DoD awards $94.8M for M795 metal parts, with General Dynamics OTS as prime contractor

Contract Overview

Contract Amount: $94,818,593 ($94.8M)

Contractor: General Dynamics OTS (wilkes Barre), LLC

Awarding Agency: Department of Defense

Start Date: 2020-03-18

End Date: 2025-01-31

Contract Duration: 1,780 days

Daily Burn Rate: $53.3K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Defense

Official Description: PURCHASE OF M795 METAL PARTS.

Place of Performance

Location: WILKES BARRE, LUZERNE County, PENNSYLVANIA, 18702

State: Pennsylvania Government Spending

Plain-Language Summary

Department of Defense obligated $94.8 million to GENERAL DYNAMICS OTS (WILKES BARRE), LLC for work described as: PURCHASE OF M795 METAL PARTS. Key points: 1. Contract value of $94.8M for ammunition components indicates significant production scale. 2. Full and open competition suggests a potentially competitive bidding process for this award. 3. Fixed Price with Economic Price Adjustment (FP/EPA) contract type introduces some cost fluctuation risk. 4. The contract duration of 1780 days spans over four years, indicating a long-term supply need. 5. The prime contractor, General Dynamics OTS, is a known entity in defense manufacturing. 6. The North American Industry Classification System (NAICS) code 332993 points to ammunition manufacturing. 7. The contract is a delivery order under a larger contract vehicle, suggesting phased procurement. 8. The award is for metal parts, a critical component in ammunition production.

Value Assessment

Rating: good

The contract value of $94.8 million for M795 metal parts appears reasonable given the scale and duration. Benchmarking against similar ammunition component contracts would provide a more precise value-for-money assessment. The FP/EPA pricing structure allows for adjustments, which can be beneficial in volatile material markets but also introduces some risk of cost increases for the government. Without specific per-unit cost data or comparison to historical pricing for these specific parts, a definitive value assessment is challenging, but the competitive nature of the award suggests a degree of price efficiency.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. This approach generally fosters a competitive environment, potentially leading to better pricing and terms for the government. The number of bidders is not specified, but the 'full and open' designation implies that multiple proposals were likely considered. The competitive nature of the procurement is a positive indicator for price discovery and achieving fair market value.

Taxpayer Impact: A full and open competition process is favorable for taxpayers as it maximizes the potential for cost savings through robust bidding and encourages contractors to offer their best prices to secure the award.

Public Impact

The Department of the Army benefits from a secured supply of critical M795 metal parts for ammunition production. This contract supports the manufacturing of essential components for military ordnance, contributing to national defense readiness. The primary beneficiaries are the military forces relying on the availability of functional ammunition. The contract's impact is primarily within the defense industrial base, supporting manufacturing capabilities. Workforce implications are likely within General Dynamics OTS's manufacturing facilities, potentially in Wilkes-Barre, Pennsylvania, and related supply chains.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Economic Price Adjustment (EPA) clause introduces potential for cost increases due to market fluctuations.
Long contract duration (1780 days) may lead to obsolescence or need for contract modifications if requirements change significantly.
Reliance on a single prime contractor for a critical component necessitates robust oversight to ensure performance and quality.
The specific nature of 'metal parts' could involve complex manufacturing processes with inherent quality control risks.

Positive Signals

Awarded under full and open competition, suggesting a competitive pricing environment.
Prime contractor, General Dynamics OTS, has established experience in defense manufacturing.
Fixed Price contract type (even with EPA) provides a baseline cost structure.
Delivery order structure allows for phased funding and delivery, potentially managing cash flow and inventory.
The contract supports a critical defense need, ensuring readiness.

Sector Analysis

The defense manufacturing sector is characterized by high barriers to entry, stringent quality requirements, and significant government investment. This contract for M795 metal parts falls within the ammunition manufacturing sub-sector, which is a critical component of the broader defense industrial base. The market for such components is often dominated by a few specialized firms capable of meeting the rigorous specifications and production volumes required by the Department of Defense. Spending in this area is directly tied to military readiness and strategic objectives, with contracts often being long-term to ensure supply chain stability.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). General Dynamics OTS is likely a large business. While there is no direct indication of small business subcontracting requirements in the provided data, large defense contracts often include provisions for small business participation. The absence of a small business set-aside suggests that the primary award went to a large entity, and any small business involvement would likely be through subcontracting opportunities generated by the prime contractor.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Army's contracting and program management offices. The contract type (Fixed Price with Economic Price Adjustment) requires monitoring of price adjustments to ensure they are justified by market conditions. Quality assurance surveillance plans (QASPs) would be crucial to ensure the metal parts meet stringent military specifications. Inspector General (IG) jurisdiction would apply to investigations of fraud, waste, or abuse related to the contract. Transparency is facilitated through contract award databases like FPDS.

Related Government Programs

Department of Defense Ammunition Procurement
Army Weapons Systems Support
Defense Industrial Base Manufacturing
Ordnance Production Contracts
General Dynamics Defense Contracts

Risk Flags

Potential for cost increases due to Economic Price Adjustment (EPA) clause.
Long contract duration may introduce risks of obsolescence or requirement changes.
Dependence on a single prime contractor for critical components requires diligent oversight.
Quality control for specialized metal parts is paramount.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $94.8 million to GENERAL DYNAMICS OTS (WILKES BARRE), LLC. PURCHASE OF M795 METAL PARTS.

