Day & Zimmermann Group Inc. awarded $27M contract for ammunition manufacturing, raising questions about competition and value

Contract Overview

Contract Amount: $27,020,686 ($27.0M)

Contractor: DAY & Zimmermann Group Inc., the

Awarding Agency: Department of Defense

Start Date: 2002-03-27

End Date: 2008-01-05

Contract Duration: 2,110 days

Daily Burn Rate: $12.8K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 200208!000509!2100!AA09 !U.S. ARMY INDUSTRIAL OPERATIONS !DAAA0999G0004 !A!N! !N!0022 !20020327!20030330!008057440!008057440!007913486!N!THE DAY & ZIMMERMANN GROUP INC!HWY 82 W !TEXARKANA !TX!75505!43720!037!48!LONE STAR ARMY AMMUN!BOWIE !TEXAS !+000004451909!N!N!000000000000!1330!GRENADES !A6 !AMMUNITION !1000!NOT DISCERNABLE OR CLASSIFIED !332993!E! !4! ! ! ! ! !20040531!B! ! !N!Z!D!N!J!1!001!N!1G!A!N!Z! ! !N!C!N! ! ! !A!A!A!A!000!A!C!Y! ! ! ! ! ! !0001!

Place of Performance

Location: TEXARKANA, BOWIE County, TEXAS, 75505

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $27.0 million to DAY & ZIMMERMANN GROUP INC., THE for work described as: 200208!000509!2100!AA09 !U.S. ARMY INDUSTRIAL OPERATIONS !DAAA0999G0004 !A!N! !N!0022 !20020327!20030330!008057440!008057440!007913486!N!THE DAY & ZIMMERMANN GROUP INC!HWY 82 W !TEXARKANA !TX!75505!43720!037!48!LONE STAR ARMY AMMUN!BOWIE… Key points: 1. Contract awarded on a sole-source basis, limiting price discovery and potentially increasing costs. 2. Significant contract value suggests a substantial need for ammunition, impacting defense readiness. 3. The fixed-price contract type shifts some risk to the contractor, but oversight is crucial. 4. The duration of the contract (over 6 years) indicates a long-term requirement for these services. 5. The specific National Stock Number (NSN) points to a specialized area within ammunition production. 6. The contractor's location in Texas may have implications for regional economic impact and supply chain.

Value Assessment

Rating: questionable

The contract value of $27,020,686.30 for ammunition manufacturing appears substantial. Without comparable sole-source contracts or detailed cost breakdowns, it is difficult to definitively assess value for money. The lack of competition inherently limits the government's ability to secure the lowest possible price. Benchmarking against similar sole-source awards for ammunition of this type would be necessary for a more robust evaluation.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed. This approach is typically used when only one responsible source can provide the required goods or services. The lack of competition means there were no other bidders, and the government did not benefit from a competitive bidding process to drive down prices or encourage innovation.

Taxpayer Impact: For taxpayers, a sole-source award means there is a higher risk of paying a premium compared to a competed contract. Without competitive pressure, the contractor may not have the same incentive to offer the most cost-effective solution.

Public Impact

The primary beneficiaries are likely U.S. Army units requiring the specified ammunition. The contract delivers essential ammunition, contributing to military operational capabilities. The geographic impact is primarily centered around the contractor's facility in Texarkana, Texas. Workforce implications include employment at The Day & Zimmermann Group Inc. facility in Texas.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and taxpayer value.
Lack of transparency in pricing due to no competition.
Long contract duration may not adapt to changing technological needs.
Potential for contractor to leverage sole-source status for higher margins.

Positive Signals

Contract supports critical defense needs for ammunition.
Firm fixed-price contract shifts some performance risk to the contractor.
Contractor is an established entity in defense manufacturing.

Sector Analysis

This contract falls within the defense manufacturing sector, specifically focusing on ammunition production. The market for defense contracting is often characterized by specialized requirements and long-term relationships between government agencies and key suppliers. While specific market size data for this niche is not provided, the Department of Defense is a major consumer of such goods, with significant annual spending on munitions. Benchmarking would involve comparing this contract's value and terms to other ammunition procurements, particularly those awarded to similar large defense contractors.

Small Business Impact

There is no indication that this contract included small business set-asides. As a sole-source award to a large prime contractor, the primary impact on small businesses would be through potential subcontracting opportunities. The extent of small business participation would depend on the prime contractor's subcontracting plan and the availability of qualified small businesses capable of fulfilling specific components or services related to ammunition manufacturing.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Army's contracting and program management offices. Accountability measures would be embedded in the contract terms, including delivery schedules and quality specifications. Transparency is limited due to the sole-source nature of the award. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Department of Defense Ammunition Procurement
Army Industrial Operations Contracts
Ordnance and Ammunition Manufacturing
Defense Logistics Agency (DLA) Munitions

Risk Flags

Sole-source award limits competition.
Potential for cost overruns if contractor's estimates are inaccurate.
Long contract duration may not align with evolving technological needs.
Lack of transparency in pricing due to non-competitive award.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $27.0 million to DAY & ZIMMERMANN GROUP INC., THE. 200208!000509!2100!AA09 !U.S. ARMY INDUSTRIAL OPERATIONS !DAAA0999G0004 !A!N! !N!0022 !20020327!20030330!008057440!008057440!007913486!N!THE DAY & ZIMMERMANN GROUP INC!HWY 82 W !TEXARKANA !TX!75505!43720!037!48!LONE STAR ARMY AMMUN!BOWIE !TEXAS !+000004451909!N!N!000000000000!1330!GRENADES !A6 !AMMUNITION !1000!NOT DISCERNABLE OR CLASSIFIED !332993!E! !4! ! ! ! ! !20040531!B

Who is the contractor on this award?

The obligated recipient is DAY & ZIMMERMANN GROUP INC., THE.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Army).

What is the total obligated amount?

The obligated amount is $27.0 million.

What is the period of performance?

Start: 2002-03-27. End: 2008-01-05.

What is the track record of The Day & Zimmermann Group Inc. with similar sole-source ammunition contracts?

The Day & Zimmermann Group Inc. has a long history of working with the U.S. military, including extensive experience in munitions manufacturing and support. While specific details on past sole-source contracts for this exact NSN are not readily available in this dataset, the company is a known entity in the defense industrial base. Analyzing their broader contract history, including any past sole-source awards for similar ordnance, would provide further insight into their performance and pricing patterns. Publicly available contract databases and defense news archives may contain information on their previous engagements, which could reveal trends in contract values, performance ratings, and any associated issues. Understanding their historical reliance on sole-source awards versus competed contracts would also be informative.

How does the $27 million contract value compare to market rates for similar ammunition manufacturing services?

Directly comparing the $27 million contract value to precise market rates for this specific type of ammunition manufacturing is challenging without detailed cost breakdowns or access to competitive bidding data. As a sole-source award, the government did not leverage a competitive process to establish a market-driven price. To benchmark this value, one would need to identify comparable contracts for the same or similar National Stock Numbers (NSNs), ideally those awarded through full and open competition. Analyzing the per-unit cost, if discernible, and comparing it to industry benchmarks or historical government pricing for similar items would be crucial. Factors such as raw material costs, labor, overhead, and profit margins specific to defense contracting would need to be considered in any comparative analysis.

What are the primary risks associated with this sole-source ammunition contract?

The primary risk associated with this sole-source contract is the potential for inflated pricing due to the lack of competition. Without competing bids, the government may not be securing the most cost-effective solution available in the market. Another risk is contractor dependency; if The Day & Zimmermann Group Inc. is the sole provider for this critical ammunition, the government could face supply chain vulnerabilities and limited leverage in future negotiations. Furthermore, the long duration of the contract (over 6 years) increases the risk that the technology or requirements might evolve, potentially making the contracted product or service outdated or less optimal over time. Ensuring robust oversight and performance monitoring is critical to mitigate these risks.

What is the historical spending pattern for this specific ammunition type (NSN 332993) by the Department of the Army?

Historical spending data for NSN 332993 by the Department of the Army is not detailed within the provided data snippet. However, the award of a $27 million contract suggests a consistent and significant requirement for this type of ammunition. To understand historical patterns, one would need to query federal procurement databases (like FPDS or SAM.gov) for all contracts associated with NSN 332993, filtering by the Department of the Army and relevant time periods. This would reveal the total volume and value of spending over time, identify other potential contractors (if any), and highlight trends in pricing and contract types (competed vs. sole-source). Such an analysis would contextualize the current award within the broader spending landscape for this munition.

How does the contract type (Firm Fixed Price) influence risk allocation between the government and the contractor?

The Firm Fixed Price (FFP) contract type allocates the majority of the cost risk to the contractor, The Day & Zimmermann Group Inc. Under an FFP agreement, the contractor is obligated to complete the work for a predetermined price, regardless of their actual costs incurred. This means that if the contractor's expenses for labor, materials, or overhead exceed their estimates, their profit margin will decrease, or they could incur a loss. Conversely, if their costs are lower than anticipated, their profit will increase. This structure incentivizes the contractor to manage costs efficiently and perform the work within budget. For the government, the FFP contract provides cost certainty, as the final price is fixed, barring any contract modifications.

Industry Classification

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

Product/Service Code: AMMUNITION AND EXPLOSIVES

Competition & Pricing

Extent Competed: NOT COMPETED

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Contractor Details

Address: 1818 MARKET ST FL 20, PHILADELPHIA, PA, 90

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: DAAA0999G0004

IDV Type: IDC

Timeline