DoD awards $134M for medium caliber ammunition, with General Dynamics securing the largest share

Contract Overview

Contract Amount: $134,176,811 ($134.2M)

Contractor: General Dynamics Ordnance & Tactical Systems, Inc.

Awarding Agency: Department of Defense

Start Date: 2018-09-24

End Date: 2025-10-31

Contract Duration: 2,594 days

Daily Burn Rate: $51.7K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: MEDIUM CALIBER AMMUNITION

Place of Performance

Location: MARION, WILLIAMSON County, ILLINOIS, 62959

State: Illinois Government Spending

Plain-Language Summary

Department of Defense obligated $134.2 million to GENERAL DYNAMICS ORDNANCE & TACTICAL SYSTEMS, INC. for work described as: MEDIUM CALIBER AMMUNITION Key points: 1. Value for money appears reasonable given the scale and duration of the contract. 2. Competition was conducted after excluding sources, suggesting potential limitations in market reach. 3. Risk indicators are moderate, with a long performance period and a firm fixed-price structure. 4. Performance context is within the defense sector's ongoing need for munitions. 5. Sector positioning is within the defense manufacturing industry, specifically ammunition production.

Value Assessment

Rating: good

The contract value of $134 million over approximately 7 years represents a significant investment in medium caliber ammunition. Benchmarking against similar large-scale munitions contracts is challenging without more specific details on the types and quantities of ammunition. However, the firm fixed-price nature suggests that the government has locked in costs, which can be advantageous if market prices increase. The award to General Dynamics, a major defense contractor, indicates a focus on established suppliers with proven production capabilities.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

This contract was awarded under 'Full and Open Competition After Exclusion of Sources.' This procurement method implies that while the competition was intended to be open, certain sources were excluded, potentially narrowing the field of bidders. The specific reasons for exclusion are not detailed but could relate to specialized capabilities, security requirements, or prior relationships. With two bids received, the competition level was limited, which could impact price discovery and potentially lead to higher costs compared to a broader competition.

Taxpayer Impact: The limited competition may mean taxpayers did not benefit from the lowest possible prices achievable through a wider bidding process. However, the exclusion of sources might have been justified by specific technical or security needs, ensuring the most capable supplier was selected.

Public Impact

The primary beneficiaries are the Department of the Army and potentially other branches of the U.S. military requiring medium caliber ammunition for training and operational readiness. The contract delivers essential ammunition, crucial for maintaining military effectiveness and national security. Geographic impact is likely concentrated around the contractor's manufacturing facilities and military bases where the ammunition will be deployed. Workforce implications include job creation and retention within the defense manufacturing sector, particularly at General Dynamics facilities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition could result in less favorable pricing for the government.
Long contract duration increases the risk of obsolescence or changing military requirements.
Reliance on a single primary contractor for a critical defense item poses supply chain risks.

Positive Signals

Firm fixed-price contract provides cost certainty for the government.
Award to an established defense contractor suggests a high likelihood of successful delivery.
Contract duration allows for sustained supply and potential economies of scale in production.

Sector Analysis

The defense sector is characterized by long-term contracts, specialized manufacturing, and significant government investment. The market for ammunition is substantial, driven by ongoing military operations, training requirements, and strategic stockpiling. This contract for medium caliber ammunition fits within the broader landscape of defense procurement, where companies like General Dynamics play a critical role in supplying essential materiel. Comparable spending benchmarks are difficult to ascertain without detailed specifications, but multi-year munitions contracts often run into hundreds of millions of dollars.

Small Business Impact

The data indicates that small business participation (ss: false, sb: false) was not a primary focus or requirement for this specific contract, as neither a small business set-aside nor subcontracting goals were explicitly mentioned. This suggests that the prime contractor, General Dynamics, is expected to fulfill the contract requirements directly or through its own supply chain, potentially limiting direct opportunities for small businesses in this particular award. The impact on the small business ecosystem is likely minimal unless General Dynamics actively engages small businesses in its subcontracting efforts, which are not detailed here.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and program management offices, with potential involvement from the Defense Contract Management Agency (DCMA) for performance monitoring. Accountability measures are embedded in the contract terms, including delivery schedules and quality specifications. Transparency is facilitated through contract databases like FPDS, though detailed performance metrics and specific oversight activities are often internal. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Department of Defense Ammunition Procurement
Medium Caliber Ammunition Manufacturing
General Dynamics Ordnance & Tactical Systems Contracts
Defense Industrial Base Support
Military Readiness and Sustainment Programs

Risk Flags

Limited competition procurement method
Long contract duration increases risk of obsolescence
Potential for supply chain vulnerabilities

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $134.2 million to GENERAL DYNAMICS ORDNANCE & TACTICAL SYSTEMS, INC.. MEDIUM CALIBER 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 $134.2 million.

What is the period of performance?

Start: 2018-09-24. End: 2025-10-31.

What is the historical spending pattern for medium caliber ammunition by the Department of the Army?

Historical spending on medium caliber ammunition by the Department of the Army has been substantial and consistent, reflecting its critical role in military operations and training. While specific figures fluctuate annually based on global security postures, training cycles, and inventory needs, the Army consistently allocates significant portions of its budget to munitions. Over the past decade, annual spending on various types of ammunition, including medium caliber, has often reached hundreds of millions, if not billions, of dollars. This contract, valued at $134 million over several years, represents a significant but not unprecedented portion of that historical expenditure. Factors influencing spending include the development of new weapon systems, geopolitical events requiring increased readiness, and the modernization of existing ammunition stockpiles.

How does the pricing of this contract compare to similar medium caliber ammunition procurements?

Direct price comparison for this $134 million contract is challenging without detailed specifications of the ammunition types, quantities, and quality standards. However, the firm fixed-price (FFP) nature of the contract provides cost certainty for the government. Generally, FFP contracts aim to secure competitive pricing, but the 'Full and Open Competition After Exclusion of Sources' procurement method suggests a potentially narrower competitive landscape than a truly open bid. If market research indicates that similar contracts with broader competition achieved lower per-unit costs or better overall value, then the pricing here might be considered fair but not necessarily exceptional. The long-term nature of the contract could also allow for economies of scale, potentially offsetting any price inflation over its duration.

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

Key performance indicators for this contract would likely revolve around on-time delivery of specified quantities of medium caliber ammunition, adherence to stringent quality control standards (e.g., defect rates, performance in testing), and compliance with safety regulations during manufacturing and transport. The primary risks include potential supply chain disruptions (e.g., raw material shortages, geopolitical impacts on suppliers), manufacturing defects leading to mission failure or safety hazards, and the risk of cost overruns if the fixed price does not adequately account for unforeseen inflation or production challenges. Additionally, the long duration (over 7 years) introduces risks related to technological obsolescence of the ammunition or changes in military requirements, potentially rendering the procured items less relevant.

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

General Dynamics Ordnance & Tactical Systems, Inc. (GD-OTS) has a long-standing and extensive track record of supplying ammunition and ordnance systems to the U.S. Department of Defense and allied nations. They are a major producer of various calibers of ammunition, including medium caliber rounds, as well as larger ordnance systems. GD-OTS has historically secured numerous large-scale contracts for munitions, often through competitive bidding processes. Their performance is generally considered reliable, given their established manufacturing capabilities, quality control systems, and experience in meeting stringent military specifications. While specific contract performance details are often proprietary, their continued success in winning significant DoD contracts suggests a strong performance history and a trusted position within the defense supply chain.

How does this contract align with the Army's overall munitions strategy and readiness goals?

This contract directly aligns with the Army's fundamental need to maintain adequate stocks of medium caliber ammunition to support training, operational readiness, and strategic deterrence. Medium caliber ammunition is essential for a wide range of platforms, including infantry fighting vehicles, armored personnel carriers, and certain aircraft, making its consistent availability critical. The multi-year nature of the award suggests a strategic approach to ensuring a stable supply chain and potentially achieving better pricing through long-term commitment. By securing this supply, the Army aims to mitigate risks associated with potential shortages, price volatility, and reliance on less predictable, shorter-term procurement actions, thereby bolstering overall force readiness.

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: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Wico Limited

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: $134,176,811

Exercised Options: $134,176,811

Current Obligation: $134,176,811

Subaward Activity

Number of Subawards: 27

Total Subaward Amount: $64,296,282

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: W52P1J18D0093

IDV Type: IDC

Timeline