DoD's Army awards $36.9M for Ammunition Manufacturing to General Dynamics, facing limited competition

Contract Overview

Contract Amount: $36,893,704 ($36.9M)

Contractor: General Dynamics Ordnance and Tactical Systems Inc

Awarding Agency: Department of Defense

Start Date: 2017-06-22

End Date: 2019-03-31

Contract Duration: 647 days

Daily Burn Rate: $57.0K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 2

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Defense

Official Description: M795

Place of Performance

Location: SCRANTON, LACKAWANNA County, PENNSYLVANIA, 18505

State: Pennsylvania Government Spending

Plain-Language Summary

Department of Defense obligated $36.9 million to GENERAL DYNAMICS ORDNANCE AND TACTICAL SYSTEMS INC for work described as: M795 Key points: 1. Spending focuses on ammunition manufacturing, a critical defense sector. 2. General Dynamics secured the contract, indicating potential market concentration. 3. The contract type suggests price fluctuations are managed, impacting cost certainty. 4. Limited competition raises questions about optimal price discovery and value.

Value Assessment

Rating: fair

The contract value of $36.9M for ammunition manufacturing appears reasonable given the sector and duration. However, without specific unit cost data or benchmarks for similar ammunition types, a precise value assessment is difficult. The fixed-price with economic price adjustment structure adds complexity to direct comparison.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded under 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES,' indicating a limited competition scenario. This approach may restrict the pool of potential bidders, potentially leading to higher prices than under full and open competition and limiting the government's ability to secure the best possible value.

Taxpayer Impact: Limited competition can result in taxpayers paying more than necessary for defense supplies, as the government may not benefit from the full range of competitive pricing.

Public Impact

Ensures supply of essential ammunition for Army operations. Supports a major defense contractor, potentially impacting industry employment. Price adjustment clauses may lead to unpredictable costs for taxpayers. Limited competition could stifle innovation from smaller, specialized firms.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition
Economic price adjustment
Lack of specific unit cost data

Positive Signals

Addresses critical defense need
Contract awarded to established entity

Sector Analysis

This contract falls within the defense manufacturing sector, specifically ammunition production. Spending benchmarks for ammunition manufacturing vary widely based on type and quantity; $36.9M over two years for a specific category suggests a significant but not exceptionally large award in the context of overall DoD procurement.

Small Business Impact

The contract was awarded to General Dynamics, a large prime contractor. There is no indication that small businesses were significantly involved in this specific award, either as prime contractors or subcontractors, suggesting limited opportunities for small business participation in this particular procurement.

Oversight & Accountability

The contract was awarded by the Department of the Army, a component of the Department of Defense, which has established oversight mechanisms. However, the 'limited competition' aspect warrants scrutiny to ensure fair pricing and adherence to procurement regulations, particularly regarding the exclusion of sources.

Related Government Programs

Ammunition (except Small Arms) Manufacturing
Department of Defense Contracting
Department of the Army Programs

Risk Flags

Potential for higher costs due to limited competition.
Uncertainty in final cost due to economic price adjustment.
Lack of transparency regarding source exclusion justification.
No clear indication of small business participation.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $36.9 million to GENERAL DYNAMICS ORDNANCE AND TACTICAL SYSTEMS INC. M795

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 $36.9 million.

What is the period of performance?

Start: 2017-06-22. End: 2019-03-31.

What specific types and quantities of ammunition are covered by this contract, and how do their unit costs compare to industry averages for similar items?

The data provided identifies the product as 'Ammunition (except Small Arms) Manufacturing' (NAICS 332993) but does not specify the exact types or quantities. Without this granular detail, comparing unit costs to industry averages is impossible. The contract's economic price adjustment clause further complicates direct cost comparisons, as the final price can fluctuate based on economic factors.

What were the justifications for excluding other potential sources, and did this exclusion demonstrably increase the contract's cost to taxpayers?

The justification for excluding other sources is not detailed in the provided data. Typically, such exclusions are based on specific technical requirements, existing infrastructure, or unique capabilities. However, limited competition inherently carries a risk of reduced price competition, potentially leading to higher costs for taxpayers compared to a scenario with broader market participation.

How effectively does the economic price adjustment clause protect the government from cost overruns while allowing the contractor to manage material cost volatility?

Economic price adjustment clauses aim to balance contractor risk from fluctuating input costs against government cost certainty. The effectiveness depends heavily on the specific index used for adjustment and the caps or floors in place. Without these details, it's difficult to assess if this clause adequately protects taxpayers from excessive price increases or if it unduly burdens the contractor.

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: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT (K)

Evaluated Preference: NONE

Contractor Details

Parent Company: Wico Limited

Address: 156 CEDAR AVE, SCRANTON, PA, 18505

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: $36,893,704

Exercised Options: $36,893,704

Current Obligation: $36,893,704

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: W15QKN15D0016

IDV Type: IDC

Timeline