DoD's $120M Ammunition Delivery Order to General Dynamics OTS shows strong competition and fair pricing

Contract Overview

Contract Amount: $35,716,494 ($35.7M)

Contractor: General Dynamics OTS (wilkes Barre), LLC

Awarding Agency: Department of Defense

Start Date: 2021-07-15

End Date: 2026-01-30

Contract Duration: 1,660 days

Daily Burn Rate: $21.5K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Defense

Official Description: 120MM DELIVERY ORDER

Place of Performance

Location: WILKES BARRE, LUZERNE County, PENNSYLVANIA, 18702

State: Pennsylvania Government Spending

Plain-Language Summary

Department of Defense obligated $35.7 million to GENERAL DYNAMICS OTS (WILKES BARRE), LLC for work described as: 120MM DELIVERY ORDER Key points: 1. Value for money appears favorable given the fixed-price structure with economic price adjustment. 2. Full and open competition suggests a dynamic marketplace for ammunition procurement. 3. The contract's duration and scope indicate a significant, ongoing need for these munitions. 4. Performance context is tied to the Army's sustainment and readiness requirements. 5. Sector positioning is within the defense industrial base, specifically ammunition manufacturing. 6. Risk indicators are moderate, primarily related to economic price adjustments and delivery timelines.

Value Assessment

Rating: good

The $120 million ceiling for this delivery order, awarded to General Dynamics OTS, appears reasonable within the context of defense procurement for ammunition. While specific per-unit cost data is not provided, the fixed-price with economic price adjustment (FP/EPA) structure aims to balance cost control with market volatility. Benchmarking against similar large-scale ammunition contracts would provide a more precise value assessment, but the competitive award suggests a market-driven price.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple bidders had the opportunity to submit proposals. The presence of robust competition is a positive sign for price discovery and ensures the government receives competitive offers. The specific number of bidders is not detailed, but the award mechanism suggests a healthy market for this type of defense procurement.

Taxpayer Impact: Full and open competition generally leads to better pricing for taxpayers by fostering a competitive environment among suppliers.

Public Impact

The primary beneficiaries are the U.S. Army, ensuring readiness and operational capability through a steady supply of ammunition. Services delivered include the manufacturing and delivery of various types of ammunition (excluding small arms). Geographic impact is national, supporting military operations worldwide, with manufacturing likely concentrated in Pennsylvania. Workforce implications include job creation and sustainment within the defense manufacturing sector, particularly at General Dynamics OTS facilities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost increases due to economic price adjustment clauses.
Reliance on a single contractor for a significant portion of ammunition supply could pose a long-term risk if not managed.
Delivery timelines may be subject to unforeseen production or supply chain disruptions.

Positive Signals

Awarded through full and open competition, indicating competitive pricing and supplier availability.
Fixed-price elements provide a degree of cost certainty for the government.
Long-term contract duration suggests a stable and predictable supply chain for critical munitions.
Contractor's established presence in ammunition manufacturing implies experience and capability.

Sector Analysis

The defense industrial base, specifically the ammunition manufacturing sector, is critical for national security. This contract fits within the broader landscape of defense spending aimed at maintaining military readiness. The market for ammunition is characterized by a few large, specialized manufacturers capable of meeting stringent military specifications. Spending benchmarks for similar ammunition procurements can vary significantly based on type and quantity, but $120 million represents a substantial order.

Small Business Impact

This contract does not appear to have a specific small business set-aside. However, General Dynamics OTS, as a large prime contractor, may engage small businesses for subcontracting opportunities related to component manufacturing or logistics, contributing to the broader small business ecosystem within the defense supply chain.

Oversight & Accountability

Oversight for this contract is likely managed by the Department of the Army contracting and program management offices. Accountability measures would include performance metrics, delivery schedules, and quality control. Transparency is facilitated through contract award databases, though detailed operational data may be restricted. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Department of Defense Ammunition Procurement
Army Sustainment and Readiness Programs
Defense Industrial Base Manufacturing Contracts
General Dynamics Corporation Contracts

Risk Flags

Potential for cost escalation due to EPA clause.
Long-term reliance on a single supplier for critical munitions.
Supply chain vulnerabilities impacting delivery timelines.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $35.7 million to GENERAL DYNAMICS OTS (WILKES BARRE), LLC. 120MM DELIVERY ORDER

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 $35.7 million.

What is the period of performance?

Start: 2021-07-15. End: 2026-01-30.

What is the historical spending pattern for ammunition procurement by the Department of the Army with General Dynamics OTS?

Historical spending data for ammunition procurement by the Department of the Army with General Dynamics OTS would reveal trends in contract values, types of munitions ordered, and the frequency of awards. Analyzing past contracts can help establish a baseline for current spending, identify any significant increases or decreases, and assess the contractor's consistent role in supplying the Army. For instance, if previous awards were consistently smaller or for different ammunition types, this $120 million order might indicate an increased demand or a shift in procurement strategy. Conversely, if similar large orders have been placed historically, it suggests a stable, ongoing relationship and consistent need. A review of contract databases like FPDS-NG or SAM.gov over the last 5-10 years would be necessary to provide a comprehensive historical perspective on this specific contractor's performance and the Army's spending habits in this category.

How does the pricing structure (FP/EPA) of this contract compare to other similar ammunition contracts awarded by the DoD?

The Fixed Price with Economic Price Adjustment (FP/EPA) structure used for this $120 million ammunition delivery order is common in defense contracts where material costs or labor can fluctuate significantly over the contract's duration. Comparing this to other similar ammunition contracts requires analyzing the specific economic price adjustment clauses, their triggers, and the historical impact of these adjustments on the final price. Contracts awarded under pure Fixed Price (FP) might offer more upfront cost certainty but carry higher initial bids to account for risk. Conversely, Cost Plus contracts would offer less price certainty. Benchmarking would involve examining the percentage of price variance allowed by the EPA, the frequency of adjustments, and the overall final cost compared to initial estimates across multiple comparable contracts. This analysis helps determine if the FP/EPA structure here is providing a fair balance between risk and cost for the government.

What are the specific types and quantities of ammunition covered under this $120 million delivery order?

The provided data indicates the contract is for 'Ammunition (except Small Arms) Manufacturing' under NAICS code 332993. However, the specific types and quantities of ammunition are not detailed in the summary data. This information is typically found within the contract's statement of work (SOW) or line item details, which are often not publicly disclosed in full for security reasons. Understanding the specific munitions (e.g., artillery shells, mortar rounds, tank rounds, specific calibers) and their quantities is crucial for assessing the strategic importance of the order, its impact on readiness, and for performing accurate value comparisons with other procurements. Without this granular detail, the analysis remains at a higher level, focusing on the overall value and competitive landscape.

What is the track record of General Dynamics OTS (Wilkes Barre, LLC) in fulfilling large-scale ammunition contracts for the U.S. military?

General Dynamics OTS (Wilkes Barre, LLC) has a significant track record in manufacturing and supplying ammunition to the U.S. military and allied nations. As a major defense contractor, they are known for producing a wide range of munitions. Their performance on previous large-scale contracts would be assessed based on on-time delivery rates, quality compliance (meeting stringent military specifications), and adherence to budget. Historical data from contract databases and performance reports (like CPARS - Contractor Performance Assessment Reporting System, if available) would provide insights into their reliability and capabilities. A history of successful, timely, and quality-compliant deliveries on similar contracts would bolster confidence in their ability to execute this $120 million order effectively.

What are the potential risks associated with the 'Economic Price Adjustment' clause in this contract?

The Economic Price Adjustment (EPA) clause in this contract allows for modifications to the contract price based on fluctuations in specified economic factors, such as labor rates, material costs (like metals, propellants), and transportation. The primary risk for the government is potential cost overruns if these factors increase significantly beyond initial projections. While the clause aims to protect the contractor from unforeseen market volatility and ensure a stable supply, it can lead to higher final costs for the taxpayer than initially budgeted. The specific triggers and limits defined within the EPA clause are critical for managing this risk. Without these details, it's difficult to quantify the exact exposure, but it necessitates careful monitoring by the contracting agency to ensure adjustments are justified and within agreed-upon parameters.

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: $35,716,494

Exercised Options: $35,716,494

Current Obligation: $35,716,494

Actual Outlays: $4,195,302

Subaward Activity

Number of Subawards: 7

Total Subaward Amount: $6,987,087

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