Department of the Navy Awarded $18.8M for MK285 40MM Pphe Ammunition to Nammo Raufoss AS

Contract Overview

Contract Amount: $18,755,920 ($18.8M)

Contractor: Nammo Raufoss AS

Awarding Agency: Department of Defense

Start Date: 2006-09-01

End Date: 2010-06-21

Contract Duration: 1,389 days

Daily Burn Rate: $13.5K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: MK285 40MM PPHE AMMUNITION

Plain-Language Summary

Department of Defense obligated $18.8 million to NAMMO RAUFOSS AS for work described as: MK285 40MM PPHE AMMUNITION Key points: 1. The contract was awarded on a sole-source basis, limiting price competition. 2. The duration of the contract was over three years, indicating a sustained need. 3. The award was made by the Department of the Navy, a major defense spender. 4. The product is ammunition, a critical component for military operations. 5. The contract type is Firm Fixed Price, which shifts cost risk to the contractor.

Value Assessment

Rating: questionable

Benchmarking the value for this specific ammunition type is challenging due to its specialized nature and the sole-source award. Without competitive bids, it's difficult to ascertain if the $18.8 million represents a fair market price. The lack of competition inherently raises concerns about potential overpricing compared to what might be achieved in a more open bidding environment. Further analysis would require access to historical pricing for similar munitions or internal cost data from the contractor.

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 among multiple vendors. This approach is typically used when only one vendor can provide the required goods or services, or in situations where competition is deemed not to be in the government's best interest. The lack of competition means there was no opportunity for multiple companies to bid, potentially leading to higher prices than if it had been fully competed.

Taxpayer Impact: Taxpayers may have paid a premium for this ammunition due to the absence of competitive bidding. The government did not benefit from the price discovery mechanisms inherent in a competitive procurement process.

Public Impact

The primary beneficiaries are the U.S. Navy personnel who will utilize this specialized ammunition. The service delivered is the supply of MK285 40MM PPHE AMMUNITION, essential for certain combat scenarios. The geographic impact is primarily within Navy operational theaters, wherever this ammunition is deployed. Workforce implications are likely within the defense manufacturing sector, specifically at NAMMO RAUFOSS AS and its supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price discovery and potentially increases cost to taxpayers.
Lack of competition raises questions about the government securing the best possible value.
Specialized nature of the munition may limit available suppliers, contributing to sole-source justification.

Positive Signals

Firm Fixed Price contract shifts cost overrun risk to the contractor.
Award to a known entity (NAMMO RAUFOSS AS) suggests a potentially established relationship and understanding of requirements.
The ammunition is for a specific, likely critical, military application.

Sector Analysis

The defense industry, particularly the ordnance manufacturing sector, is characterized by high barriers to entry due to specialized technology, stringent quality control, and regulatory requirements. Companies like NAMMO RAUFOSS AS operate within a market often influenced by government procurement cycles and geopolitical factors. Spending on ammunition is a consistent component of defense budgets, with significant investments made annually. This contract represents a portion of the broader U.S. defense spending on munitions, which can range in the billions of dollars annually.

Small Business Impact

This contract was awarded directly to NAMMO RAUFOSS AS and does not appear to have a specific small business set-aside component. There is no explicit information regarding subcontracting opportunities for small businesses within this award. The nature of specialized ammunition manufacturing often involves large, established prime contractors, which may limit direct opportunities for small businesses unless they are part of the prime contractor's supply chain.

Oversight & Accountability

Oversight for this contract would fall under the Department of the Navy's contracting and program management offices. Accountability measures are typically embedded in the contract terms, including delivery schedules and quality specifications. Transparency is limited by the sole-source nature of the award; however, contract award data is publicly available through federal procurement databases. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Department of Defense Ammunition Procurement
Navy Ordnance Programs
Small Arms and Ammunition Manufacturing
Specialized Munitions Development

Risk Flags

Sole-source award
Potential for overpricing due to lack of competition
Long contract duration increases supplier dependency risk

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $18.8 million to NAMMO RAUFOSS AS. MK285 40MM PPHE AMMUNITION

Who is the contractor on this award?

The obligated recipient is NAMMO RAUFOSS AS.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $18.8 million.

What is the period of performance?

Start: 2006-09-01. End: 2010-06-21.

What is the specific military application or operational need for MK285 40MM PPHE AMMUNITION?

The MK285 40MM PPHE (Pointed High Explosive) ammunition is a specialized munition designed for use in specific 40mm grenade launchers, likely those integrated into naval platforms or specialized infantry support systems. Its 'pointed' design suggests an optimized aerodynamic profile for range or penetration, while 'high explosive' indicates its primary function is destructive effect against targets. The 'PPHE' designation points to a specific type of warhead. Without access to classified operational details or specific system requirements, the precise tactical or strategic need remains undisclosed in public records. However, its procurement by the Department of the Navy signifies its importance in supporting naval operations, potentially for anti-personnel, anti-materiel, or suppression of enemy fire roles in littoral or shipboard engagements.

How does the unit cost of this ammunition compare to similar munitions procured by the DoD?

Direct unit cost comparison for the MK285 40MM PPHE AMMUNITION is difficult without knowing the exact quantity purchased under the $18.8 million contract and its specific unit price. The contract data indicates a total award of $18,755,920 for 332,994 units, which would place the average unit cost at approximately $56.33. However, this is an average and may not reflect the actual negotiated price per unit, especially if there were different configurations or quantities purchased over the contract's duration. Furthermore, comparing this to 'similar' munitions is complex, as 'similar' can vary greatly by caliber, explosive fill, fusing mechanisms, and intended application (e.g., training vs. combat, anti-personnel vs. anti-materiel). Given the sole-source nature of this award, it is challenging to establish a competitive benchmark. Generally, specialized or advanced munitions tend to have higher unit costs than standard or training rounds.

What are the risks associated with a sole-source procurement for critical defense supplies like ammunition?

Sole-source procurements for critical defense supplies like ammunition carry several inherent risks. Primarily, the absence of competition can lead to inflated prices, as the government lacks the leverage that multiple bidders provide to negotiate the best possible value. This can result in higher costs for taxpayers. Secondly, it can stifle innovation, as potential competitors are not incentivized to develop alternative or improved solutions if they know they won't have a chance to bid. Thirdly, it can create dependency on a single supplier, which poses a significant supply chain risk. If the sole-source provider experiences production issues, financial instability, or geopolitical disruptions, the government may face shortages of critical materiel. Lastly, it raises concerns about transparency and fairness in the procurement process.

What is NAMMO RAUFOSS AS's track record with the Department of Defense, particularly for ammunition contracts?

NAMMO RAUFOSS AS, part of the larger Nammo Group, has a significant history of supplying ammunition and related products to various defense organizations, including the U.S. Department of Defense. Publicly available contract data indicates numerous awards to Nammo entities for different types of ammunition, ranging from small caliber rounds to larger ordnance. Their track record generally reflects an established capability in defense manufacturing. Specific to the Department of the Navy and ammunition, they have been a recurring supplier. The award for MK285 40MM PPHE AMMUNITION is one instance within a broader pattern of defense contracting. While specific performance metrics for individual contracts are not always public, their continued success in securing defense contracts suggests a generally satisfactory performance history in meeting the government's requirements for quality and delivery.

How does the contract duration (1389 days) impact the overall value and risk assessment?

A contract duration of 1389 days (approximately 3.8 years) for ammunition procurement suggests a sustained operational requirement by the Department of the Navy. From a value perspective, a longer duration can sometimes allow for economies of scale if production is ramped up, potentially leading to lower unit costs over time, although this is less likely in a sole-source scenario. However, it also locks the government into a single supplier for an extended period, increasing the risk associated with that supplier's performance, financial stability, and potential price increases over the contract life. For a sole-source contract, a longer duration amplifies the risk of paying above-market rates for the entire period. It also reduces flexibility to adapt to new technologies or changing requirements that might emerge during the contract's term.

Industry Classification

NAICS: Manufacturing › Other Fabricated Metal Product Manufacturing › Small Arms, Ordnance, and Ordnance Accessories Manufacturing

Product/Service Code: WEAPONS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0016406R4879

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Nammo AS (UEI: 731046942)

Address: RAUFOSSENGA 10, RAUFOSS

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $18,755,920

Exercised Options: $18,755,920

Current Obligation: $18,755,920

Contract Characteristics

Cost or Pricing Data: YES

Timeline