DoD's $103M contract for PGU-15A/B ammunition awarded to Alliant Techsystems Operations LLC

Contract Overview

Contract Amount: $103,031,876 ($103.0M)

Contractor: Alliant Techsystems Operations LLC

Awarding Agency: Department of Defense

Start Date: 2007-07-31

End Date: 2013-02-28

Contract Duration: 2,039 days

Daily Burn Rate: $50.5K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 30MM PGU-15A/B

Place of Performance

Location: MINNEAPOLIS, HENNEPIN County, MINNESOTA, 55442, UNITED STATES OF AMERICA

State: Minnesota Government Spending

Plain-Language Summary

Department of Defense obligated $103.0 million to ALLIANT TECHSYSTEMS OPERATIONS LLC for work described as: 30MM PGU-15A/B Key points: 1. The contract represents a significant investment in ammunition manufacturing capabilities. 2. Competition dynamics for this contract are crucial for ensuring fair pricing. 3. Performance history and delivery timelines are key risk indicators. 4. This award is situated within the broader defense industrial base for munitions. 5. The firm-fixed-price structure aims to transfer cost risk to the contractor. 6. The contract duration suggests a long-term need for these munitions.

Value Assessment

Rating: fair

The total award value of $103 million for PGU-15A/B ammunition over approximately six years appears to be within a reasonable range for defense procurement of specialized munitions. Benchmarking against similar contracts for large-caliber ammunition requires detailed analysis of specific technical requirements, quantities, and market conditions at the time of award. Without direct comparable contract data, a precise value-for-money assessment is challenging, but the scale of the award suggests a substantial procurement.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple bidders were likely considered. The presence of two bids suggests a competitive environment, though the exact number of interested parties and the rigor of the evaluation process are not detailed here. Full and open competition generally promotes price discovery and can lead to more favorable pricing for the government.

Taxpayer Impact: A competitive award process helps ensure that taxpayer dollars are used efficiently by driving down costs through market forces.

Public Impact

The primary beneficiaries are the Department of Defense, specifically the Department of the Army, ensuring readiness. The services delivered include the manufacturing and supply of PGU-15A/B ammunition. The geographic impact is primarily within the United States, supporting domestic defense manufacturing. Workforce implications include employment in manufacturing and related support roles within the defense sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if market prices for raw materials fluctuate significantly.
Risk of production delays impacting military readiness if supply chain issues arise.
Ensuring consistent quality control for munitions is paramount.

Positive Signals

Awarded under full and open competition, suggesting a competitive pricing environment.
Firm-fixed-price contract shifts cost risk to the contractor.
Long contract duration allows for stable production planning and potential economies of scale.

Sector Analysis

This contract falls within the defense sector, specifically the manufacturing of ordnance and ammunition. The market for such specialized munitions is typically dominated by a few large defense contractors. Spending benchmarks for ammunition procurement can vary widely based on the type of munition, quantity, and geopolitical demand. This award represents a significant portion of spending within the ammunition manufacturing sub-sector.

Small Business Impact

The data indicates this contract was not set aside for small businesses, nor does it explicitly mention subcontracting plans for small businesses. The primary contractor, Alliant Techsystems Operations LLC, is a large entity. The impact on the small business ecosystem would depend on whether they engage small businesses as subcontractors for components or services, which is not detailed in this data.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and administrative contracting officer within the Department of the Army. Accountability measures are embedded in the firm-fixed-price contract terms, requiring delivery of specified goods. Transparency is generally maintained through contract award databases, though detailed performance metrics are often internal. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Department of Defense Ammunition Procurement
Ordnance Manufacturing Contracts
Army Aviation Support Contracts
Defense Industrial Base Sustainment

Risk Flags

Potential for supply chain disruptions
Quality control risks in munitions manufacturing
Market volatility of raw materials

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $103.0 million to ALLIANT TECHSYSTEMS OPERATIONS LLC. 30MM PGU-15A/B

Who is the contractor on this award?

The obligated recipient is ALLIANT TECHSYSTEMS OPERATIONS 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 $103.0 million.

What is the period of performance?

Start: 2007-07-31. End: 2013-02-28.

What is the historical spending pattern for PGU-15A/B ammunition by the Department of Defense?

Historical spending data for PGU-15A/B ammunition prior to this $103 million award would provide crucial context for assessing its significance. Analyzing past contracts for this specific munition, including award values, quantities, and contract types, would reveal trends in demand and pricing. For instance, if previous awards were smaller or less frequent, this contract might indicate an increased operational tempo or a strategic build-up of inventory. Conversely, if this award is consistent with prior spending, it suggests a stable, ongoing requirement. Without specific historical data, it's difficult to determine if this represents a surge in demand or a continuation of established procurement levels.

How does the unit cost of PGU-15A/B ammunition under this contract compare to market rates or similar government contracts?

Determining the precise unit cost requires dividing the total award value ($103,031,875.83) by the number of units procured. However, the number of units is not provided in the data. If we assume a hypothetical quantity, we could calculate a unit cost for comparison. Benchmarking this against other government contracts for similar large-caliber ammunition, or against commercial market prices (if available), is essential for a value-for-money assessment. Factors like specific technical specifications, required quality standards, and delivery timelines heavily influence unit costs. A higher unit cost might be justified by unique performance requirements or expedited delivery schedules. Conversely, a significantly higher unit cost compared to benchmarks could indicate potential overpricing or inefficiencies.

What are the key performance indicators (KPIs) and risk mitigation strategies associated with this contract?

Key performance indicators for this ammunition contract would likely include on-time delivery rates, adherence to quality specifications (e.g., defect rates, performance in testing), and production output volume. Risk mitigation strategies employed by the government and the contractor would focus on ensuring supply chain resilience, managing potential cost fluctuations of raw materials, and maintaining stringent quality control throughout the manufacturing process. The firm-fixed-price contract structure itself is a risk mitigation tool, transferring cost overrun risk to Alliant Techsystems Operations LLC. The government would likely monitor production progress closely and may have clauses for remedies in case of significant delays or quality failures.

What is the track record of Alliant Techsystems Operations LLC in delivering similar defense contracts?

Alliant Techsystems Operations LLC (now part of Northrop Grumman) has a long and extensive history of delivering complex defense systems and munitions to the U.S. military. Their track record typically includes large-scale production contracts for various types of ordnance, including artillery shells, missile components, and other energetic materials. Assessing their specific performance on contracts similar to this PGU-15A/B award would involve reviewing past contract histories for on-time delivery, quality compliance, and cost performance. Generally, major defense contractors like Alliant are expected to meet stringent performance requirements, and their ability to secure substantial contracts like this one suggests a generally positive performance history, though specific contract performance can vary.

How does the competition level (2 bidders) for this contract potentially impact pricing and innovation?

Having two bidders in a full and open competition suggests a moderately competitive environment. While more bidders generally lead to greater price reductions and potentially more innovative solutions, two bidders can still exert significant downward pressure on price, especially if both are capable and motivated to win the contract. The government's evaluation criteria would determine how much weight is given to price versus technical merit. If the two bidders were closely matched in capability, the pricing would likely be highly competitive. However, a limited number of bidders could also indicate barriers to entry in this specialized manufacturing sector, potentially limiting long-term innovation if the incumbent contractor faces little pressure to improve processes or develop new technologies.

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

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: W52P1J07R0056

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Innovation Systems LLC (UEI: 618705925)

Address: 4700 NATHAN LN N, PLYMOUTH, MN, 55442

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

Financial Breakdown

Contract Ceiling: $103,031,876

Exercised Options: $103,031,876

Current Obligation: $103,031,876

Contract Characteristics

Cost or Pricing Data: NO

Timeline