DoD awards $21.9M contract for ammunition manufacturing, highlighting potential value concerns

Contract Overview

Contract Amount: $21,944,298 ($21.9M)

Contractor: DAY & Zimmermann Group Inc., the

Awarding Agency: Department of Defense

Start Date: 2003-09-17

End Date: 2010-11-01

Contract Duration: 2,602 days

Daily Burn Rate: $8.4K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 5

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: 200312!001292!2100!AE30 !TACOM - PICATINNY !DAAE3003C1166 !A!N! !N! !20030917!20061231!007913486!007913486!007913486!N!DAY & ZIMMERMANN, INC !1818 MARKET ST !PHILADELPHIA !PA!19103!35987!099!20!KANSAS ARMY AMMUNITI!LABETTE !KANSAS !+000001885323!N!N!000000000000!1315!AMMUNITION, 75 MM THROUGH 125 MM !A6 !AMMUNITION !1000!NOT DISCERNABLE OR CLASSIFIED !332992!E! !3! ! ! ! ! !99990909!B! ! !A! !A!U!U!2!005!N!5A!Z!N!Z! ! !N!C!N! ! ! !A!C!A!A!000!A!A!N! ! ! ! ! ! !0001! !

Place of Performance

Location: PARSONS, LABETTE County, KANSAS, 67357

State: Kansas Government Spending

Plain-Language Summary

Department of Defense obligated $21.9 million to DAY & ZIMMERMANN GROUP INC., THE for work described as: 200312!001292!2100!AE30 !TACOM - PICATINNY !DAAE3003C1166 !A!N! !N! !20030917!20061231!007913486!007913486!007913486!N!DAY & ZIMMERMANN, INC !1818 MARKET ST !PHILADELPHIA !PA!19103!35987!099!20!KANSAS ARMY AMMUNITI!LABET… Key points: 1. Contract awarded for small arms ammunition manufacturing, a critical component for military readiness. 2. The contract utilized full and open competition after exclusion of sources, suggesting a potentially competitive process. 3. A cost-plus-fixed-fee pricing structure was employed, which can sometimes lead to cost overruns if not managed carefully. 4. The contract duration of 2602 days (approximately 7 years) indicates a long-term commitment and potential for sustained performance. 5. The awarded amount of $21.9M falls within a moderate spending range for this type of defense procurement. 6. The contractor, Day & Zimmermann, Inc., has a significant presence in defense manufacturing, suggesting established capabilities.

Value Assessment

Rating: fair

The contract's value of $21.9 million for ammunition manufacturing over approximately seven years warrants careful scrutiny. While the specific unit costs are not detailed, the cost-plus-fixed-fee (CPFF) structure necessitates robust oversight to ensure efficiency and prevent cost escalation. Benchmarking against similar contracts for small arms ammunition would be crucial to determine if this price represents good value for the quantity and type of ammunition procured. Without detailed performance metrics or cost breakdowns, a definitive value assessment is challenging, but the CPFF structure introduces inherent risk.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

This contract was awarded under 'Full and Open Competition After Exclusion of Sources.' This procurement method implies that while competition was sought, certain sources may have been excluded prior to the solicitation, potentially limiting the pool of bidders. The number of bids received (5) is moderate, suggesting some level of competition, but the 'exclusion of sources' aspect raises questions about the breadth of the competitive landscape. A more open competition might have yielded more bids and potentially more competitive pricing.

Taxpayer Impact: The limited competition, particularly with the exclusion of sources, may have resulted in a higher price for taxpayers than a fully open and unrestricted bidding process could have achieved.

Public Impact

The primary beneficiaries are the U.S. Army and potentially other branches of the Department of Defense, receiving essential small arms ammunition. The contract ensures the supply of ammunition ranging from 75mm through 125mm, crucial for training and operational readiness. The geographic impact is centered around the contractor's facility in Kansas, supporting local employment and economic activity. This contract supports jobs within the defense manufacturing sector, specifically in ammunition production.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus-fixed-fee contract type can incentivize higher costs if not rigorously managed.
The 'exclusion of sources' in the competition method may have limited competitive pressure.
Long contract duration (over 7 years) increases the risk of price increases due to inflation or unforeseen market changes.
Lack of detailed performance metrics makes it difficult to assess efficiency and value for money.
Specific ammunition types (75mm-125mm) are broad; precise quantities and specifications are needed for a full value assessment.

Positive Signals

Awarded through a competitive process, indicating some level of market engagement.
Contractor has established experience in defense manufacturing.
Contract ensures a critical supply of ammunition for military operations.
The fixed fee component of the CPFF contract provides some cost predictability for the government.

Sector Analysis

The defense industry's ammunition sector is a vital component of national security, involving specialized manufacturing processes and stringent quality controls. This contract falls within the broader category of defense manufacturing, specifically focusing on small arms and artillery ammunition. The market size for such specialized munitions is significant, driven by consistent military demand for training and operational readiness. Comparable spending benchmarks would typically involve analyzing historical contracts for similar ammunition types and quantities, considering factors like inflation and technological advancements. The $21.9 million award is a moderate sum within this sector, reflecting the procurement of a specific range of ammunition over an extended period.

Small Business Impact

This contract does not appear to have a specific small business set-aside. The prime contractor, Day & Zimmermann, Inc., is a large business. While there is no direct set-aside, the contract's value and nature may present subcontracting opportunities for small businesses within the defense supply chain, particularly those specializing in raw materials, components, or specialized manufacturing processes related to ammunition. The extent of small business participation would depend on the prime contractor's subcontracting plan and the availability of qualified small business suppliers.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Army's contracting and program management offices. The cost-plus-fixed-fee structure necessitates close monitoring of expenditures and performance to ensure compliance with contract terms and prevent cost overruns. Inspector General (IG) jurisdiction would apply to investigations of fraud, waste, or abuse. Transparency is facilitated through contract databases like FPDS, which provide basic award information, but detailed performance and cost data may be less accessible to the public.

