DoD awards $155M for small arms ammunition, primarily for rifle and machine gun calibers

Contract Overview

Contract Amount: $154,909,268 ($154.9M)

Contractor: General Dynamics Ordnance and Tactical Systems, Inc.

Awarding Agency: Department of Defense

Start Date: 2008-02-15

End Date: 2011-08-30

Contract Duration: 1,292 days

Daily Burn Rate: $119.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: AWARD 5.56MM AND CALIBER .50 AMMUNITION.

Place of Performance

Location: SAINT PETERSBURG, PINELLAS County, FLORIDA, 33716

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $154.9 million to GENERAL DYNAMICS ORDNANCE AND TACTICAL SYSTEMS, INC. for work described as: AWARD 5.56MM AND CALIBER .50 AMMUNITION. Key points: 1. Contract value of $155M represents significant investment in essential military materiel. 2. Sole awardee suggests potential for concentrated market power or specialized capabilities. 3. Contract duration of over three years indicates a sustained need for these munitions. 4. Fixed-price contract type shifts cost risk to the contractor, potentially stabilizing prices. 5. Awarded to a single entity, raising questions about the breadth of competition. 6. Geographic location of awardee in Florida may have regional economic implications.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without specific unit cost data or comparisons to similar ammunition procurements. The total award of $155 million for over 1,200 days of supply suggests a substantial, but potentially reasonable, investment for critical ordnance. However, without detailed breakdowns of the types and quantities of ammunition, a precise value-for-money assessment is difficult. The firm fixed-price nature of the contract is a positive indicator for cost control, provided the initial pricing was competitive.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple vendors had the opportunity to bid. However, with only two bids received, the level of competition was limited. This suggests that the market for this specific type of ammunition may be concentrated, or that other potential bidders did not find the opportunity compelling enough to participate. A low number of bids can sometimes lead to less aggressive pricing.

Taxpayer Impact: While full and open competition was advertised, the low number of bids received means taxpayers may not have benefited from the most aggressive pricing possible. The government secured a supplier, but the potential for cost savings through broader competition was not fully realized.

Public Impact

The primary beneficiaries are the U.S. Army and other Department of Defense branches requiring small arms ammunition for training and operational readiness. This contract ensures the supply of critical munitions, including 5.56mm and .50 caliber rounds, essential for infantry and support units. The geographic impact is primarily centered around the contractor's facility in Florida, potentially supporting local jobs and the regional economy. Workforce implications include sustained employment for personnel involved in the manufacturing, quality control, and logistics of ammunition production at the contractor's site.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition (2 bids) may have resulted in higher-than-optimal pricing for taxpayers.
Lack of detailed unit cost data makes a thorough value-for-money assessment difficult.
Concentration in the ammunition manufacturing market could pose future supply chain risks.

Positive Signals

Firm fixed-price contract type provides cost certainty and shifts risk to the contractor.
Awarded under full and open competition, adhering to procurement regulations.
Contract duration ensures a stable supply of essential munitions for military operations.

Sector Analysis

The defense sector, specifically the ordnance and small arms manufacturing sub-sector, is characterized by high barriers to entry due to specialized technology, stringent quality control, and significant capital investment. This contract falls within the manufacturing of small arms ammunition, a critical component of military readiness. The market size for such specialized munitions is directly tied to defense budgets and geopolitical demands. Comparable spending benchmarks would involve analyzing other large-scale ammunition procurements by the DoD.

Small Business Impact

This contract was not set aside for small businesses and was awarded to a large defense contractor. There is no indication of specific subcontracting requirements for small businesses within the provided data. Therefore, the direct impact on the small business ecosystem is likely minimal, with the primary benefits flowing to the prime contractor and its direct suppliers.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Army's contracting command and the Department of Defense's Inspector General. Accountability measures are embedded in the firm fixed-price contract terms, requiring the contractor to deliver specified goods meeting quality standards. Transparency is facilitated through contract award databases, though detailed performance metrics and cost breakdowns may not always be publicly available.

Related Government Programs

Department of Defense Ammunition Procurement
Small Arms Ammunition Manufacturing
Military Ordnance Contracts
Army Combat Support Equipment

Risk Flags

Limited competition received (2 bids)
Potential for supply chain disruption with a single awardee
Lack of detailed unit cost data for value assessment

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $154.9 million to GENERAL DYNAMICS ORDNANCE AND TACTICAL SYSTEMS, INC.. AWARD 5.56MM AND CALIBER .50 AMMUNITION.

Who is the contractor on this award?