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 $94.8 million.

What is the period of performance?

Start: 2020-03-18. End: 2025-01-31.

What is the historical spending trend for M795 metal parts or similar ammunition components by the Department of Defense?

Analyzing historical spending for M795 metal parts or similar ammunition components requires accessing detailed procurement data over multiple fiscal years. Typically, spending in this category can fluctuate based on global geopolitical conditions, military readiness requirements, and the lifecycle of specific weapon systems. Contracts for ammunition components are often awarded through competitive processes, but long-term sustainment needs can lead to sole-source or limited competition awards for specific parts if only one or a few manufacturers possess the necessary tooling, expertise, or security clearances. Examining past contract awards, including their values, durations, and competition levels, would reveal trends in demand and pricing. For instance, periods of heightened operational tempo or strategic modernization efforts often correlate with increased spending on ammunition and its constituent parts. Benchmarking current contract values against historical averages, adjusted for inflation, is crucial for assessing value for money.

How does the per-unit cost of these M795 metal parts compare to industry benchmarks or previous contracts?

Determining the precise per-unit cost and comparing it to benchmarks is challenging without access to the detailed pricing structure of the contract, which is often proprietary. However, the contract value of $94.8 million spread over an unspecified quantity of parts provides a basis for estimation. If the contract specifies a quantity, dividing the total award value by the quantity yields an average per-unit cost. This figure can then be compared to publicly available data on similar ammunition components, industry cost models, or previous contract awards for the same or comparable parts. The 'full and open competition' aspect suggests that the government likely received competitive bids, which should theoretically drive the per-unit cost towards market rates. However, factors like specialized manufacturing requirements, material costs, and quality assurance protocols can influence the final price, making direct comparisons difficult without granular data.

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

The Fixed Price with Economic Price Adjustment (FP/EPA) contract type introduces a degree of risk related to cost volatility for both the government and the contractor. For the government, the primary risk is that the economic price adjustment clauses allow the contractor to increase the contract price in response to specific, documented increases in labor or material costs. While intended to protect contractors from unforeseen market fluctuations and ensure fair pricing, these adjustments can lead to higher-than-anticipated expenditures if inflation or input costs rise significantly. The contractor bears the risk of cost overruns if their actual costs exceed the base fixed price, but the EPA mitigates this for specified cost elements. Effective oversight is crucial to ensure that any price adjustments are legitimate, properly calculated according to the contract's formula, and reflect actual market changes rather than contractor inefficiencies.

What is the track record of General Dynamics OTS (Wilkes Barre), LLC in fulfilling similar defense manufacturing contracts?

General Dynamics Ordnance and Tactical Systems (OTS), including its Wilkes-Barre facility, has a well-established track record in defense manufacturing, particularly in areas related to munitions and energetic materials. The company is a significant supplier to the U.S. military and allied nations, producing a wide range of products including mortar systems, artillery shells, and related components. Their experience typically involves meeting stringent military specifications, managing complex supply chains, and adhering to rigorous quality control standards. Past performance information, often available through government contract databases or contractor performance assessment reporting tools, would provide specific details on their timeliness, quality, and overall performance on previous contracts. Given their position as a major defense contractor, it is likely they have successfully executed numerous contracts of similar scale and complexity.

How does the $94.8 million award compare to the total annual spending on ammunition manufacturing by the Department of the Army?

The $94.8 million award for M795 metal parts represents a specific procurement action for a critical component. To contextualize this against the Department of the Army's total annual spending on ammunition manufacturing, one would need to examine the Army's overall budget allocations for procurement, research, development, testing, and evaluation (RDT&E), and maintenance related to munitions. Annual spending can vary significantly based on strategic priorities, operational tempo, and inventory replenishment needs. This single contract, while substantial, is likely one of many awards contributing to the Army's overall ammunition sustainment and production efforts. Comparing this award to the total annual ammunition budget would indicate its relative significance within the broader procurement landscape, highlighting whether it represents a major investment or a routine replenishment activity.

What are the potential implications of this contract on the broader defense industrial base and supply chain resilience?

This contract for M795 metal parts has several implications for the defense industrial base and supply chain resilience. Firstly, it supports a key segment of the ammunition manufacturing sector, ensuring continued production capabilities for essential ordnance. By awarding to General Dynamics OTS, a major defense contractor, the contract reinforces the capacity of established players within the industrial base. Secondly, the reliance on specific metal parts highlights the importance of a robust and resilient supply chain for raw materials and specialized manufacturing processes. Disruptions in these upstream supply chains could impact the timely delivery of the final ammunition. Ensuring multiple sources for critical components or having contingency plans can enhance supply chain resilience. The long-term nature of the contract also provides a degree of stability for the involved manufacturers and their suppliers.

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

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

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

Evaluated Preference: NONE

Contractor Details

Parent Company: Wico Limited

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

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

Financial Breakdown

Contract Ceiling: $94,818,593

Exercised Options: $94,818,593

Current Obligation: $94,818,593

Subaward Activity

Number of Subawards: 13

Total Subaward Amount: $26,463,430

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: W15QKN19D0084

IDV Type: IDC

Timeline