DoD awards $78.4M for M240L machine guns, with FN America as sole source
Contract Overview
Contract Amount: $78,382,462 ($78.4M)
Contractor: FN America LLC
Awarding Agency: Department of Defense
Start Date: 2009-06-11
End Date: 2012-09-28
Contract Duration: 1,205 days
Daily Burn Rate: $65.0K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: FIRM FIXED PRICE
Sector: Defense
Official Description: M240L MACHINE GUN 7.62MM
Place of Performance
Location: COLUMBIA, RICHLAND County, SOUTH CAROLINA, 29229
Plain-Language Summary
Department of Defense obligated $78.4 million to FN AMERICA LLC for work described as: M240L MACHINE GUN 7.62MM Key points: 1. Contract awarded on a firm-fixed-price basis, indicating clear cost expectations. 2. Sole-source award suggests limited market competition for this specific weapon system. 3. Contract duration of 1205 days implies a significant production and delivery timeline. 4. Awarded by the Department of the Army, indicating a direct military need. 5. FN America LLC, the contractor, is a known entity in small arms manufacturing. 6. The contract falls under the 'Small Arms, Ordnance, and Ordnance Accessories Manufacturing' NAICS code.
Value Assessment
Rating: fair
The total award of $78.4 million for M240L machine guns needs further benchmarking against historical procurement data for similar weapon systems. Without comparative pricing for alternative or previous models, assessing value for money is challenging. The firm-fixed-price structure provides cost certainty for the government, but the sole-source nature may have limited opportunities for competitive price reductions. The duration of the contract suggests a substantial quantity or complex manufacturing process, which could influence per-unit cost.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was awarded on a sole-source basis, meaning only one bidder, FN America LLC, was solicited. This approach is typically used when a unique capability or proprietary technology is required, or in cases of urgent need where competition is not feasible. The lack of competition means there was no opportunity for multiple companies to bid, potentially leading to higher prices than if a competitive bidding process had been employed.
Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive pressure. The government did not benefit from the price discovery mechanisms inherent in a multi-bidder scenario.
Public Impact
The primary beneficiaries are the U.S. Army personnel who will be equipped with the M240L machine gun. The contract delivers essential infantry support weapon systems to enhance combat effectiveness. The geographic impact is primarily within the United States, where FN America LLC is based, and potentially at military installations receiving the weapons. Workforce implications include employment at FN America's manufacturing facilities and potentially within the Army's logistics and maintenance units.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award limits competitive pricing and potentially increases cost to taxpayers.
- Lack of transparency in the justification for sole-source procurement.
- Long contract duration could lead to cost overruns if not managed effectively.
- Potential for obsolescence if technology advances rapidly during the contract period.
Positive Signals
- Firm-fixed-price contract provides cost certainty for the government.
- FN America LLC is an established manufacturer with a track record in small arms.
- Directly supports the operational readiness of U.S. Army forces.
- Contract award signifies a commitment to equipping soldiers with necessary weaponry.
Sector Analysis
The defense sector, specifically small arms manufacturing, is characterized by specialized producers and often long-standing relationships with government agencies. Procurement of major weapon systems can involve significant R&D investment and stringent quality control. While some components may be sourced competitively, the final assembly and integration of complex systems like machine guns often involve a limited number of qualified contractors. Benchmarking this contract would involve comparing it to other large-scale procurements of similar caliber automatic weapons by the DoD or allied nations.
Small Business Impact
This contract does not appear to include a small business set-aside. Given the sole-source nature and the specialized manufacturing requirements for firearms, it is unlikely that subcontracting opportunities for small businesses were mandated or extensively explored. The primary contractor, FN America LLC, is a large business. The impact on the small business ecosystem is likely minimal, as the focus is on a prime contractor with established capabilities.
Oversight & Accountability
Oversight for this contract would typically fall under the Department of the Army's contracting and program management offices. Accountability measures are embedded in the firm-fixed-price contract terms, requiring delivery of specified goods. Transparency may be limited due to the sole-source nature, with justifications for this procurement method usually detailed in contract award documents. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.