Related Government Programs

Department of Defense Ammunition Procurement
Army Small Arms and Artillery Programs
Defense Manufacturing Industrial Base
Cost-Plus-Fixed-Fee Contracts
Ammunition Production Contracts

Risk Flags

Cost Overruns Risk (CPFF)
Limited Competition Impact
Long-Term Contract Vulnerability
Quality Control Assurance
Supply Chain Disruptions

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $21.9 million to DAY & ZIMMERMANN GROUP INC., THE. 200312!001292!2100!AE30 !TACOM - PICATINNY !DAAE3003C1166 !A!N! !N! !20030917!20061231!007913486!007913486!007913486!N!DAY & ZIMMERMANN, INC !1818 MARKET ST !PHILADELPHIA !PA!19103!35987!099!20!KANSAS ARMY AMMUNITI!LABETTE !KANSAS !+000001885323!N!N!000000000000!1315!AMMUNITION, 75 MM THROUGH 125 MM !A6 !AMMUNITION !1000!NOT DISCERNABLE OR CLASSIFIED !332992!E! !3! ! ! ! ! !99990909!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 $21.9 million.

What is the period of performance?

Start: 2003-09-17. End: 2010-11-01.

What is the historical spending pattern for ammunition manufacturing contracts awarded to Day & Zimmermann, Inc. by the Department of Defense?

Analyzing historical spending for Day & Zimmermann, Inc. in ammunition manufacturing reveals a consistent and significant relationship with the Department of Defense. Over the years, the company has secured numerous contracts for various types of munitions, reflecting its established role as a key supplier. Specific contract values have varied widely based on the type, quantity, and duration of the ammunition procured. For instance, larger, multi-year contracts for artillery shells or complex munitions would naturally command higher dollar amounts than smaller orders for specific small arms rounds. Examining past awards can provide context for the $21.9 million contract, indicating whether this award is typical, an increase, or a decrease in the company's typical contract volume for similar items. It also helps in understanding the government's reliance on this contractor for critical ammunition needs over time.

How does the awarded price per unit for this ammunition contract compare to market rates or similar government contracts?

A precise per-unit cost comparison for this $21.9 million contract is challenging without access to the detailed specifications and quantities of the ammunition procured (75mm through 125mm). Ammunition costs vary significantly based on caliber, type (e.g., training, armor-piercing, explosive), and manufacturing complexity. However, the contract's 'Cost Plus Fixed Fee' (CPFF) structure suggests that the government pays the actual allowable costs incurred by the contractor plus a predetermined fixed fee. To assess value, one would need to benchmark the estimated total cost against historical data for similar ammunition types and quantities procured by the DoD or other federal agencies. If comparable contracts show significantly lower total costs or lower per-unit prices for similar specifications, it would indicate potential overpricing or inefficiencies in this award. Conversely, if the price aligns with or is lower than benchmarks, it suggests reasonable value.

What are the key performance indicators (KPIs) used to measure the success and efficiency of this ammunition manufacturing contract?

The success and efficiency of this ammunition manufacturing contract are likely measured through a combination of performance metrics tied to the Cost Plus Fixed Fee (CPFF) structure and the specific requirements of the ammunition. Key Performance Indicators (KPIs) would typically include on-time delivery rates, adherence to quality control standards (e.g., defect rates, compliance with technical specifications), production output volume, and cost control. For a CPFF contract, monitoring the contractor's ability to manage costs within projected levels, while still meeting quality and delivery targets, is paramount. The fixed fee provides an incentive for the contractor to control costs efficiently. Performance reports submitted by the contractor and reviewed by the government contracting officer would detail progress against these KPIs, informing decisions about contract modifications, payments, and future procurements.

What is the potential risk associated with the 'Cost Plus Fixed Fee' (CPFF) contract type for this ammunition procurement?

The primary risk associated with a Cost Plus Fixed Fee (CPFF) contract for ammunition procurement is the potential for cost overruns. While the 'fixed fee' component provides a ceiling on the contractor's profit, the government bears the risk of all allowable costs incurred. If the contractor is inefficient, experiences unexpected material cost increases, or faces production challenges, the total cost to the government can escalate significantly beyond initial estimates. This necessitates robust government oversight to scrutinize all incurred costs, ensure they are reasonable, allocable, and allowable under the contract terms. Without diligent cost monitoring and management, the CPFF structure can lead to higher overall expenditures compared to fixed-price contracts, potentially impacting the value for money received by the taxpayer.

How does the 'Full and Open Competition After Exclusion of Sources' procurement method impact price discovery and taxpayer value?

The 'Full and Open Competition After Exclusion of Sources' method presents a nuanced impact on price discovery and taxpayer value. While it aims for competition, the explicit exclusion of certain sources prior to solicitation inherently limits the number of potential bidders. This reduction in the competitive pool can diminish the pressure on bidders to offer the lowest possible price. Price discovery relies on a robust marketplace; when that marketplace is artificially constrained, the resulting price may not reflect the most competitive market rate achievable. For taxpayers, this means there's a heightened risk that the awarded price could be higher than what might have been secured through a truly unrestricted, full-and-open competition. The government must ensure that the exclusion of sources is justified by specific, documented reasons to avoid inadvertently reducing competition and increasing costs.

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 AFTER EXCLUSION OF SOURCES

Offers Received: 5

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 1818 MARKET ST, PHILADELPHIA, PA, 90

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $17,099

Exercised Options: $17,099

Current Obligation: $21,944,298

Contract Characteristics

Cost or Pricing Data: NO

Timeline