DoD awards $36.2M contract for 120mm mortar shell bodies to General Dynamics OTS

Contract Overview

Contract Amount: $36,179,037 ($36.2M)

Contractor: General Dynamics OTS (wilkes Barre), LLC

Awarding Agency: Department of Defense

Start Date: 2023-03-20

End Date: 2028-04-28

Contract Duration: 1,866 days

Daily Burn Rate: $19.4K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Defense

Official Description: MANUFACTURE, PRODUCTION, AND DELIVERY OF 120MM MORTAR SHELL BODIES.

Place of Performance

Location: WILKES BARRE, LUZERNE County, PENNSYLVANIA, 18702

State: Pennsylvania Government Spending

Plain-Language Summary

Department of Defense obligated $36.2 million to GENERAL DYNAMICS OTS (WILKES BARRE), LLC for work described as: MANUFACTURE, PRODUCTION, AND DELIVERY OF 120MM MORTAR SHELL BODIES. Key points: 1. Contract value represents a significant investment in essential munitions. 2. Competition dynamics suggest a potentially competitive bidding process for this critical defense item. 3. Fixed-price contract with economic price adjustment introduces some cost variability. 4. Contract duration of nearly 5 years indicates a long-term need for these components. 5. The award is for manufacturing and delivery, highlighting production capacity. 6. Pennsylvania-based contractor suggests regional economic impact.

Value Assessment

Rating: good

The contract value of $36.2 million for 120mm mortar shell bodies appears reasonable given the quantity and specialized nature of the product. Benchmarking against similar defense contracts for munitions components is challenging without more specific data on unit costs and material fluctuations. However, the fixed-price with economic price adjustment (EPA) structure aims to balance cost certainty for the government with protection for the contractor against unforeseen material cost increases, which is a common practice for long-lead-time defense production.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple bidders were likely solicited and evaluated. This approach is generally preferred for defense procurements as it fosters a competitive environment, potentially leading to better pricing and innovation. The specific number of bidders is not provided, but the 'full and open' designation suggests a robust competition.

Taxpayer Impact: Full and open competition is beneficial for taxpayers as it increases the likelihood of obtaining the best value by encouraging multiple companies to offer competitive bids, driving down costs.

Public Impact

The U.S. Department of the Army is the primary beneficiary, securing a critical component for its mortar systems. The contract ensures the production and delivery of 120mm mortar shell bodies, essential for military operations. The geographic impact is concentrated in Pennsylvania, where General Dynamics OTS is located, potentially supporting local jobs and the regional economy. The contract supports the defense industrial base and the workforce involved in advanced manufacturing of munitions.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Economic price adjustment clause introduces potential for cost increases beyond initial projections.
Long contract duration could be subject to evolving geopolitical needs and technological advancements.
Reliance on a single contractor for a specific component could pose supply chain risks if not managed proactively.

Positive Signals

Awarded under full and open competition, suggesting a competitive process and potential for value.
Fixed-price element provides a baseline cost control measure.
Contractor is an established entity in defense manufacturing, implying experience and capability.
Clear definition of the product (120mm mortar shell bodies) reduces ambiguity.
Long-term contract ensures sustained supply of a critical munition component.

Sector Analysis

This contract falls within the defense manufacturing sector, specifically focusing on the production of ammunition components. The market for such specialized components is typically dominated by a few large defense contractors with the necessary expertise and facilities. Spending in this area is driven by military readiness requirements and ongoing modernization efforts. Comparable spending benchmarks would involve analyzing historical procurement data for similar munitions or components from various defense agencies.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). General Dynamics OTS is a large defense contractor. There is no explicit information on subcontracting plans for small businesses within this award. Therefore, the direct impact on the small business ecosystem from this specific contract appears limited, though larger prime contractors often engage small businesses for various support services.

Oversight & Accountability

Oversight for this contract will likely be managed by the Department of the Army's contracting and program management offices. Accountability measures are embedded in the contract terms, including delivery schedules and quality specifications. Transparency is facilitated through contract award databases like FPDS. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse related to the contract.

Related Government Programs

Department of Defense Ammunition Procurement
Army Combat Vehicle Munitions
Mortar Systems Procurement
Defense Industrial Base Manufacturing

Risk Flags

Potential for cost escalation due to Economic Price Adjustment (EPA).
Supply chain vulnerability for raw materials.
Long-term contract duration may outpace evolving technological needs.
Dependence on a single supplier for critical components.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $36.2 million to GENERAL DYNAMICS OTS (WILKES BARRE), LLC. MANUFACTURE, PRODUCTION, AND DELIVERY OF 120MM MORTAR 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 $36.2 million.

What is the period of performance?

Start: 2023-03-20. End: 2028-04-28.

What is the historical spending pattern for 120mm mortar shell bodies by the Department of Defense?

Analyzing historical spending for 120mm mortar shell bodies requires accessing detailed procurement data over several fiscal years. Typically, the Department of Defense procures such munitions through multi-year contracts or annual delivery orders, often awarded via competitive processes. Spending can fluctuate based on operational tempo, inventory levels, and strategic priorities. For instance, periods of heightened conflict or significant military exercises often correlate with increased demand and spending on ammunition. Without specific historical data for this exact component, it's difficult to provide precise figures, but trends generally show consistent investment in maintaining adequate stockpiles of critical munitions like 120mm mortar shells to ensure readiness.

How does the unit cost of these mortar shell bodies compare to similar contracts?

Determining the precise unit cost requires dividing the total contract value by the number of shell bodies, which is not explicitly stated. However, if we assume the $36.2 million contract covers a substantial quantity, the unit cost would need to be benchmarked against previous awards for similar components. Factors influencing unit cost include material prices (steel, explosives), manufacturing complexity, labor, overhead, and profit margins. The 'fixed price with economic price adjustment' (EPA) clause suggests that the base price is set, but adjustments can be made for material cost fluctuations. A thorough comparison would involve analyzing the EPA formula and comparing the adjusted price to market rates for raw materials and finished goods in the defense sector.

What is General Dynamics OTS's track record with similar defense manufacturing contracts?

General Dynamics Ordnance and Tactical Systems (OTS) has a well-established track record in defense manufacturing, including the production of various munitions and ordnance systems. They are known for producing mortar systems, artillery shells, and related components for the U.S. military and allied nations. Their experience typically includes managing complex production processes, adhering to stringent quality control standards, and delivering on large-scale contracts. Past performance reviews and contract histories available through government databases would provide more granular detail on their on-time delivery rates, quality metrics, and overall performance on previous, similar contracts, which are crucial for assessing their capability to fulfill this current award.

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

Primary risks include potential cost overruns due to the economic price adjustment (EPA) clause, which can increase the final contract value if material costs rise significantly. Another risk is supply chain disruption for raw materials or components, potentially delaying production. Furthermore, changes in military requirements or budget allocations could impact future demand. Mitigation strategies often involve robust oversight of the EPA mechanism, diversification of material sourcing where possible, maintaining strong relationships with suppliers, and clear communication channels between the contractor and the Army program office to address issues proactively. The fixed-price component of the contract also provides a baseline cost control.

How does this contract contribute to the overall readiness of U.S. Army forces?

This contract is crucial for maintaining the readiness of U.S. Army forces by ensuring a steady supply of 120mm mortar shell bodies. The 120mm mortar is a standard indirect fire weapon system used by various Army units, including infantry, armor, and airborne forces. Adequate stocks of ammunition are fundamental to operational capability, allowing troops to engage targets effectively during training and combat. By securing the production of these essential components, the Army replenishes its inventory, supports ongoing training requirements, and prepares for potential contingencies, thereby directly enhancing overall combat readiness.

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

Solicitation ID: W15QKN17R0018

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: $36,179,037

Exercised Options: $36,179,037

Current Obligation: $36,179,037

Subaward Activity

Number of Subawards: 10

Total Subaward Amount: $9,690,172

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