Related Government Programs
- M249 Squad Automatic Weapon
- M4 Carbine
- Small Arms Procurement
- Infantry Weapons Systems
Risk Flags
- Sole Source Justification
- Potential for Price Inflation
- Long-Term Production Schedule
Tags
defense, department-of-the-army, machine-gun, small-arms, ordnance, fn-america-llc, sole-source, firm-fixed-price, definitive-contract, south-carolina, us-military
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $78.4 million to FN AMERICA LLC. M240L MACHINE GUN 7.62MM
Who is the contractor on this award?
The obligated recipient is FN AMERICA 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 $78.4 million.
What is the period of performance?
Start: 2009-06-11. End: 2012-09-28.
What is the specific justification for awarding this contract on a sole-source basis to FN America LLC?
The specific justification for a sole-source award is typically documented in the contract file, often through a Justification and Approval (J&A) document. Common reasons include the existence of unique capabilities, proprietary technology, or urgent and compelling needs where competition is not feasible. For FN America LLC, it might relate to specific design patents, existing production lines tailored for the M240L, or a requirement to maintain interoperability with existing systems. Without access to the official J&A, the precise rationale remains speculative, but it implies that no other vendor could meet the government's requirements as effectively or efficiently at the time of award.
How does the unit cost of the M240L machine gun under this contract compare to previous procurements or similar weapon systems?
Direct comparison of unit cost is challenging without knowing the total quantity procured under this $78.4 million contract. The contract is for the 'M240L MACHINE GUN 7.62MM', and the award amount is a total value. To determine unit cost, the total award value would need to be divided by the number of units delivered. Furthermore, comparing this to previous procurements requires access to historical contract data for the M240L or comparable weapons like the M240B. Factors such as inflation, technological upgrades, and changes in manufacturing processes can significantly influence unit costs over time. The sole-source nature of this award also suggests that competitive pricing benchmarks may not be readily available.
What are the key performance metrics and delivery schedules associated with this contract?
The contract has a duration of 1205 days, spanning from June 11, 2009, to September 28, 2012. This indicates the timeframe over which the M240L machine guns were to be manufactured and delivered. Key performance metrics would typically include adherence to technical specifications (e.g., reliability, accuracy, durability), quality control standards, and timely delivery. Failure to meet these metrics could result in contract penalties or termination. Specific delivery schedules, including milestones for partial deliveries, would be detailed in the contract's statement of work and delivery orders, ensuring the Army receives the weapons according to its operational needs.
What is FN America LLC's track record with the Department of Defense, particularly concerning small arms manufacturing?
FN America LLC has a long-standing and significant track record with the Department of Defense, particularly in the manufacturing of small arms. They are known for producing variants of the M240 machine gun series, as well as the M249 Squad Automatic Weapon and the M4 carbine. Their history includes numerous contracts for these essential weapons systems, indicating a deep familiarity with military specifications, production processes, and quality assurance requirements. This established relationship and proven capability likely contributed to the sole-source award, as the government would have confidence in their ability to deliver reliable and effective weapon systems.
Are there any identified risks or concerns related to the performance or long-term viability of this contract?
Risks associated with this contract primarily stem from its sole-source nature, which can limit price competition and potentially lead to higher costs. The long duration (1205 days) also presents risks related to potential technological obsolescence if advancements occur rapidly in weapon system design during the contract period. Furthermore, any delays in production or quality control issues could impact the operational readiness of the Army units relying on these weapons. The government's oversight mechanisms are crucial for mitigating these risks, ensuring adherence to specifications and timely delivery.
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: W15QKN09R0265
Offers Received: 1
Pricing Type: FIRM FIXED PRICE (J)
Evaluated Preference: NONE
Contractor Details
Parent Company: Herstal SA (UEI: 770838464)
Address: 797 OLD CLEMSON RD, COLUMBIA, SC, 29229
Business Categories: Category Business, Limited Liability Corporation, Manufacturer of Goods, Not Designated a Small Business
Financial Breakdown
Contract Ceiling: $78,382,462
Exercised Options: $78,382,462
Current Obligation: $78,382,462
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: NO
Timeline
Start Date: 2009-06-11
Current End Date: 2012-09-28
Potential End Date: 2012-09-28 12:09:00
Last Modified: 2020-07-13
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