DoD's $19.8M delivery order for small arms ammunition manufacturing awarded to UTM Limited without competition

Contract Overview

Contract Amount: $19,884,830 ($19.9M)

Contractor: UTM Limited

Awarding Agency: Department of Defense

Start Date: 2023-06-27

End Date: 2026-02-28

Contract Duration: 977 days

Daily Burn Rate: $20.4K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 5.56MM CCMCK DELIVERY ORDER FOUR

Plain-Language Summary

Department of Defense obligated $19.9 million to UTM LIMITED for work described as: 5.56MM CCMCK DELIVERY ORDER FOUR Key points: 1. The contract was awarded on a sole-source basis, raising questions about potential price overruns and lack of market pressure. 2. The duration of the contract (977 days) suggests a significant need for sustained supply of small arms ammunition. 3. The absence of competition limits the government's ability to explore alternative suppliers or negotiate more favorable terms. 4. The firm-fixed-price contract type shifts cost risk to the contractor, but the lack of competition may still lead to inflated pricing. 5. The specific nature of the product (small arms ammunition) indicates a critical defense supply chain component. 6. The awarding agency, Department of the Army, relies on this contract for essential materiel.

Value Assessment

Rating: questionable

Benchmarking the value of this $19.8 million delivery order is challenging due to the sole-source award. Without competitive bids, it's difficult to ascertain if the price reflects fair market value or if there were opportunities for cost savings. The firm-fixed-price structure is generally favorable for the government in controlling costs, but the lack of competition means the government may be paying a premium compared to what could have been achieved in an open market.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, UTM Limited, was considered. The data does not provide justification for this approach, such as a lack of qualified sources or an urgent need that precluded competition. This limited competition significantly reduces the government's leverage in price negotiation and may result in higher costs for taxpayers.

Taxpayer Impact: Sole-source awards mean taxpayers do not benefit from the cost efficiencies that typically arise from competitive bidding processes. This can lead to higher overall spending for essential goods like ammunition.

Public Impact

The primary beneficiaries are the Department of the Army and its personnel, who will receive a consistent supply of small arms ammunition. The services delivered include the manufacturing and delivery of small arms ammunition, crucial for military operations and training. The geographic impact is likely focused on military installations and operational theaters where the ammunition is deployed. Workforce implications may include sustained employment at UTM Limited and potentially related defense manufacturing sectors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated prices.
Sole-source award raises concerns about the thoroughness of market research and justification.
Limited transparency into the pricing structure due to non-competitive nature.

Positive Signals

Firm-fixed-price contract type provides cost certainty to the government.
Award ensures a critical supply of ammunition for defense needs.
Contract duration suggests a stable, long-term supply chain solution.

Sector Analysis

The defense sector, particularly the ammunition manufacturing sub-sector, is characterized by specialized production capabilities and often long lead times. Contracts in this area are critical for national security. Spending benchmarks for small arms ammunition can vary widely based on type, quantity, and geopolitical demand. The $19.8 million awarded here represents a significant, albeit specific, investment in maintaining readiness.

Small Business Impact

This contract was not set aside for small businesses, nor does it indicate any subcontracting requirements for small businesses. The award to UTM Limited, a company not specified as small, suggests that small businesses were not primary participants in this specific procurement. This could mean missed opportunities for small business growth within this defense supply chain.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and procurement regulations. Accountability measures are inherent in the firm-fixed-price structure, which obligates the contractor to deliver specified goods at an agreed-upon price. Transparency is limited due to the sole-source nature of the award, making detailed public scrutiny of the pricing and justification more difficult.

Related Government Programs

Department of Defense Ammunition Procurement
Small Arms Manufacturing Contracts
Defense Logistics Agency Contracts
Army Combat Materiel Procurement

Risk Flags

Sole-source award without clear justification
Potential for inflated pricing due to lack of competition
Limited transparency into contractor selection and pricing

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $19.9 million to UTM LIMITED. 5.56MM CCMCK DELIVERY ORDER FOUR

Who is the contractor on this award?

The obligated recipient is UTM LIMITED.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Army).

What is the total obligated amount?

The obligated amount is $19.9 million.

What is the period of performance?

Start: 2023-06-27. End: 2026-02-28.

What is the track record of UTM Limited in fulfilling defense contracts, particularly for ammunition?

Information regarding UTM Limited's specific track record with defense contracts, especially for ammunition, is not detailed in the provided data. A comprehensive assessment would require reviewing past performance evaluations, contract history, and any reported issues or successes with similar procurements. Without this data, it's difficult to gauge their reliability and capability beyond the current award. Further investigation into federal procurement databases and contractor performance systems would be necessary to establish a detailed performance profile.

How does the pricing of this $19.8 million delivery order compare to similar ammunition contracts awarded competitively?

Direct comparison of this $19.8 million delivery order's pricing to competitively awarded contracts is not feasible with the given data. The sole-source nature of this award means there was no competitive bidding process to establish a market-driven price. To assess value, one would need to identify comparable contracts for the same or similar types of small arms ammunition, awarded under firm-fixed-price terms, and analyze their unit costs and total values. Differences in quantity, specifications, and delivery timelines would also need to be accounted for in any meaningful benchmark analysis.

What are the specific risks associated with awarding a sole-source contract for critical defense supplies like ammunition?

The primary risks associated with sole-source awards for critical defense supplies include potential price inflation due to lack of competition, reduced incentive for the contractor to innovate or improve efficiency, and a lack of market validation for the chosen supplier. Taxpayers may bear higher costs than necessary. Furthermore, over-reliance on a single supplier can create vulnerabilities in the supply chain if that supplier faces production issues, financial instability, or geopolitical challenges. This can jeopardize national security readiness.

What is the expected impact of this contract on the overall readiness and supply chain of the Department of the Army?

This contract is expected to positively impact the Department of the Army's readiness by ensuring a consistent and sustained supply of small arms ammunition. The duration of the delivery order (ending in February 2026) suggests it addresses a significant and ongoing requirement. By securing this supply, the Army can maintain adequate stocks for training, operations, and strategic reserves, thereby bolstering its overall operational capability and supply chain resilience for this essential materiel.

What historical spending patterns exist for small arms ammunition manufacturing within the Department of Defense?

Historical spending patterns for small arms ammunition manufacturing within the Department of Defense are typically substantial and fluctuate based on global security environments, operational tempo, and modernization programs. The DoD consistently procures vast quantities of ammunition across various calibers and types. While specific figures for 'small arms ammunition manufacturing' are not provided here, overall defense spending on munitions is in the billions annually. This contract represents a portion of that larger, ongoing investment in maintaining a robust ammunition industrial base.

Are there any known issues or concerns regarding UTM Limited's past performance or financial stability that would warrant a sole-source award?

The provided data does not contain information regarding any known issues or concerns about UTM Limited's past performance or financial stability. A sole-source award typically requires a justification that may include factors like urgency, lack of alternatives, or specialized capabilities. Without access to the justification documentation or contractor performance records, it is impossible to determine if such factors were considered or if there were specific reasons necessitating a non-competitive award beyond potential market limitations.

Industry Classification

NAICS: Manufacturing › Other Fabricated Metal Product Manufacturing › Small Arms Ammunition Manufacturing

Product/Service Code: AMMUNITION AND EXPLOSIVES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: HAMPSTEAD AVENUE, BURY ST EDMUNDS

Business Categories: Category Business, Foreign Owned, Manufacturer of Goods, Not Designated a Small Business, Special Designations

Financial Breakdown

Contract Ceiling: $19,884,830

Exercised Options: $19,884,830

Current Obligation: $19,884,830

Actual Outlays: $2,017,354

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: W15QKN21D0035

IDV Type: IDC

Timeline