The obligated recipient is GENERAL DYNAMICS ORDNANCE AND 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 $154.9 million.

What is the period of performance?

Start: 2008-02-15. End: 2011-08-30.

What is the historical spending pattern for small arms ammunition by the Department of the Army over the last decade?

Analyzing the historical spending patterns for small arms ammunition by the Department of the Army over the last decade reveals a consistent and substantial investment. While specific figures fluctuate based on global security environments, training requirements, and modernization efforts, the Army typically allocates hundreds of millions of dollars annually to ammunition procurement. This includes various calibers, from small pistol rounds to larger machine gun and artillery shells. Factors influencing spending include troop deployment levels, combat engagement intensity, and the phasing out of older ammunition types in favor of newer, more advanced rounds. The $155 million awarded in this specific contract represents a significant, but not unprecedented, portion of the Army's annual ammunition budget, underscoring the continuous need for these essential supplies.

How does the unit cost of 5.56mm and .50 caliber ammunition from this contract compare to market rates or other government contracts?

Determining the precise unit cost for 5.56mm and .50 caliber ammunition from this contract is not possible with the provided data, as it only lists the total award amount and contract duration. To compare unit costs, one would need the specific quantities of each ammunition type procured. Generally, government contracts for ammunition are subject to competitive bidding, which aims to secure favorable pricing. However, market rates can fluctuate based on raw material costs (like metals and propellants), manufacturing capacity, and demand. Historically, large-scale government procurements often achieve lower unit costs due to economies of scale compared to commercial sales. Without specific unit pricing from this contract, a direct comparison to market rates or other government contracts remains speculative, though the firm fixed-price nature suggests an effort to lock in costs.

What is the track record of General Dynamics Ordnance and Tactical Systems, Inc. in fulfilling large defense contracts, particularly for ammunition?

General Dynamics Ordnance and Tactical Systems, Inc. (GD-OTS) has a well-established track record as a major defense contractor specializing in munitions and ordnance systems. They are a significant supplier of ammunition to the U.S. military and allied nations, producing a wide range of calibers and types, including those specified in this contract (5.56mm and .50 caliber). GD-OTS has historically secured numerous large contracts for ammunition production, often through competitive bidding processes. Their experience includes managing complex manufacturing operations, ensuring stringent quality control, and meeting delivery schedules for critical military supplies. While specific performance metrics for every contract are not always public, their continued success in winning substantial awards from the Department of Defense indicates a generally reliable performance history in delivering essential ordnance.

What are the potential risks associated with relying on a single supplier for such a critical defense commodity like ammunition?

Relying on a single supplier for critical defense commodities like ammunition presents several potential risks. Firstly, it creates a vulnerability in the supply chain; any disruption at the supplier's facility, whether due to natural disasters, labor disputes, equipment failure, or geopolitical events affecting their operations or raw material sourcing, could lead to significant shortages. Secondly, a sole supplier may have increased leverage in future negotiations, potentially leading to higher prices for taxpayers over time, especially if competition is limited in subsequent procurements. Thirdly, it can stifle innovation if alternative suppliers are not encouraged to enter the market or develop competing technologies. For essential items like ammunition, maintaining a robust and diversified supplier base is often a strategic imperative to ensure consistent availability and competitive pricing.

How does the duration of this contract (over three years) impact the Department of the Army's ability to adapt to potential changes in ammunition technology or requirements?

The contract duration of over three years (1292 days) provides the Department of the Army with supply chain stability for essential ammunition types during that period. However, it also introduces a degree of inflexibility regarding rapid adaptation to new ammunition technologies or evolving battlefield requirements. If significant technological advancements emerge or strategic needs shift substantially during the contract's term, the Army might be constrained in its ability to procure newer, potentially more effective, munitions from different vendors until this contract expires or is renegotiated. While firm fixed-price contracts offer cost certainty, they can sometimes lag behind the pace of innovation. The Army typically manages this by incorporating clauses for modifications or by initiating new procurement actions for advanced systems.

Industry Classification

NAICS: Manufacturing › Other Fabricated Metal Product Manufacturing › Small Arms Ammunition Manufacturing

Product/Service Code: AMMUNITION AND EXPLOSIVES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: General Dynamics Corp (UEI: 001381284)

Address: 11399 16TH COURT N - SUIT, SAINT PETERSBU, FL

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $154,909,268

Exercised Options: $154,909,268

Current Obligation: $154,909,268

Contract Characteristics

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: W52P1J05G0002

IDV Type: IDC

Timeline