DoD awards $190M for PGU-series ammunition, with General Dynamics securing the contract

Contract Overview

Contract Amount: $190,320,382 ($190.3M)

Contractor: General Dynamics Ordnance & Tactical Systems, Inc.

Awarding Agency: Department of Defense

Start Date: 2008-09-24

End Date: 2014-12-31

Contract Duration: 2,289 days

Daily Burn Rate: $83.1K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Defense

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

Place of Performance

Location: MARION, WILLIAMSON County, ILLINOIS, 62959

State: Illinois Government Spending

Plain-Language Summary

Department of Defense obligated $190.3 million to GENERAL DYNAMICS ORDNANCE & TACTICAL SYSTEMS, INC. for work described as: BASIC AWARD OF 20MM PGU-SERIES AMMUNITION Key points: 1. Value for money assessed through competitive bidding and fixed-price structure. 2. Competition dynamics indicate a robust market for ammunition manufacturing. 3. Risk indicators are moderate, given the established nature of ammunition production. 4. Performance context relies on timely delivery and adherence to specifications. 5. Sector positioning places this within the broader defense industrial base. 6. Contract duration of nearly 6 years suggests a significant, long-term need.

Value Assessment

Rating: good

The contract value of approximately $190 million for PGU-series ammunition appears reasonable given the duration and the nature of defense procurement. Benchmarking against similar large-scale ammunition contracts would provide further insight, but the firm fixed-price structure suggests an effort to control costs. The award to a single, established contractor implies a focus on proven capability and reliability, which can be a good value proposition in defense.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, suggesting that multiple capable vendors had the opportunity to bid. The fact that it resulted in an award to a single entity, General Dynamics Ordnance & Tactical Systems, Inc., implies they offered the most advantageous proposal based on price, technical factors, or other evaluation criteria. The presence of competition is generally positive for price discovery.

Taxpayer Impact: Full and open competition helps ensure that taxpayer dollars are used efficiently by driving competitive pricing among qualified suppliers.

Public Impact

The Department of the Army is the primary beneficiary, ensuring a supply of critical ammunition. Services delivered include the manufacturing and provision of PGU-series ammunition. Geographic impact is likely concentrated around manufacturing facilities and military installations. Workforce implications include jobs in manufacturing and related support roles within the defense sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for supply chain disruptions impacting delivery timelines.
Reliance on a single contractor could pose long-term supply risks if market conditions change.

Positive Signals

Award to an established defense contractor with a track record in ordnance.
Firm fixed-price contract helps mitigate cost overrun risks for the government.
Long contract duration indicates a stable, predictable demand for the product.

Sector Analysis

This contract falls within the defense industrial base, specifically the manufacturing of ordnance and ammunition. The market for such specialized defense articles is typically characterized by a limited number of highly capable, vetted suppliers. Spending in this sector is driven by military readiness requirements and geopolitical factors. Comparable spending benchmarks would involve other large-scale ammunition procurements for various weapon systems.

Small Business Impact

The data indicates this contract was not specifically set aside for small businesses, nor does it explicitly mention subcontracting goals for small businesses. As a large-scale procurement of specialized defense equipment, the primary contractor is likely a large entity. The impact on the small business ecosystem would depend on whether General Dynamics utilizes small business subcontractors, which is not detailed in this award information.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and program management structures. 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 specific performance details may be sensitive. 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
Tactical Ammunition Supply

Risk Flags

Long-term supply dependency
Potential for obsolescence if PGU-series is phased out
Raw material price volatility

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $190.3 million to GENERAL DYNAMICS ORDNANCE & TACTICAL SYSTEMS, INC.. BASIC AWARD OF 20MM PGU-SERIES AMMUNITION

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 $190.3 million.

What is the period of performance?

Start: 2008-09-24. End: 2014-12-31.

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

Historical spending on PGU-series ammunition by the Department of the Army would likely show a consistent demand driven by training, operational readiness, and inventory replenishment needs. Prior to this $190 million award, there would have been previous contracts, potentially with the same or different manufacturers, to fulfill these requirements. Analyzing past contract values, durations, and awarded quantities would reveal trends in unit costs, supplier base evolution, and the overall budget allocated to this specific munition type. Fluctuations might correlate with geopolitical events, changes in military doctrine, or the introduction of new weapon systems requiring different ammunition. Understanding this history provides context for the current award's scale and pricing.

How does the unit cost of this PGU-series ammunition compare to similar contracts awarded in the past or to other branches of the military?

A direct comparison of the unit cost for this PGU-series ammunition requires access to detailed pricing information within the contract, which is often not publicly available in full. However, by dividing the total award amount ($190,320,382.32) by the estimated quantity (if known, or by inferring from the contract duration and typical usage rates), a notional unit cost can be estimated. This estimate can then be benchmarked against publicly reported unit costs for similar ammunition types or contracts awarded to different entities or branches around the same period. Variations in unit cost can be attributed to factors such as production volume, specific technical requirements, raw material costs, and the competitive landscape at the time of each award. Significant deviations from benchmarks might warrant further investigation into the specific circumstances of this contract.

What is General Dynamics Ordnance & Tactical Systems, Inc.'s track record with similar defense contracts?

General Dynamics Ordnance & Tactical Systems, Inc. (GD-OTS) has a well-established track record in manufacturing a wide range of ordnance and ammunition for the U.S. military and allied nations. They are known for producing various types of munitions, including artillery shells, mortar rounds, and specialized rounds like the PGU-series used in aircraft cannons. Their history likely includes numerous large-scale, long-term contracts with the Department of Defense, demonstrating their capacity, quality control, and ability to meet stringent military specifications. Past performance evaluations, contract completion history, and any significant past performance issues or commendations would provide a comprehensive view of their reliability and capability in fulfilling this current $190 million award.

What are the key performance indicators (KPIs) and potential risks associated with this ammunition supply contract?

Key performance indicators for this contract would likely revolve around on-time delivery of conforming ammunition, meeting specified quality and safety standards, and maintaining production rates as required. Potential risks include supply chain disruptions affecting raw materials or components, manufacturing defects leading to rejection of lots, delays in delivery impacting military readiness, and potential cost increases if the firm fixed-price structure doesn't adequately account for unforeseen market volatility. Cybersecurity risks related to production data and intellectual property could also be a concern. The government's mitigation strategies would involve robust quality assurance, regular performance reviews, and potentially maintaining strategic stockpiles.

How does the $190 million award compare to the total annual spending on ammunition by the Department of Defense?

The $190 million award represents a significant, but not overwhelming, portion of the Department of Defense's total annual spending on ammunition. The DoD procures a vast array of munitions across all services, ranging from small arms ammunition to large-caliber projectiles and advanced missile components. Annual defense budgets typically allocate billions of dollars to ammunition procurement and sustainment. This specific contract for PGU-series ammunition addresses a particular need, likely for specific aircraft or weapon systems. Its value should be considered within the context of the broader ammunition portfolio, where other major contracts for different munition types would also be active concurrently.

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: General Dynamics Corp (UEI: 001381284)

Address: 6658 ROUTE 148, MARION, IL, 12

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Federally Funded Research and Development Corp, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $190,320,382

Exercised Options: $190,320,382

Current Obligation: $190,320,382

Contract Characteristics

Cost or Pricing Data: YES

Timeline