DoD awards $65M for HE, FRPC, and smoke shell bodies, with fixed-price adjustments

Contract Overview

Contract Amount: $65,083,681 ($65.1M)

Contractor: General Dynamics Ordnance and Tactical Systems Inc

Awarding Agency: Department of Defense

Start Date: 2007-12-17

End Date: 2013-03-31

Contract Duration: 1,931 days

Daily Burn Rate: $33.7K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 1

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Defense

Official Description: BASIC AWARD OF THE 120MM HE, FRPC, AND SMOKE SHELL BODIES.

Place of Performance

Location: SCRANTON, LACKAWANNA County, PENNSYLVANIA, 18505

State: Pennsylvania Government Spending

Plain-Language Summary

Department of Defense obligated $65.1 million to GENERAL DYNAMICS ORDNANCE AND TACTICAL SYSTEMS INC for work described as: BASIC AWARD OF THE 120MM HE, FRPC, AND SMOKE SHELL BODIES. Key points: 1. Contract awarded through full and open competition after exclusion of sources, indicating a structured procurement process. 2. The contract type, Fixed Price with Economic Price Adjustment, suggests potential for cost fluctuations based on market conditions. 3. Awarded to General Dynamics Ordnance and Tactical Systems Inc., a significant player in the defense manufacturing sector. 4. The duration of the contract (1931 days) indicates a long-term need for these specific ordnance components. 5. The product service code (PSC) for Ammunition (except Small Arms) Manufacturing places this award within a critical defense supply chain. 6. The contract's value of $65.08 million represents a substantial investment in essential military supplies.

Value Assessment

Rating: fair

The contract value of $65.08 million for ammunition components appears to be within a reasonable range for a multi-year defense procurement. However, without specific details on the quantity and exact specifications of the shell bodies, a precise value-for-money assessment is challenging. The fixed-price with economic price adjustment (FPEPA) contract type introduces variability, meaning the final cost could exceed initial projections if economic factors escalate significantly. Benchmarking against similar contracts for comparable ordnance components would provide a clearer picture of its cost-effectiveness.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded under 'Full and Open Competition After Exclusion of Sources.' This indicates that while the competition was intended to be broad, certain sources were excluded, potentially limiting the number of bidders. The specific reasons for exclusion are not detailed, but this approach can sometimes lead to less competitive pricing compared to truly unrestricted full and open competition. Further analysis would be needed to understand the impact of the excluded sources on the final price.

Taxpayer Impact: The limited competition, even with an initial 'full and open' designation, may have resulted in a higher price for taxpayers than if all potential sources had been allowed to bid. This procurement strategy warrants scrutiny to ensure maximum value was achieved.

Public Impact

Benefits the Department of Defense by ensuring a supply of critical ammunition components for military operations. Delivers essential HE, FRPC, and smoke shell bodies, vital for various combat and training scenarios. The geographic impact is primarily within the United States, supporting domestic defense manufacturing capabilities. Implications for the defense industrial workforce, particularly in specialized manufacturing roles within General Dynamics Ordnance and Tactical Systems Inc.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The 'Economic Price Adjustment' clause introduces uncertainty in the final cost to taxpayers.
The 'Exclusion of Sources' in the competition raises questions about the extent of market engagement and potential price impacts.
Lack of detailed performance metrics makes it difficult to assess the contractor's efficiency and effectiveness over the contract's long duration.

Positive Signals

Awarded through a competitive process, suggesting an effort to obtain fair pricing.
The contract is with a known defense contractor with established capabilities in ordnance manufacturing.
The long duration indicates a stable and predictable supply chain for essential munitions.

Sector Analysis

This contract falls within the defense manufacturing sector, specifically focusing on ammunition production. The market for such specialized components is typically dominated by a few large defense contractors due to high barriers to entry, including specialized facilities, security clearances, and extensive R&D. Spending in this area is driven by military readiness requirements and modernization programs. Comparable spending benchmarks would involve analyzing other DoD contracts for similar types of ordnance and their associated costs per unit or per contract.

Small Business Impact

The data indicates this contract was not set aside for small businesses (ss: false, sb: false). General Dynamics Ordnance and Tactical Systems Inc. is a large corporation, suggesting that subcontracting opportunities for small businesses may exist within its supply chain. However, the extent of these opportunities and whether they are actively pursued is not detailed in this award information. The primary focus of this large prime contract is on direct production by the awarded entity.

Oversight & Accountability

Oversight for this contract would typically be managed by the Department of the Army, likely through contracting officers and program managers responsible for ordnance procurement. Accountability measures are embedded in the contract terms, including delivery schedules and quality specifications. Transparency is facilitated through contract award databases, though detailed performance reports may not be publicly available. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Department of Defense Ammunition Procurement
Ordnance Manufacturing Contracts
Fixed-Price Contracts with Economic Price Adjustment
Defense Industrial Base Support
Army Ammunition Production

Risk Flags

Potential for cost overruns due to Economic Price Adjustment clause.
Limited competition due to exclusion of sources may impact price discovery.
Long contract duration could reduce flexibility and potentially lock in higher costs.
Lack of detailed performance data makes ongoing value assessment difficult.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $65.1 million to GENERAL DYNAMICS ORDNANCE AND TACTICAL SYSTEMS INC. BASIC AWARD OF THE 120MM HE, FRPC, AND SMOKE SHELL BODIES.

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 $65.1 million.

What is the period of performance?

Start: 2007-12-17. End: 2013-03-31.

What is the historical spending pattern for HE, FRPC, and smoke shell bodies by the Department of the Army?

Analyzing historical spending for these specific shell bodies requires access to detailed procurement data over multiple fiscal years. Generally, the Department of the Army maintains consistent spending on ammunition components to ensure readiness. Factors influencing spending include operational tempo, inventory levels, and modernization efforts. For instance, periods of increased deployment or new weapon system introductions could lead to higher procurement volumes and associated costs. Without specific historical contract data for these exact components, it's difficult to provide precise figures, but it's reasonable to assume a sustained, multi-million dollar annual expenditure on such critical munitions to support training and operational needs.

How does the unit cost of these shell bodies compare to similar contracts awarded by other military branches or allied nations?

A direct comparison of unit costs for these specific shell bodies is challenging without detailed specifications and quantities from comparable contracts. Different military branches or allied nations may procure components with varying tolerances, materials, or performance characteristics, influencing price. Furthermore, contract terms, such as volume discounts, delivery schedules, and economic price adjustment clauses, can significantly affect the final unit cost. To conduct a robust benchmark, one would need to identify contracts with identical or highly similar Product Service Codes (PSCs) and specifications, then normalize for quantity, delivery location, and contract type. This often requires access to specialized defense procurement databases and analytical tools.

What are the specific risks associated with the 'Fixed Price with Economic Price Adjustment' (FPEPA) contract type for this procurement?

The primary risk of an FPEPA contract for taxpayers is cost escalation. While it aims to protect the contractor from unforeseen increases in material, labor, or other direct costs, it shifts some of that risk to the government. If market prices for raw materials (like metals) or specialized labor rise significantly during the contract period, the government will pay the higher adjusted price. This can lead to the final cost exceeding initial budget projections. For the contractor, the risk is mitigated, potentially leading to less incentive to aggressively control costs compared to a firm fixed-price contract. Effective oversight is crucial to ensure that any price adjustments are justified and align with established economic indices.

What is General Dynamics Ordnance and Tactical Systems Inc.'s track record in fulfilling similar defense manufacturing contracts?

General Dynamics Ordnance and Tactical Systems Inc. (GD-OTS) has a well-established and extensive track record in defense manufacturing, including the production of various types of ordnance, munitions, and related components. They are a significant supplier to the U.S. military and allied nations. Their history includes fulfilling large-scale, complex contracts for ammunition systems, artillery shells, and other tactical hardware. While specific performance metrics for every contract are not publicly detailed, GD-OTS is generally recognized as a capable and reliable producer within the defense industrial base. Any concerns regarding past performance would typically be documented within government performance assessment systems, which are not directly accessible here.

What are the potential performance implications of awarding a contract with a duration of over 1900 days?

A contract duration of over 1900 days (approximately 5.3 years) suggests a long-term, stable requirement for the specified shell bodies. This extended period allows for production planning, investment in manufacturing capabilities, and potentially economies of scale for the contractor. For the government, it ensures a consistent supply chain for critical components, reducing the need for frequent re-procurement actions. However, it also ties the government to a single contractor for an extended period, potentially limiting flexibility if requirements change or if better pricing becomes available through new competitions. It necessitates robust contract management to ensure continued value and adherence to specifications throughout the term.

How does the 'Exclusion of Sources' clause impact the competitive landscape and potential for innovation in this contract?

The 'Full and Open Competition After Exclusion of Sources' clause indicates that while the procurement was not a sole-source award, certain potential bidders were deliberately excluded from the competition. The reasons for exclusion are critical to understanding its impact. If sources were excluded based on specific technical capabilities, security requirements, or past performance issues, it might be a justifiable measure to ensure contract success. However, if exclusions were arbitrary or based on criteria that unnecessarily limit the bidder pool, it could stifle competition, potentially leading to higher prices and reduced innovation. This approach requires careful justification to ensure it serves the government's best interest and doesn't unduly restrict market access.

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: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: W15QKN07R0608

Offers Received: 1

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT (K)

Evaluated Preference: NONE

Contractor Details

Parent Company: General Dynamics Corp

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: $65,172,402

Exercised Options: $65,083,681

Current Obligation: $65,083,681

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline