DoD's $311.6M contract for ammunition manufacturing awarded to Alliant Techsystems Operations LLC

Contract Overview

Contract Amount: $311,611,955 ($311.6M)

Contractor: Alliant Techsystems Operations LLC

Awarding Agency: Department of Defense

Start Date: 2009-03-27

End Date: 2014-07-31

Contract Duration: 1,952 days

Daily Burn Rate: $159.6K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: LW30MM M789 CARTRIDGES

Place of Performance

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

State: Minnesota Government Spending

Plain-Language Summary

Department of Defense obligated $311.6 million to ALLIANT TECHSYSTEMS OPERATIONS LLC for work described as: LW30MM M789 CARTRIDGES Key points: 1. Contract awarded for ammunition manufacturing, indicating a need for sustained supply. 2. The contract value suggests a significant investment in defense logistics. 3. The duration of the contract points to long-term strategic planning by the Department of Defense. 4. The firm-fixed-price structure aims to provide cost certainty for the government. 5. The award was made under full and open competition, suggesting a robust bidding process. 6. The specific product code (332993) relates to ammunition manufacturing, excluding small arms. 7. The contract was awarded by the Department of the Army, a major component of the DoD. 8. The contract's performance period spans over 5 years, indicating ongoing operational requirements.

Value Assessment

Rating: good

The contract value of $311.6 million for ammunition manufacturing appears reasonable given the scale and duration. Benchmarking against similar large-scale defense procurement contracts for munitions would provide a more precise value-for-money assessment. The firm-fixed-price (FFP) contract type is generally favorable for the government in stable markets, as it shifts cost overrun risks to the contractor. However, without detailed cost breakdowns or comparisons to market prices for specific ammunition types, a definitive assessment of exceptional value is challenging.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple bidders were likely solicited and evaluated. This competitive process is designed to encourage a range of proposals and potentially drive down prices through market forces. The number of bidders and the specific evaluation criteria would further illuminate the intensity of the competition. A robust competition typically leads to better price discovery and selection of the most capable offeror.

Taxpayer Impact: Full and open competition generally benefits taxpayers by ensuring that the government receives the best possible value through a wide range of offers and potentially lower prices due to competitive pressure.

Public Impact

The primary beneficiaries are the U.S. Army personnel who will be supplied with essential ammunition for training and operations. The contract ensures the continued availability of LW30MM M789 cartridges, critical for various military platforms. The geographic impact is national, supporting defense readiness across various operational theaters. The contract supports jobs within the defense manufacturing sector, specifically in ammunition production. This procurement contributes to the overall operational readiness and effectiveness of the U.S. Army.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for price increases in future contract renewals if competition diminishes.
Dependence on a single contractor for a critical defense supply chain component.
Risk of obsolescence if ammunition technology rapidly advances.
Geopolitical factors could impact raw material availability and cost.
Ensuring consistent quality control over a long-term, high-volume production contract.

Positive Signals

Awarded through full and open competition, suggesting competitive pricing.
Firm-fixed-price contract provides cost predictability for the government.
Long contract duration indicates a stable, long-term requirement and potential for economies of scale.
Contractor has a significant presence in defense manufacturing, suggesting established capabilities.
The specific nature of the ammunition suggests a well-defined product with established manufacturing processes.

Sector Analysis

The defense sector, particularly ammunition manufacturing, is a critical component of national security. This contract falls under the broader category of defense procurement, specifically focusing on ordnance and ammunition. The market for such specialized defense goods is often characterized by long-term relationships between government agencies and a limited number of highly qualified contractors. Spending in this area is driven by military readiness requirements, technological advancements, and geopolitical considerations. Comparable spending benchmarks would involve analyzing other large-scale contracts for similar types of munitions or defense articles.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (sb: false) and the awardee is a large corporation (co: ALLIANT TECHSYSTEMS OPERATIONS LLC). Therefore, there are no direct small business set-aside implications. However, large prime contractors like Alliant Techsystems are often required to meet subcontracting goals with small businesses as part of their overall contract performance. The extent to which this contract contributes to the small business ecosystem would depend on the specific subcontracting plan and its execution.

Oversight & Accountability

Oversight for this contract would typically be managed by the Department of the Army's contracting and program management offices. Accountability measures are embedded within the firm-fixed-price contract terms, requiring delivery of specified goods at the agreed-upon price. Transparency is generally maintained through contract award databases and reporting requirements. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse related to the contract.

Related Government Programs

Department of Defense Ammunition Procurement
Army Combat Vehicle Ammunition
Ordnance and Explosives Manufacturing
Defense Logistics Agency (DLA) Contracts
Tactical Vehicle Support Contracts

Risk Flags

Long-term contract duration may limit flexibility for adopting newer technologies.
Dependence on a single contractor for a critical munition.
Potential for supply chain vulnerabilities in a globalized market.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $311.6 million to ALLIANT TECHSYSTEMS OPERATIONS LLC. LW30MM M789 CARTRIDGES

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 $311.6 million.

What is the period of performance?

Start: 2009-03-27. End: 2014-07-31.

What is the historical spending trend for LW30MM M789 cartridges by the Department of Defense?

Analyzing historical spending on LW30MM M789 cartridges requires access to detailed procurement data over multiple fiscal years. While this specific contract award of $311.6 million covers a significant period, it represents a single major procurement action. To understand the trend, one would need to aggregate data from all contracts awarded for this specific munition type across different agencies and years. Factors influencing spending trends include changes in military doctrine, operational tempo, inventory levels, and the introduction of new weapon systems or ammunition technologies. Without a comprehensive historical dataset, it is difficult to definitively state the spending trend, but a contract of this magnitude suggests a consistent and substantial requirement for this type of ammunition.

How does the unit cost of these LW30MM M789 cartridges compare to similar munitions or market rates?

Determining the precise unit cost requires dividing the total contract value by the total number of units procured, which is not provided in the summary data. However, even with the total value ($311.6 million) and contract duration (1952 days, approximately 5.3 years), we can infer an average annual spend of roughly $58.8 million. To benchmark the unit cost, we would need to compare it against: 1) prices paid by other military branches or allied nations for the same or equivalent ammunition, 2) prices from previous contracts awarded to the same or different vendors for this munition, and 3) any available commercial market data, though military-specific munitions often have limited commercial parallels. Given the firm-fixed-price nature, the contractor likely factored in production costs, overhead, profit, and anticipated market conditions. A detailed cost analysis report or comparison with publicly available defense budget justifications for similar items would be necessary for a robust comparison.

What are the key performance indicators (KPIs) used to evaluate Alliant Techsystems Operations LLC's performance on this contract?

Key performance indicators (KPIs) for a contract of this nature typically revolve around delivery timeliness, quality control, and adherence to specifications. For ammunition manufacturing, critical KPIs would include: 1) On-time delivery rates, ensuring that cartridges are supplied according to the production schedule to meet operational demands. 2) Quality assurance metrics, such as defect rates, failure rates during testing, and compliance with stringent military specifications (e.g., MIL-STD). 3) Production volume and efficiency, ensuring the contractor can meet the required output levels. 4) Compliance with safety and environmental regulations during manufacturing. Performance evaluations would likely involve regular reviews by the Army's contracting officer's representative (COR) and quality assurance specialists, with potential for incentives or penalties tied to KPI achievement.

What is the strategic importance of LW30MM M789 cartridges for the U.S. Army's current and future operations?

The LW30MM M789 cartridge is a key munition, often associated with specific weapon systems like the AH-64 Apache attack helicopter. Its strategic importance lies in providing direct fire support, engaging armored threats, and neutralizing enemy positions. For the U.S. Army, maintaining a robust supply of such ammunition is crucial for mission success in various combat scenarios, from counter-insurgency operations to high-intensity conflicts. The 'LW' designation might indicate a lighter weight variant, potentially offering advantages in payload capacity or range for aircraft. Ensuring a consistent and reliable supply through contracts like this one is vital for maintaining operational readiness, training effectiveness, and overall force projection capabilities.

Are there any known risks associated with relying on Alliant Techsystems Operations LLC for this critical defense supply?

While Alliant Techsystems Operations LLC is a major defense contractor with significant experience, potential risks associated with relying on any single supplier for critical defense items include: 1) Supply chain disruptions: Dependence on a sole or primary source can be vulnerable to unforeseen events like natural disasters, labor strikes, or geopolitical instability affecting raw material sourcing or production. 2) Contractor performance issues: Despite a strong track record, there's always a risk of performance degradation, quality control failures, or financial instability impacting delivery. 3) Price escalation: While the current contract is fixed-price, future renegotiations or new contracts could see price increases if competition is limited or market conditions change unfavorably. 4) Technological obsolescence: If newer, more effective ammunition types are developed, the reliance on older systems and their associated munitions could become a strategic vulnerability. Mitigation strategies often involve maintaining strategic stockpiles, fostering competition where possible, and continuous monitoring of contractor performance and market dynamics.

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: W52P1J08R0171

Offers Received: 1

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: $311,611,955

Exercised Options: $311,611,955

Current Obligation: $311,611,955

Contract Characteristics

Cost or Pricing Data: YES

Timeline