DoD awards $22.4M for artillery charge systems, with American Ordnance LLC securing the contract

Contract Overview

Contract Amount: $22,453,311 ($22.5M)

Contractor: American Ordnance LLC

Awarding Agency: Department of Defense

Start Date: 2020-05-11

End Date: 2025-06-30

Contract Duration: 1,876 days

Daily Burn Rate: $12.0K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: THIS DELIVERY ORDER IS TO PURCHASE MODULAR ARTILLERY CHARGE SYSTEM (MACS) M231 AND M232A2 LOAD, ASSEMBLE, AND PACK (LAP) FOR THE 155 PROPELLING CHARGES.

Place of Performance

Location: MIDDLETOWN, DES MOINES County, IOWA, 52638

State: Iowa Government Spending

Plain-Language Summary

Department of Defense obligated $22.5 million to AMERICAN ORDNANCE LLC for work described as: THIS DELIVERY ORDER IS TO PURCHASE MODULAR ARTILLERY CHARGE SYSTEM (MACS) M231 AND M232A2 LOAD, ASSEMBLE, AND PACK (LAP) FOR THE 155 PROPELLING CHARGES. Key points: 1. Contract focuses on essential ammunition components for 155mm artillery. 2. The award represents a significant investment in tactical munitions readiness. 3. Delivery order structure suggests ongoing demand for these specific charge systems. 4. Fixed-price contract type aims to control costs over the performance period. 5. The procurement supports the Army's operational capabilities in artillery support. 6. This contract is part of a broader defense spending on munitions manufacturing.

Value Assessment

Rating: good

The contract value of $22.4 million for modular artillery charge systems appears reasonable given the specialized nature of the product and the multi-year performance period. Benchmarking against similar ammunition component contracts is challenging due to the specific nature of the MACS M231 and M232A2 load, assemble, and pack (LAP) services. However, the firm fixed-price structure provides cost certainty for the government, suggesting a good faith effort to achieve value for money. The duration of the contract (over 5 years) also indicates a strategic procurement rather than an emergency purchase, allowing for more predictable budgeting.

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 competition was sought, certain sources were excluded, potentially due to specific technical requirements, existing relationships, or prior performance. The exact number of bidders is not specified, but the 'exclusion of sources' suggests a more limited competitive pool than a truly open competition. This approach can sometimes lead to higher prices if the excluded sources represent significant competition.

Taxpayer Impact: The limited competition may mean taxpayers are not benefiting from the lowest possible price that could have been achieved with broader participation. However, if the excluded sources were unable to meet stringent technical specifications, this approach ensures the government receives the most suitable product, which can be a form of value.

Public Impact

The U.S. Army benefits directly through the acquisition of critical artillery ammunition components. Services delivered include the load, assemble, and pack (LAP) of MACS M231 and M232A2 for 155mm propelling charges. The geographic impact is primarily centered around the contractor's facility in Iowa, supporting local employment and industry. Workforce implications include skilled labor in manufacturing and ordnance handling at the contractor's site.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition could potentially increase costs for taxpayers.
Reliance on a single contractor for specific ammunition components poses a supply chain risk.
The 'exclusion of sources' mechanism requires careful justification to ensure fairness and optimal value.

Positive Signals

Firm fixed-price contract provides cost predictability.
Long-term delivery order structure ensures sustained supply of critical munitions.
Contractor's specialization in ordnance manufacturing suggests technical expertise.

Sector Analysis

This contract falls within the defense manufacturing sector, specifically focusing on ammunition production. The market for specialized ordnance components like modular artillery charges is relatively niche, often dominated by a few key manufacturers with the necessary security clearances and technical capabilities. The total addressable market for such components is tied to global defense spending and military readiness requirements. Comparable spending benchmarks are difficult to establish precisely due to the proprietary nature of defense contracts and the specific technical requirements of the MACS system.

Small Business Impact

The data indicates that small business participation is not a primary focus of this specific contract, as the prime contractor is American Ordnance LLC, a large entity. There is no explicit mention of small business set-asides. Subcontracting opportunities for small businesses are not detailed in the provided information, but typically, large defense contracts may involve some level of subcontracting, though the extent is unknown here. The impact on the small business ecosystem is likely minimal unless significant subcontracts are awarded.

Oversight & Accountability

Oversight for this contract would primarily 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 is generally limited for defense contracts due to national security considerations, but contract awards and basic details are publicly available through federal procurement databases. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

155mm Howitzer Ammunition
Artillery Propelling Charges
Modular Artillery Charge System (MACS)
Ammunition Load, Assemble, and Pack (LAP) Services
Defense Ammunition Production Program

Risk Flags

Limited competition
Potential supply chain concentration
Reliance on specialized manufacturing capabilities

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $22.5 million to AMERICAN ORDNANCE LLC. THIS DELIVERY ORDER IS TO PURCHASE MODULAR ARTILLERY CHARGE SYSTEM (MACS) M231 AND M232A2 LOAD, ASSEMBLE, AND PACK (LAP) FOR THE 155 PROPELLING CHARGES.

Who is the contractor on this award?

The obligated recipient is AMERICAN ORDNANCE 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 $22.5 million.

What is the period of performance?

Start: 2020-05-11. End: 2025-06-30.

What is the track record of American Ordnance LLC in fulfilling defense contracts, particularly for ammunition components?

American Ordnance LLC has a significant history as a defense contractor, specializing in the manufacturing and loading of ammunition. They are known for producing various types of munitions, including artillery shells and components. Their experience often involves complex manufacturing processes requiring stringent quality control and adherence to military specifications. While specific performance metrics for past contracts are not detailed here, their continued selection for such critical procurements suggests a generally reliable track record. However, like any large contractor, past performance reviews and any associated issues would need to be examined for a comprehensive assessment. Their role often involves large-scale production, indicating capacity to handle substantial government orders.

How does the pricing of this contract compare to similar ammunition component procurements by the Department of Defense?

Direct price comparisons for this specific contract are challenging due to the specialized nature of the MACS M231 and M232A2 load, assemble, and pack (LAP) services and the 'exclusion of sources' competition method. Ammunition component pricing is influenced by raw material costs, manufacturing complexity, security requirements, and production volume. The firm fixed-price nature of this contract provides cost certainty for the government. Without access to detailed cost breakdowns or comparable contract data for identical or highly similar items, a precise value-for-money assessment relative to market rates is difficult. However, the multi-year duration and the nature of the product suggest a strategic procurement where ensuring supply and quality may be prioritized alongside cost.

What are the primary risks associated with this contract, and how are they being mitigated?

Key risks include potential supply chain disruptions for critical raw materials, manufacturing defects, and the possibility of cost overruns if the fixed-price contract does not adequately account for unforeseen escalations (though less likely with FFP). The limited competition also presents a risk of suboptimal pricing. Mitigation strategies likely involve robust quality assurance processes by the Army, close monitoring of the contractor's production, and potentially maintaining alternative sourcing options or strategic stockpiles for essential components. The firm fixed-price structure itself mitigates the risk of cost increases for the government, provided the scope remains unchanged. The exclusion of sources requires careful justification to ensure the chosen contractor is indeed the best value despite limited competition.

How effective is the 'Full and Open Competition After Exclusion of Sources' method in ensuring optimal value for taxpayers in this context?

The effectiveness of 'Full and Open Competition After Exclusion of Sources' is context-dependent. In this case, it suggests that while competition was sought, only specific sources met stringent technical, security, or capability requirements for producing the MACS components. If these exclusions were well-justified and based on essential qualifications, this method can ensure the government procures a necessary item from a capable provider, thereby safeguarding operational readiness. However, if the exclusions were overly broad or not strictly necessary, it could limit competition, potentially leading to higher prices than a truly open bid process might yield. The value for taxpayers hinges on whether the excluded sources could have met the requirements at a lower cost or if the selected contractor offers superior quality or reliability that justifies any price premium.

What are the historical spending patterns for similar artillery charge systems or ammunition components within the Department of Defense?

Historical spending on artillery charge systems and related ammunition components within the DoD is substantial and fluctuates based on global geopolitical conditions, operational tempo, and modernization programs. The Army, in particular, maintains significant budgets for munitions to support its land warfare capabilities. Spending on 155mm artillery ammunition, including propelling charges, has been a consistent line item, often increasing during periods of heightened conflict or strategic focus on conventional deterrence. Specific figures for MACS components are not readily available in public aggregate spending data, as they are often bundled within broader ammunition procurement categories. However, the overall trend indicates a sustained, multi-billion dollar annual investment in conventional munitions.

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: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 17575 HIGHWAY 79, MIDDLETOWN, IA, 52638

Business Categories: Category Business, Limited Liability Corporation, Manufacturer of Goods, Not Designated a Small Business, Partnership or Limited Liability Partnership, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $22,453,311

Exercised Options: $22,453,311

Current Obligation: $22,453,311

Actual Outlays: $2,394,814

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: W15QKN19D0109

IDV Type: IDC

Timeline