DoD awards $113M contract for mortar cartridge shell bodies, with General Dynamics OTS as the sole awardee

Contract Overview

Contract Amount: $112,998,679 ($113.0M)

Contractor: General Dynamics OTS (wilkes Barre), LLC

Awarding Agency: Department of Defense

Start Date: 2013-06-26

End Date: 2021-01-31

Contract Duration: 2,776 days

Daily Burn Rate: $40.7K/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: 120MM HE/FRP/SMOKE MORTAR CARTRIDGE SHELL BODIES

Place of Performance

Location: WILKES BARRE, LUZERNE County, PENNSYLVANIA, 18702

State: Pennsylvania Government Spending

Plain-Language Summary

Department of Defense obligated $113.0 million to GENERAL DYNAMICS OTS (WILKES BARRE), LLC for work described as: 120MM HE/FRP/SMOKE MORTAR CARTRIDGE SHELL BODIES Key points: 1. The contract value of $113 million for ammunition components suggests a significant demand for these specific military supplies. 2. The award was made under 'Full and Open Competition After Exclusion of Sources,' indicating a complex procurement process that may have limited initial bidder participation. 3. The contract type, Fixed Price with Economic Price Adjustment (FPEPA), introduces potential for cost fluctuations based on market conditions, impacting long-term value. 4. The duration of the contract (2776 days) points to a long-term need for these components, suggesting sustained operational requirements. 5. The North American Industry Classification System (NAICS) code 332993 covers Ammunition (except Small Arms) Manufacturing, placing this contract within a specialized defense industrial base sector. 6. The absence of small business set-aside (ss: false, sb: false) indicates that the contract was not specifically targeted towards small businesses.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without specific per-unit cost data or comparisons to similar shell body procurements. The fixed-price with economic price adjustment structure introduces variability. However, the substantial dollar amount over a long period suggests a significant investment in ammunition production capabilities. Further analysis would require detailed cost breakdowns and comparisons to industry standards for similar components.

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, possibly due to specific technical requirements, security concerns, or prior performance issues. The number of bidders is not explicitly stated, but the 'exclusion of sources' suggests a potentially narrowed field compared to a truly unrestricted full and open competition.

Taxpayer Impact: This procurement approach may limit the number of potential suppliers, potentially impacting the government's ability to secure the most competitive pricing. Taxpayers may benefit from specialized capabilities but could face higher costs if competition is artificially constrained.

Public Impact

This contract directly supports the Department of the Army's readiness and operational capabilities by ensuring a supply of essential ammunition components. The primary beneficiaries are military personnel who rely on the availability of functioning ammunition for training and combat. The contract's impact is primarily within the defense industrial base, supporting manufacturing jobs and specialized technical expertise. The geographic impact is concentrated in Pennsylvania, where General Dynamics OTS (Wilkes Barre) is located, contributing to the local economy and workforce.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The 'Full and Open Competition After Exclusion of Sources' could limit competitive pricing if the exclusion criteria were overly restrictive.
The Fixed Price with Economic Price Adjustment (FPEPA) contract type introduces risk of cost escalation due to market fluctuations in raw materials or labor.
Lack of specific per-unit cost data makes it difficult to assess true value-for-money without further detailed analysis.
The long contract duration could lead to obsolescence of technology or changes in military requirements over time.

Positive Signals

The award to a known defense contractor like General Dynamics OTS suggests a reliable source for critical defense materiel.
The substantial contract value indicates a significant and sustained need for these components, ensuring production continuity.
The contract's duration implies a stable demand, potentially allowing for efficient production planning and economies of scale.
The fixed-price element, even with adjustment, provides some cost certainty compared to cost-plus contracts.

Sector Analysis

This contract falls within the defense manufacturing sector, specifically focusing on ammunition production. The market for such components is highly specialized, dominated by a few large defense contractors. Spending in this area is driven by military readiness requirements and geopolitical factors. Comparable spending benchmarks would typically be found within the broader DoD ammunition procurement categories, which can run into billions annually.

Small Business Impact

This contract was not awarded as a small business set-aside, and the prime contractor, General Dynamics OTS, is a large business. There is no explicit information provided regarding subcontracting plans for small businesses. The impact on the small business ecosystem is likely indirect, potentially through the supply chain if smaller firms provide raw materials or specialized services to the prime contractor.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of the Army contracting officers and program managers. The contract type (FPEPA) may require specific oversight to monitor economic price adjustment clauses and ensure they are applied fairly. Transparency is generally maintained through contract award databases, but detailed cost breakdowns and performance metrics are often considered sensitive defense information. Inspector General (IG) jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Department of Defense Ammunition Procurement
Army Combat Ammunition Systems
Ordnance Manufacturing Contracts
Defense Industrial Base Sustainment

Risk Flags

Potential for cost overruns due to economic price adjustment.
Limited competition due to exclusion of sources.
Long contract duration may not align with evolving technology.
Dependence on a single contractor for critical components.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $113.0 million to GENERAL DYNAMICS OTS (WILKES BARRE), LLC. 120MM HE/FRP/SMOKE MORTAR CARTRIDGE SHELL BODIES

Who is the contractor on this award?

