulfill its national defense objectives. The effectiveness is contingent on the contractor meeting quality standards and delivery schedules, thereby ensuring that soldiers have the necessary munitions to perform their duties safely and effectively.

How have historical spending patterns for small arms ammunition evolved, and does this contract align?

Historical spending patterns for small arms ammunition within the Department of Defense have fluctuated significantly based on operational tempo, geopolitical events, and strategic inventory management. Periods of heightened conflict, such as those in Iraq and Afghanistan, typically saw substantial increases in ammunition procurement to meet battlefield demands. Conversely, periods of drawdown or reduced global engagement might lead to lower procurement levels, focusing more on modernization and sustainment. This contract, awarded in 2006 and spanning through 2010, falls within a period of active military operations, suggesting that the $41.3 million award aligns with the demand driven by ongoing conflicts. The specific amount reflects the Army's need to replenish stocks and maintain readiness during this time. Understanding broader trends in ammunition spending requires analyzing multi-year procurement data and considering factors like inventory levels and the introduction of new weapon systems.

What is the significance of the NAICS code 332992 (Small Arms Ammunition Manufacturing) in the context of federal spending?

The NAICS code 332992, Small Arms Ammunition Manufacturing, represents a specialized segment within the broader manufacturing and defense industrial base. Federal spending under this code is critical for national security, as it ensures the availability of essential munitions for military personnel. Contracts awarded under this classification typically involve high-precision manufacturing processes, stringent quality control, and adherence to rigorous military specifications. The size of the market can fluctuate based on defense budgets and global security needs. Companies operating under this NAICS code are often key suppliers to the Department of Defense and other government agencies. Federal investment in this area supports not only military readiness but also domestic manufacturing capabilities and specialized technical expertise within the workforce.

Industry Classification

NAICS: Manufacturing › Other Fabricated Metal Product Manufacturing › Small Arms Ammunition Manufacturing

Product/Service Code: AMMUNITION AND EXPLOSIVES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: General Dynamics Corp (UEI: 001381284)

Address: 8820 ROUTE 148, MARION, IL, 12

Business Categories: Category Business, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Contract Characteristics

Cost or Pricing Data: NO

Timeline