Department of the Army awards $37.2M delivery order to American Ordnance LLC for ammunition manufacturing

Contract Overview

Contract Amount: $37,173,445 ($37.2M)

Contractor: American Ordnance LLC

Awarding Agency: Department of Defense

Start Date: 2021-06-01

End Date: 2024-10-31

Contract Duration: 1,248 days

Daily Burn Rate: $29.8K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: MINE CLEARING LINE CHARGE PRODUCTION DELIVERY ORDER

Place of Performance

Location: MIDDLETOWN, DES MOINES County, IOWA, 52638

State: Iowa Government Spending

Plain-Language Summary

Department of Defense obligated $37.2 million to AMERICAN ORDNANCE LLC for work described as: MINE CLEARING LINE CHARGE PRODUCTION DELIVERY ORDER Key points: 1. Contract awarded through full and open competition, suggesting a competitive bidding process. 2. The contract is a firm-fixed-price delivery order, which shifts cost risk to the contractor. 3. The duration of the order is over three years, indicating a significant, long-term need. 4. The North American Industry Classification System (NAICS) code 332993 points to a specialized manufacturing sector. 5. The contract is for ammunition, a critical component for defense operations. 6. The award is a delivery order, likely part of a larger indefinite-delivery/indefinite-quantity (IDIQ) contract.

Value Assessment

Rating: good

The contract value of $37.2 million for ammunition manufacturing over approximately three years appears reasonable given the specialized nature of the product and the firm-fixed-price structure. Benchmarking against similar ammunition production contracts would provide a more precise value-for-money assessment. However, the full and open competition suggests that pricing was likely scrutinized by multiple bidders, contributing to a fair market price.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. The specific number of bidders is not provided, but this method generally fosters a competitive environment, which can lead to better pricing and terms for the government. The open competition suggests that the Army sought the best value from the market.

Taxpayer Impact: Full and open competition is beneficial for taxpayers as it maximizes the potential for cost savings through a robust bidding process, ensuring that the government receives competitive pricing for essential defense supplies.

Public Impact

The primary beneficiaries are the U.S. Army units requiring ammunition for training and operational readiness. The service delivered is the production and delivery of ammunition, crucial for military effectiveness. The geographic impact is primarily related to the contractor's manufacturing facilities and delivery points within the U.S. Workforce implications include employment at American Ordnance LLC's facilities and potentially in supporting industries.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of specific bidder count limits assessment of competitive intensity.
Details on specific ammunition types and quantities are not provided, hindering detailed performance analysis.
Potential for supply chain disruptions impacting delivery timelines.

Positive Signals

Firm-fixed-price contract shifts cost overrun risk to the contractor.
Awarded under full and open competition, indicating a competitive market.
Long-term duration suggests a stable and predictable supply chain for critical munitions.

Sector Analysis

The ammunition manufacturing sector is a critical component of the defense industrial base. Companies like American Ordnance LLC specialize in producing munitions, ranging from small arms to larger caliber rounds. This contract fits within the broader defense procurement landscape, where the Department of Defense is a major customer. Spending in this sector is often driven by operational tempo, modernization efforts, and strategic stock levels. Comparable spending benchmarks would involve analyzing other large-scale ammunition procurements by various military branches.

Small Business Impact

The provided data does not indicate any small business set-aside provisions for this contract, nor does it specify subcontracting goals for small businesses. As a large prime contract for ammunition manufacturing, it is possible that American Ordnance LLC may engage small businesses for specific components or services, but this is not explicitly detailed. Further analysis would be needed to determine the extent of small business participation.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and the relevant program executive office within the Department of the Army. Accountability measures are embedded in the firm-fixed-price contract terms, requiring delivery of specified goods. Transparency is facilitated through contract award databases like FPDS. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Department of Defense Ammunition Procurement
Army Munitions and Ordnance Programs
Defense Industrial Base Manufacturing Contracts
Ammunition (except Small Arms) Manufacturing
Indefinite-Delivery/Indefinite-Quantity (IDIQ) Contracts

Risk Flags

Potential for supply chain vulnerabilities
Dependence on a single contractor for specific munitions
Long lead times for specialized ammunition production

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $37.2 million to AMERICAN ORDNANCE LLC. MINE CLEARING LINE CHARGE PRODUCTION DELIVERY ORDER

Who is the contractor on this award?

The obligated recipient is AMERICAN ORDNANCE 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 $37.2 million.

What is the period of performance?

Start: 2021-06-01. End: 2024-10-31.

What is American Ordnance LLC's track record with the Department of Defense, particularly in ammunition manufacturing?

American Ordnance LLC has a significant history of producing munitions for the U.S. military. As a key contractor, they have been involved in manufacturing various types of ammunition, including artillery shells and mortar rounds. Their experience often includes managing complex production processes and adhering to stringent quality control standards required by the Department of Defense. Past performance reviews and contract awards data would provide a more detailed picture of their reliability, on-time delivery rates, and overall performance on previous DoD contracts. Their specialization in this niche area suggests a deep understanding of the requirements and challenges associated with defense manufacturing.

How does the $37.2 million value compare to similar ammunition manufacturing contracts awarded by the DoD?

The $37.2 million value for this delivery order falls within a typical range for specialized ammunition production contracts. The DoD procures vast quantities of munitions annually, with individual contract values varying significantly based on the type of ammunition, quantity, and duration. Larger, multi-year contracts for major caliber munitions or strategic reserve replenishment can easily reach hundreds of millions or even billions of dollars. Smaller, more frequent delivery orders for specific training or operational needs, like this one, often fall in the tens of millions. Without knowing the exact specifications of the ammunition, a direct comparison is challenging, but the value suggests a substantial, yet not unprecedented, procurement.

What are the primary risks associated with this contract, and how are they mitigated?

Primary risks include potential supply chain disruptions for raw materials, manufacturing defects, and delivery delays. Mitigation strategies are inherent in the contract structure and DoD oversight. The firm-fixed-price nature shifts cost overrun risk to American Ordnance LLC. The contract's multi-year duration (over three years) provides some stability, but requires robust supplier management by the contractor. DoD quality assurance representatives are likely involved to monitor production and ensure compliance with specifications. Performance metrics and potential penalties for non-compliance would also serve as risk mitigators.

How effective is full and open competition in ensuring value for money in ammunition procurement?

Full and open competition is generally considered the most effective method for ensuring value for money in ammunition procurement. By allowing all responsible sources to bid, the government benefits from a wider range of proposals, potentially leading to lower prices and innovative solutions. It fosters a competitive environment where contractors are incentivized to offer their best terms. However, the effectiveness also depends on the number of capable bidders in the market for specific types of ammunition and the clarity of the solicitation requirements. In niche markets with few suppliers, even full and open competition might yield limited price reductions.

What are the historical spending patterns for ammunition manufacturing by the Department of the Army?

Historical spending patterns for ammunition manufacturing by the Department of the Army show consistent and substantial investment. The Army is a primary consumer of munitions, requiring a wide array of ammunition types for training, combat, and strategic readiness. Spending fluctuates based on geopolitical events, operational tempo, and modernization programs. In recent years, there has been a significant focus on replenishing stocks and modernizing ammunition capabilities, leading to sustained or increased procurement levels. Annual spending can range from billions to tens of billions of dollars across all ammunition categories, reflecting its critical and ongoing need.

Industry Classification

NAICS: Manufacturing › Other Fabricated Metal Product Manufacturing › Ammunition (except Small Arms) Manufacturing

Product/Service Code: WEAPONS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 17575 HIGHWAY 79, MIDDLETOWN, IA, 52638

Business Categories: Category Business, Limited Liability Corporation, Manufacturer of Goods, Not Designated a Small Business, Partnership or Limited Liability Partnership, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $37,173,445

Exercised Options: $37,173,445

Current Obligation: $37,173,445

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: W52P1J21D0035

IDV Type: IDC

Timeline