The obligated recipient is GENERAL DYNAMICS OTS (WILKES BARRE), 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 $113.0 million.

What is the period of performance?

Start: 2013-06-26. End: 2021-01-31.

What is the historical spending pattern for similar ammunition components by the Department of the Army?

Historical spending on ammunition components by the Department of the Army is substantial and fluctuates based on operational tempo, modernization efforts, and strategic stockpiling. While specific data for 'HE/FRP/SMOKE MORTAR CARTRIDGE SHELL BODIES' is not publicly detailed, the Army consistently procures billions of dollars worth of ammunition annually across various categories. This includes artillery shells, mortar rounds, small arms ammunition, and specialized munitions. Factors influencing historical spending include global security environments, congressional appropriations, and the lifecycle of weapon systems requiring specific ammunition types. Analyzing past solicitations and awards for similar components can reveal trends in pricing, competition levels, and contract durations, providing context for the current $113 million award.

How does the pricing of this contract compare to industry benchmarks for ammunition shell bodies?

Directly comparing the pricing of this contract to industry benchmarks for ammunition shell bodies is difficult without access to detailed cost breakdowns and per-unit pricing information, which is often proprietary or classified for defense contracts. The contract's 'Fixed Price with Economic Price Adjustment' (FPEPA) structure adds complexity, as the final price can vary based on market indices for raw materials and labor. However, the $113 million award over approximately 7.6 years suggests a significant volume. General Dynamics OTS is a major defense contractor, and their pricing is generally considered competitive within the defense industrial base, though potentially higher than commercial equivalents due to stringent quality, security, and performance requirements. Benchmarking would ideally involve comparing the per-unit cost against other government contracts for similar components or against internal cost estimates if available.

What are the key performance indicators (KPIs) and risks associated with this contract for General Dynamics OTS?

Key performance indicators for this contract likely revolve around on-time delivery, quality control (meeting stringent specifications for shell bodies), production volume, and adherence to cost control measures, especially concerning the economic price adjustment clauses. Risks for General Dynamics OTS include potential supply chain disruptions for raw materials, fluctuations in material costs exceeding the economic price adjustment caps, potential for production delays impacting delivery schedules, and the possibility of contract modifications or terminations if military requirements change. Maintaining compliance with defense manufacturing standards and security protocols also presents ongoing operational risks. Failure to meet performance standards could lead to penalties or affect future contract opportunities.

What is the strategic importance of this contract for the Department of the Army's ammunition readiness?

This contract is strategically important for the Department of the Army as it ensures the continued supply of critical components for mortar cartridges. Mortars are essential indirect fire support weapons used across various Army formations, from infantry units to special operations forces. Maintaining an adequate stock of reliable ammunition is crucial for both training exercises and sustained combat operations. The long-term nature of the contract suggests a commitment to ensuring a stable production base for these components, mitigating risks associated with supply chain vulnerabilities or sole-source dependencies. This procurement directly contributes to the Army's overall ammunition readiness and its ability to project power effectively.

How does the 'Full and Open Competition After Exclusion of Sources' procurement method impact overall cost and innovation?

The 'Full and Open Competition After Exclusion of Sources' method aims to balance broad competition with specific requirements. While it allows for more bidders than a sole-source contract, excluding certain sources can limit the competitive pool. This limitation might reduce downward pressure on prices compared to unrestricted full and open competition. However, the exclusion is typically based on technical capabilities, security clearances, or past performance, suggesting that the remaining bidders are qualified to meet stringent defense needs. This approach can foster innovation by encouraging specialized firms to compete, provided the exclusion criteria are narrowly tailored and justified. The impact on cost and innovation depends heavily on the rationale for the exclusion and the number of qualified, competing sources remaining.

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: W15QKN12RA008

Offers Received: 1

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

Evaluated Preference: NONE

Contractor Details

Parent Company: General Dynamics Corp

Address: 1500 HIGHWAY 315 BLVD, WILKES BARRE, PA, 18702

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Limited Liability Corporation, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $296,741,736

Exercised Options: $201,029,309

Current Obligation: $112,998,679

Subaward Activity

Number of Subawards: 1

Total Subaward Amount: $582,750

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline