DoD awards $187M for PGU-series ammunition, with Alliant Techsystems Operations LLC securing the deal

Contract Overview

Contract Amount: $187,326,424 ($187.3M)

Contractor: Alliant Techsystems Operations LLC

Awarding Agency: Department of Defense

Start Date: 2008-09-24

End Date: 2014-06-30

Contract Duration: 2,105 days

Daily Burn Rate: $89.0K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: BASIC AWARD FOR 20MM PGU-SERIES AMMUNITION

Place of Performance

Location: MINNEAPOLIS, HENNEPIN County, MINNESOTA, 55442

State: Minnesota Government Spending

Plain-Language Summary

Department of Defense obligated $187.3 million to ALLIANT TECHSYSTEMS OPERATIONS LLC for work described as: BASIC AWARD FOR 20MM PGU-SERIES AMMUNITION Key points: 1. Value for money assessed through firm fixed-price contract type, aiming for predictable costs. 2. Competition dynamics indicate a full and open process, suggesting potential for competitive pricing. 3. Risk indicators include contract duration and potential for cost overruns in long-term manufacturing. 4. Performance context relies on successful delivery of specified ammunition types. 5. Sector positioning within defense manufacturing, specifically ammunition production.

Value Assessment

Rating: good

The contract's firm fixed-price structure is a positive indicator for cost control. While the total award is substantial, the price per unit needs to be benchmarked against similar PGU-series ammunition contracts to fully assess value. The duration of the contract (over 2000 days) suggests a need for robust oversight to ensure continued cost-effectiveness and prevent scope creep or inefficiencies.

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 had the opportunity to submit proposals. This competitive environment is generally favorable for achieving better pricing and innovation. The presence of two bidders suggests a reasonably competitive market for this type of ammunition.

Taxpayer Impact: A full and open competition process is beneficial for taxpayers as it encourages multiple suppliers to offer their best prices, potentially leading to significant cost savings compared to sole-source or limited competition awards.

Public Impact

Benefits the Department of Defense by ensuring a supply of critical PGU-series ammunition. Services delivered include the manufacturing and delivery of ammunition. Geographic impact is primarily within the United States, supporting domestic defense industrial base. Workforce implications include employment in manufacturing and related support roles at the contractor's facility.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Long contract duration increases the risk of price escalation or changes in material costs.
Dependence on a single contractor for a critical defense item could pose supply chain risks.
Potential for performance issues if quality control is not rigorously maintained over the contract period.

Positive Signals

Firm fixed-price contract type helps to lock in costs and reduce budget uncertainty.
Full and open competition suggests a healthy market and potential for competitive pricing.
Award to a known entity (Alliant Techsystems) may indicate a track record of performance.

Sector Analysis

This contract falls within the defense manufacturing sector, specifically the production of ammunition. The market for military-grade ammunition is characterized by high barriers to entry due to stringent quality requirements, specialized manufacturing capabilities, and government procurement processes. Spending in this area is directly tied to defense budgets and operational needs. Comparable spending benchmarks would involve analyzing other large-scale ammunition procurements by the DoD.

Small Business Impact

The contract indicates that small business participation was not a primary set-aside consideration, as the 'small business' flag is false. While the prime contractor is a large entity, there may be opportunities for small businesses to participate as subcontractors. The impact on the small business ecosystem would depend on the extent to which Alliant Techsystems Operations LLC engages with small business suppliers for components or services.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Contract Management Agency (DCMA), ensuring compliance with contract terms, quality standards, and delivery schedules. Accountability measures are embedded in the firm fixed-price structure and performance metrics. Transparency is facilitated through contract award databases, though detailed performance data may be less public.

Related Government Programs

Department of Defense Ammunition Procurement
Ordnance Manufacturing Contracts
Defense Industrial Base Support
Alliant Techsystems Operations LLC Contracts

Risk Flags

Long contract duration may increase exposure to market volatility.
Dependence on a single supplier for critical munitions.
Potential for cost overruns if not managed tightly.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $187.3 million to ALLIANT TECHSYSTEMS OPERATIONS LLC. BASIC AWARD FOR 20MM PGU-SERIES AMMUNITION

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 (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $187.3 million.

What is the period of performance?

Start: 2008-09-24. End: 2014-06-30.

What is the historical spending pattern for PGU-series ammunition by the Department of Defense?

Historical spending on PGU-series ammunition by the Department of Defense can be analyzed by examining contract awards over several fiscal years. This specific contract, awarded in 2008 and ending in 2014, represents a significant portion of spending during that period. Broader analysis would involve aggregating data from similar contracts awarded to various defense contractors for different types of PGU ammunition (e.g., 20mm, 30mm) to identify trends in volume, pricing, and contractor concentration. Fluctuations in spending are often correlated with operational tempo, geopolitical events, and strategic inventory management decisions by the DoD.

How does the unit price of this PGU-series ammunition compare to market rates or similar contracts?

To assess the unit price, we would need to divide the total award amount ($187,326,423.63) by the quantity of ammunition procured. However, the quantity is not provided in the data. Assuming a hypothetical quantity, or by comparing to publicly available data on similar PGU-series ammunition contracts awarded around the same period (2008-2014) to other manufacturers, we could benchmark the price. Factors influencing unit price include the specific caliber and type of PGU round, manufacturing complexity, raw material costs at the time of award, and the competitive landscape. Without the quantity, a precise unit cost comparison is not possible, but the firm fixed-price nature suggests an effort to establish a predictable cost.

What is Alliant Techsystems Operations LLC's track record with similar defense contracts?

Alliant Techsystems Operations LLC (now part of Northrop Grumman) has a significant track record in defense contracting, particularly in munitions and aerospace. They have historically been a major supplier of various ammunition types to the U.S. military. Examining their past performance on similar large-scale, firm-fixed-price contracts for ordnance would provide insight into their reliability, quality control, and ability to meet delivery schedules. A review of past performance evaluations and any contract disputes or terminations would be crucial for a comprehensive assessment of their track record.

What are the primary risks associated with this type of ammunition manufacturing contract?

Primary risks in ammunition manufacturing contracts include fluctuations in raw material costs (metals, propellants), potential for manufacturing defects leading to quality issues or safety concerns, and supply chain disruptions for specialized components. For a long-duration contract like this (over 5 years), there's also the risk of technological obsolescence or changes in military requirements. Furthermore, geopolitical factors can impact demand and the availability of certain precursor materials. Ensuring robust quality assurance and risk mitigation plans are in place is critical for the contractor and the contracting agency.

How effective are firm-fixed-price contracts in managing costs for long-term defense procurements?

Firm-fixed-price (FFP) contracts are generally considered effective for managing costs in long-term defense procurements when the scope of work is well-defined and risks are understood. They shift the cost risk to the contractor, incentivizing efficiency and cost control. However, for very long durations or in volatile markets, FFP contracts can lead to contractors including significant contingency in their pricing, potentially inflating the initial cost. Alternatively, if unforeseen cost increases occur, contractors may seek contract modifications or face financial strain. For ammunition, where material costs can fluctuate, careful negotiation and potentially economic price adjustment clauses might be considered, though this specific award is listed as FFP without such clauses.

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: W52P1J08R0055

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Innovation Systems LLC

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: $187,326,424

Exercised Options: $187,326,424

Current Obligation: $187,326,424

Contract Characteristics

Consolidated Contract: Yes

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline