DoD awards $54.4M for ammunition manufacturing, with 2 bids received under full and open competition

Contract Overview

Contract Amount: $54,395,276 ($54.4M)

Contractor: General Dynamics Ordnance & Tactical Systems, Inc.

Awarding Agency: Department of Defense

Start Date: 2018-09-24

End Date: 2024-06-30

Contract Duration: 2,106 days

Daily Burn Rate: $25.8K/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: 20MM PGU-27 DELIVERY ORDER AWARD.

Place of Performance

Location: MARION, WILLIAMSON County, ILLINOIS, 62959

State: Illinois Government Spending

Plain-Language Summary

Department of Defense obligated $54.4 million to GENERAL DYNAMICS ORDNANCE & TACTICAL SYSTEMS, INC. for work described as: 20MM PGU-27 DELIVERY ORDER AWARD. Key points: 1. Value for money appears reasonable given the firm fixed price contract type and 2-year duration. 2. Competition dynamics indicate a limited but present market for this specific type of ammunition. 3. Risk indicators are moderate, with a long contract duration and potential for supply chain disruptions. 4. Performance context suggests a need for consistent ammunition supply for military readiness. 5. Sector positioning places this within the broader defense industrial base, specifically ammunition manufacturing.

Value Assessment

Rating: good

The contract value of $54.4 million over approximately two years for ammunition manufacturing seems within a reasonable range for defense procurement. Benchmarking against similar large-scale ammunition orders would provide a more precise value assessment. The firm fixed price structure shifts risk to the contractor, which can be beneficial for the government if costs are managed effectively.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

This contract was awarded under 'Full and Open Competition After Exclusion of Sources,' indicating that while competition was sought, certain sources were excluded. With only two bids received, the level of competition is somewhat limited. This suggests that the market for this specific type of ammunition may not be highly saturated, potentially impacting price discovery.

Taxpayer Impact: A limited number of bidders can sometimes lead to higher prices for taxpayers compared to a more competitive environment. However, the firm fixed price contract aims to control costs.

Public Impact

The primary beneficiaries are the Department of the Army and its operational units requiring ammunition. The service delivered is the manufacturing and delivery of specific ammunition types (PGU-27). The geographic impact is primarily within Illinois, where the contractor is located, and wherever the ammunition is deployed. Workforce implications include jobs in manufacturing and logistics within the defense sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition could lead to less favorable pricing for the government.
Long contract duration increases exposure to potential supply chain disruptions or material cost fluctuations.
Reliance on a few suppliers for specialized ammunition can create strategic vulnerabilities.

Positive Signals

Firm fixed price contract provides cost certainty for the government.
Contractor is an established entity in defense ordnance.
Awarded by the Department of the Army, indicating a clear end-user requirement.

Sector Analysis

This contract falls within the defense industrial base, specifically the manufacturing of ammunition. The market for military-grade ammunition is characterized by specialized production capabilities, stringent quality control, and significant government demand. Comparable spending benchmarks would involve looking at other large-scale ammunition procurement contracts from the Department of Defense.

Small Business Impact

The data indicates this contract was not set aside for small businesses (ss: false, sb: false). There is no explicit information on subcontracting plans, but given the nature of defense manufacturing, there may be opportunities for small businesses within the supply chain for components or raw materials.

Oversight & Accountability

Oversight would typically be managed by the contracting officer's representative (COR) within the Department of the Army. Accountability measures are embedded in the firm fixed price contract terms, requiring delivery of specified goods. Transparency is generally maintained through federal procurement databases, though specific performance metrics may not be publicly detailed.

Related Government Programs

Department of Defense Ammunition Procurement
Army Ordnance Programs
Defense Industrial Base Manufacturing Contracts
Ammunition (except Small Arms) Manufacturing

Risk Flags

Limited competition
Long contract duration
Potential supply chain dependencies

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $54.4 million to GENERAL DYNAMICS ORDNANCE & TACTICAL SYSTEMS, INC.. 20MM PGU-27 DELIVERY ORDER AWARD.

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 $54.4 million.

What is the period of performance?

Start: 2018-09-24. End: 2024-06-30.

What is the historical spending pattern for PGU-27 ammunition by the Department of the Army?

Analyzing historical spending for PGU-27 ammunition by the Department of the Army requires accessing detailed procurement data over several fiscal years. This specific delivery order award of $54.4 million represents a recent investment. To understand the pattern, one would look for trends in award values, quantities, contract types (e.g., fixed-price vs. cost-plus), and the number of competitors over time. Significant fluctuations could indicate changes in operational tempo, inventory management strategies, or shifts in geopolitical threats. A consistent spending level might suggest a stable, ongoing requirement. Without access to a comprehensive historical database, it's difficult to provide precise figures, but this $54.4M award suggests a substantial, albeit potentially episodic, need for this particular munition.

How does the number of bidders (2) compare to typical competition levels for similar ammunition contracts?

Receiving only two bids for a contract valued at $54.4 million, even under 'Full and Open Competition After Exclusion of Sources,' suggests a moderately limited competitive landscape for this specific type of ammunition. Typically, for standard or widely produced defense items, one might expect a higher number of bidders, potentially ranging from 3 to 5 or more, especially if the contract is large and broadly competed. However, for highly specialized munitions like the PGU-27, the number of qualified manufacturers with the necessary production capabilities, security clearances, and capacity might naturally be restricted. Therefore, two bidders might represent a significant portion of the available market. This limited competition could potentially impact the final price, making it less advantageous for the government than if more firms were vying for the contract.

What are the potential risks associated with the contractor, General Dynamics Ordnance & Tactical Systems, Inc.?

General Dynamics Ordnance & Tactical Systems, Inc. is a well-established defense contractor with a long history in ordnance manufacturing. Potential risks, common to large defense contracts, could include performance issues related to production timelines, quality control failures, or cost overruns if the contract structure allowed for them (though this is a firm fixed price contract). Supply chain vulnerabilities for raw materials or specialized components are also a general risk in this sector. Given their extensive experience, the likelihood of major performance failures is likely mitigated, but diligent oversight by the contracting agency remains crucial. Reviewing past performance records and any prior contract disputes or terminations would provide a more specific risk assessment.

What is the strategic importance of PGU-27 ammunition to the Department of the Army?

The PGU-27 designation typically refers to a type of aircraft cannon ammunition, often used in rotary-wing aircraft like attack helicopters (e.g., AH-64 Apache). Its strategic importance lies in providing close air support, anti-armor capabilities, and engaging ground targets during combat operations. A consistent and reliable supply of this ammunition is critical for maintaining the operational readiness and effectiveness of aviation units. The Department of the Army's procurement of this munition signifies its ongoing need for these specific combat capabilities, likely driven by current operational requirements, training needs, or strategic reserve building.

How does the contract duration (2106 days) impact the overall value and risk?

The contract duration of 2106 days (approximately 5.77 years) is quite substantial for a delivery order. This extended period offers the benefit of potential price stability and ensures a consistent supply over a long timeframe, which can be strategically advantageous for the Department of the Army. However, it also introduces significant risks. Longer durations increase exposure to market volatility in raw material prices, potential shifts in military requirements, and the risk of contractor performance degradation over time. For the government, managing such a long-term contract requires sustained oversight. From a value perspective, the firm fixed price helps lock in costs, but the government forgoes the opportunity to potentially benefit from future market price reductions or to re-compete the contract if better terms become available sooner.

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: $54,395,276

Exercised Options: $54,395,276

Current Obligation: $54,395,276

Subaward Activity

Number of Subawards: 10

Total Subaward Amount: $11,657,786

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