DoD's $77.2M contract for HEDP ammunition awarded to General Dynamics, highlighting manufacturing capabilities

Contract Overview

Contract Amount: $77,249,070 ($77.2M)

Contractor: General Dynamics Ordnance & Tactical Systems, Inc.

Awarding Agency: Department of Defense

Start Date: 2010-02-19

End Date: 2015-04-15

Contract Duration: 1,881 days

Daily Burn Rate: $41.1K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: LW30MM M789 HEDP FIRST ARTICLE TEST

Place of Performance

Location: MARION, WILLIAMSON County, ILLINOIS, 62959

State: Illinois Government Spending

Plain-Language Summary

Department of Defense obligated $77.2 million to GENERAL DYNAMICS ORDNANCE & TACTICAL SYSTEMS, INC. for work described as: LW30MM M789 HEDP FIRST ARTICLE TEST Key points: 1. Contract value of $77.2 million for specialized ammunition. 2. Awarded to a single, established defense contractor. 3. Long-term contract duration of over 5 years. 4. Focus on first article testing and production readiness. 5. Contract type suggests cost-sharing and performance incentives. 6. Geographic concentration of performance in Illinois.

Value Assessment

Rating: fair

The contract value of $77.2 million for ammunition manufacturing, specifically for HEDP rounds and first article testing, appears within a reasonable range for specialized defense procurement. However, without specific unit cost data or comparisons to similar advanced ammunition contracts, a precise value-for-money assessment is challenging. The Cost Plus Fixed Fee (CPFF) structure implies that costs were estimated and a fixed fee was added, which can lead to cost overruns if not managed tightly. Benchmarking against other ammunition procurements would be necessary for a more definitive value assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded under 'Full and Open Competition After Exclusion of Sources,' indicating that while competition was initially considered, specific circumstances led to the exclusion of other potential bidders. This suggests a limited competitive environment, potentially due to specialized requirements, proprietary technology, or existing relationships. The limited competition may have impacted price discovery, potentially leading to higher costs than under a fully open bid process.

Taxpayer Impact: Taxpayers may have faced higher prices due to the limited competition, as fewer bidders meant less pressure to offer the most competitive rates. This procurement structure warrants scrutiny to ensure fair pricing was achieved.

Public Impact

Benefits the Department of Defense by ensuring a supply of critical HEDP ammunition. Supports advanced ammunition manufacturing capabilities within the United States. Impacts the defense industrial base, particularly in Illinois where performance is concentrated. Ensures readiness for military operations requiring specialized ordnance.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition could result in suboptimal pricing for taxpayers.
Cost Plus Fixed Fee contracts can incentivize cost escalation if not rigorously overseen.
Long contract duration may not adapt well to evolving technological needs or market price shifts.

Positive Signals

Award to an established contractor suggests a focus on reliable production and quality.
First article testing indicates a commitment to product validation before mass production.
Contract supports critical defense materiel needs.

Sector Analysis

This contract falls within the defense manufacturing sector, specifically focusing on ammunition production. The market for advanced ordnance is characterized by high barriers to entry, stringent quality requirements, and significant government investment. General Dynamics Ordnance & Tactical Systems is a major player in this niche. Comparable spending benchmarks would involve analyzing other large-scale ammunition procurements by the DoD, which often run into tens or hundreds of millions of dollars depending on the type and quantity of munitions.

Small Business Impact

The contract was not set aside for small businesses, and the prime contractor, General Dynamics, is a large corporation. There is no explicit information regarding subcontracting plans for small businesses within this award. Therefore, the direct impact on the small business ecosystem is likely minimal, unless the prime contractor voluntarily engages small businesses for specific components or services.

Oversight & Accountability

Oversight for this contract would typically be managed by the Department of the Army contracting and program management offices. Accountability measures would be embedded in the contract terms, including performance metrics, delivery schedules, and quality assurance provisions. Transparency is facilitated through contract databases like FPDS, though detailed operational oversight is internal to the agency. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Department of Defense Ammunition Procurement
Ordnance Manufacturing Contracts
Cost Plus Fixed Fee Contracts
Defense Industrial Base Support

Risk Flags

Limited competition may lead to higher costs.
Cost Plus Fixed Fee structure requires robust oversight to manage costs.
Geographic concentration poses potential supply chain risks.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $77.2 million to GENERAL DYNAMICS ORDNANCE & TACTICAL SYSTEMS, INC.. LW30MM M789 HEDP FIRST ARTICLE TEST

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 $77.2 million.

What is the period of performance?

Start: 2010-02-19. End: 2015-04-15.

What is the specific type and purpose of the HEDP ammunition procured under this contract?

HEDP stands for High-Explosive Dual-Purpose ammunition. This type of ammunition is designed to function effectively against both personnel and lightly armored vehicles. It typically contains a high-explosive filler and a fuse that can be set to detonate on impact or with a slight delay, maximizing damage to targets. The 'First Article Test' component of the contract indicates that this award includes the initial production and testing phase to validate the design, manufacturing process, and performance characteristics of the ammunition before full-scale production commences. This ensures that the ammunition meets stringent military specifications for effectiveness and safety.

How does the contract's 'Full and Open Competition After Exclusion of Sources' clause impact pricing and fairness?

This clause suggests that while the solicitation was initially intended for broad competition, certain sources were subsequently excluded. This exclusion could be based on factors such as proprietary technology, unique manufacturing capabilities, or specific security requirements that only a limited number of contractors could meet. The impact on pricing is generally a reduction in competitive pressure compared to true full and open competition. Fewer bidders typically lead to less aggressive pricing strategies. For taxpayers, this means the potential for higher costs than if multiple companies were vying for the contract. It also raises questions about the justification for excluding other capable sources to ensure the government is receiving the best possible value.

What are the implications of the Cost Plus Fixed Fee (CPFF) contract type for this procurement?

A Cost Plus Fixed Fee (CPFF) contract is a type of cost-reimbursement contract where the contractor is reimbursed for all allowable costs incurred, plus a fixed amount of profit (the fee). This structure is often used when the scope of work is well-defined but the costs are uncertain, or for research and development. For this HEDP ammunition contract, CPFF means the government bears the risk of cost overruns, as the contractor is guaranteed their costs will be covered. The fixed fee provides some incentive for the contractor to control costs, as their profit is predetermined. However, it can also lead to less cost-consciousness compared to fixed-price contracts. Effective oversight is crucial to ensure costs are reasonable and allowable.

What is the significance of the 'First Article Test' in the context of this contract?

The 'First Article Test' (FAT) is a critical phase in defense procurement, especially for complex or newly manufactured items like specialized ammunition. It involves producing a small quantity of the item (the first articles) and subjecting them to rigorous testing to verify that they meet all contract specifications, performance requirements, and quality standards. Successful completion of the FAT is typically a prerequisite for proceeding to full-rate production. This process helps mitigate risks by identifying potential manufacturing defects, design flaws, or performance issues early on, preventing costly problems during large-scale production and ensuring the delivered product is fit for purpose.

How does the geographic concentration in Illinois potentially affect the supply chain and economic impact?

The concentration of contract performance in Illinois suggests that the primary manufacturing and testing activities for this ammunition will occur within that state. This can lead to significant economic benefits for the region, including job creation, investment in local infrastructure, and support for ancillary businesses. However, it also introduces supply chain risks. If operations in Illinois are disrupted due to natural disasters, labor issues, or other unforeseen events, the entire production of this critical ammunition could be jeopardized. Diversifying manufacturing locations can mitigate such risks, but it often increases logistical complexity and costs.

What is the track record of General Dynamics Ordnance & Tactical Systems in producing similar defense contracts?

General Dynamics Ordnance & Tactical Systems (GD-OTS) is a well-established and significant defense contractor with a long history of producing a wide range of munitions, including artillery shells, mortar rounds, and various types of small and medium-caliber ammunition. They are known for their expertise in explosives, propellants, and advanced manufacturing techniques. Their track record generally indicates a capability to deliver complex ordnance systems reliably. However, like any large contractor, they have experienced contract performance reviews and occasional challenges. Assessing specific past performance on contracts directly comparable to this HEDP ammunition award would require a deeper dive into contract databases and performance reports.

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 AFTER EXCLUSION OF SOURCES

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: W52P1J08R0172

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: General Dynamics Corp (UEI: 001381284)

Address: 6658 ROUTE 148, MARION, IL, 62959

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

Financial Breakdown

Contract Ceiling: $77,249,070

Exercised Options: $77,249,070

Current Obligation: $77,249,070

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline