DoD awards $14.8M for M1028 canister cartridges, with Alliant Techsystems Operations LLC securing the contract

Contract Overview

Contract Amount: $14,862,632 ($14.9M)

Contractor: Alliant Techsystems Operations LLC

Awarding Agency: Department of Defense

Start Date: 2008-07-17

End Date: 2011-04-11

Contract Duration: 998 days

Daily Burn Rate: $14.9K/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: M1028 CANISTER CARTRIDGE

Place of Performance

Location: MINNEAPOLIS, HENNEPIN County, MINNESOTA, 55442

State: Minnesota Government Spending

Plain-Language Summary

Department of Defense obligated $14.9 million to ALLIANT TECHSYSTEMS OPERATIONS LLC for work described as: M1028 CANISTER CARTRIDGE Key points: 1. Contract value of $14.8M for ammunition manufacturing indicates significant procurement in this defense sector. 2. The contract was awarded under 'Full and Open Competition After Exclusion of Sources', suggesting a specific justification for limiting bidders. 3. The fixed-price with economic price adjustment (EPA) structure introduces potential for cost fluctuations over the contract's duration. 4. The contract duration of 998 days points to a medium-term supply need for these specialized munitions. 5. The North American Industry Classification System (NAICS) code 332993 categorizes this as Ammunition (except Small Arms) Manufacturing. 6. The award was made by the Department of the Army, highlighting its role in equipping ground forces.

Value Assessment

Rating: fair

Benchmarking the value of $14.8M for M1028 canister cartridges requires detailed analysis of unit costs and comparison to similar defense procurements. Without specific unit pricing or comparable contract data, it's difficult to definitively assess value for money. The fixed-price with EPA contract type introduces a degree of risk regarding cost escalation, which could impact the overall value if economic adjustments are significant. The contract's duration suggests a substantial quantity, but the precise efficiency of the pricing remains unclear without further context.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded under 'Full and Open Competition After Exclusion of Sources'. This procurement method implies that while the competition was intended to be open, certain sources were excluded, likely due to specific technical requirements, security considerations, or prior performance. The exact number of bidders that responded after the exclusion is not specified, but the designation suggests a more controlled competition than a purely 'full and open' process. This could potentially limit price discovery and lead to higher costs compared to a broader competitive environment.

Taxpayer Impact: Taxpayers may face higher costs due to the limited nature of the competition, as fewer potential suppliers were allowed to bid. This exclusion could reduce the downward pressure on pricing that a wider field of competitors might exert.

Public Impact

The primary beneficiaries are the U.S. Army ground forces who will receive the M1028 canister cartridges for their operational needs. The contract delivers essential ammunition, contributing to the military's readiness and combat effectiveness. The geographic impact is primarily within the United States, where the contractor, Alliant Techsystems Operations LLC, will manufacture the cartridges. Workforce implications include employment opportunities at Alliant Techsystems Operations LLC and potentially its subcontractors, particularly in manufacturing and logistics roles.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition may result in less favorable pricing for the government.
The 'economic price adjustment' clause introduces uncertainty regarding final contract cost.
Exclusion of sources requires clear justification to ensure fairness and prevent anti-competitive practices.
Contract awarded in 2008, performance extended to 2011; market conditions and pricing may have evolved significantly since then.

Positive Signals

Contract awarded to a known defense contractor, Alliant Techsystems Operations LLC, suggesting established capabilities.
The contract was competed, even with exclusions, indicating an effort to secure a supplier.
The fixed-price component provides some cost certainty for a portion of the contract value.
The Department of the Army is procuring essential munitions, supporting military readiness.

Sector Analysis

The defense sector, specifically ammunition manufacturing, is characterized by high barriers to entry due to specialized technology, stringent quality control, and significant capital investment. Contracts like this are crucial for maintaining domestic production capabilities and ensuring the supply chain for essential munitions. The market size for such specialized ordnance is directly tied to defense budgets and geopolitical demands. Alliant Techsystems Operations LLC is a major player in this space, often competing for large-scale government contracts.

Small Business Impact

The contract data indicates that small business participation was not a primary driver, as the 'small business' flag is false. There is no explicit mention of small business set-asides. This suggests that the procurement was likely focused on large-scale industrial capabilities rather than specifically targeting small business prime contractors. Subcontracting opportunities for small businesses may exist, but they would depend on the prime contractor's sourcing strategy and are not detailed in this award notice.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Army's contracting command and potentially the Defense Contract Management Agency (DCMA). Accountability measures are embedded in the contract's terms, including delivery schedules, quality standards, and payment milestones. Transparency is facilitated through contract award databases like FPDS, though detailed performance metrics are often not publicly disclosed. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Department of Defense Ammunition Procurement
Army Combat Vehicle Ammunition
Fixed Price with Economic Price Adjustment Contracts
Defense Manufacturing Industrial Base
Alliant Techsystems Operations LLC Contracts

Risk Flags

Limited Competition
Economic Price Adjustment Clause
Potential for Cost Overruns

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $14.9 million to ALLIANT TECHSYSTEMS OPERATIONS LLC. M1028 CANISTER CARTRIDGE

Who is the contractor on this award?

The obligated recipient is ALLIANT TECHSYSTEMS OPERATIONS LLC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $14.9 million.

What is the period of performance?

Start: 2008-07-17. End: 2011-04-11.

What is the specific justification for excluding certain sources in this 'Full and Open Competition After Exclusion of Sources' award?

The justification for excluding sources in a 'Full and Open Competition After Exclusion of Sources' award typically stems from unique technical requirements, specialized manufacturing processes, proprietary technology, or specific security clearances that only a limited number of contractors can meet. For M1028 canister cartridges, the exclusion might be related to specific performance characteristics, compatibility with existing weapon systems, or the need for a particular manufacturing facility with proven capabilities. Without access to the official justification documentation filed with the contract award, the precise reasons remain speculative. However, such exclusions are intended to ensure the government obtains a product that meets stringent military specifications, even if it means a less competitive bidding pool.

How does the 'Economic Price Adjustment' (EPA) clause typically function for ammunition contracts, and what was its impact on this $14.8M award?

An Economic Price Adjustment (EPA) clause in a defense contract allows for adjustments to the contract price based on fluctuations in specific economic factors, such as labor costs, material prices, or overhead. For ammunition, this often relates to the cost of raw materials (metals, propellants) and specialized labor. The purpose is to protect both the contractor from unforeseen cost increases and the government from paying inflated prices if costs decrease. For this $14.8M award, the EPA clause means the final amount paid could deviate from the initial $14.8M if the specified economic indicators changed significantly between the contract award date (2008) and the completion date (2011). The exact impact would depend on the specific EPA formula used and the actual market fluctuations during that period. Without detailed financial data from the contract's lifecycle, the precise monetary effect of the EPA is unknown.

What is the typical unit cost for an M1028 canister cartridge, and how does this contract's implied unit cost compare?

Determining the precise unit cost for the M1028 canister cartridge from the provided data is challenging without knowing the exact quantity procured under the $14.8M contract. The M1028 is a specific type of 120mm tank ammunition, often used by the Abrams tank. Historical data and open-source intelligence suggest that the unit cost for such advanced munitions can range significantly, often from several hundred to over a thousand dollars per round, depending on the specific variant, quantity, and contract terms. If, for example, 15,000 rounds were procured, the implied unit cost would be approximately $990. If 20,000 rounds were procured, it would be around $743. These figures are estimates, and actual costs can vary widely based on the contract's specifics, including the EPA clause. A thorough comparison would require access to detailed procurement histories and unit pricing data from multiple comparable contracts.

What is Alliant Techsystems Operations LLC's track record with similar defense contracts, particularly in ammunition manufacturing?

Alliant Techsystems Operations LLC (now part of Northrop Grumman) has a substantial and long-standing track record in defense contracting, particularly in munitions and aerospace. The company has been a key supplier of various types of ammunition, including artillery shells, tank rounds, and small arms ammunition, to the U.S. military for decades. They have historically secured numerous large-scale contracts for manufacturing and supplying ordnance. Their experience includes managing complex production lines, adhering to strict military specifications, and navigating the challenges of economic price adjustments and fluctuating raw material costs. This specific contract for M1028 canister cartridges aligns with their core competencies in ammunition production, suggesting a basis for their selection as a capable supplier.

How has federal spending on ammunition (NAICS 332993) trended over the period encompassing this contract (2008-2011) and in subsequent years?

Federal spending on ammunition manufacturing (NAICS 332993) during the period of this contract (2008-2011) was influenced by ongoing military operations in Iraq and Afghanistan, leading to sustained demand. Spending in this category generally reflects overall defense budget allocations and the intensity of deployed military activities. Following this period, as U.S. military engagements evolved, spending patterns shifted. While specific figures for NAICS 332993 fluctuate annually, overall defense spending on munitions remains a significant component of the defense budget, driven by modernization efforts, readiness requirements, and global security challenges. Post-2011 trends have seen continued investment in advanced munitions, alongside efforts to optimize supply chains and potentially reduce unit costs through consolidation and strategic sourcing, though geopolitical events can rapidly increase demand and spending.

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: W15QKN08R0644

Offers Received: 2

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

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Innovation Systems LLC (UEI: 618705925)

Address: 4700 NATHAN LANE NORTH, MINNEAPOLIS, MN, 90

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $31,832,211

Exercised Options: $14,862,632

Current Obligation: $14,862,632

Contract Characteristics

Cost or Pricing Data: NO

Timeline