Department of Defense awards $24.7M for ammunition, highlighting sole-source procurement for critical components

Contract Overview

Contract Amount: $24,764,124 ($24.8M)

Contractor: General Dynamics Ordnance and Tactical Systems, Inc.

Awarding Agency: Department of Defense

Start Date: 2023-05-18

End Date: 2025-12-31

Contract Duration: 958 days

Daily Burn Rate: $25.9K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: KE-W A1 DELIVERY ORDER 1 FOR 1,230 KE-W A1 CARTRIDGES, FAT AND CFAT

Place of Performance

Location: SAINT PETERSBURG, PINELLAS County, FLORIDA, 33716

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $24.8 million to GENERAL DYNAMICS ORDNANCE AND TACTICAL SYSTEMS, INC. for work described as: KE-W A1 DELIVERY ORDER 1 FOR 1,230 KE-W A1 CARTRIDGES, FAT AND CFAT Key points: 1. Contract awarded on a firm-fixed-price basis, indicating predictable costs for the government. 2. The contract duration of 958 days suggests a sustained need for these ammunition components. 3. Sole-source award raises questions about potential cost efficiencies and market competition. 4. Procurement falls under the Ammunition (except Small Arms) Manufacturing sector, vital for military readiness. 5. Geographic location of the contractor in Florida may have implications for regional economic impact.

Value Assessment

Rating: fair

The contract value of $24.7 million for 1,230 KE-W A1 cartridges and related components is difficult to benchmark without more detailed specifications and market data. Given the sole-source nature of the award, a direct comparison to competitive bids is not possible. The firm-fixed-price structure provides cost certainty, but the absence of competition may have led to a higher price than could have been achieved through a more open bidding process. Further analysis of historical pricing for similar components would be necessary to definitively assess value for money.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, GENERAL DYNAMICS ORDNANCE AND TACTICAL SYSTEMS, INC., was solicited. This approach is typically used when a specific capability or product is only available from a single source, or in cases of urgent and compelling need. The lack of competition means that price discovery through market forces was bypassed, potentially impacting the final cost to the government.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive bidding. Without multiple offers, there is less assurance that the government secured the best possible price for these critical ammunition components.

Public Impact

The primary beneficiaries are the U.S. Army, which will receive essential ammunition components for its operations. The contract ensures the supply of KE-W A1 cartridges and related components, crucial for military readiness. The geographic impact is concentrated in Florida, where the contractor is located, potentially supporting local jobs and the regional economy. Workforce implications include the potential for sustained employment at GENERAL DYNAMICS ORDNANCE AND TACTICAL SYSTEMS, INC. facilities in Florida.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially increasing costs for taxpayers.
Lack of transparency in the justification for sole-source procurement.
Dependence on a single supplier for critical ammunition components could pose supply chain risks.

Positive Signals

Firm-fixed-price contract provides cost certainty for the government.
Contract duration suggests a stable, long-term supply of essential materiel.
Contractor is a known entity in defense manufacturing, implying established quality and production capabilities.

Sector Analysis

The defense sector, specifically the manufacturing of ammunition, is characterized by high barriers to entry due to specialized technology, stringent quality control, and significant capital investment. This contract for KE-W A1 cartridges falls within the 'Ammunition (except Small Arms) Manufacturing' industry. The market is often dominated by a few large, established defense contractors. Spending in this area is driven by military readiness requirements and modernization programs. Comparable spending benchmarks are difficult to ascertain without specific details on the type and quantity of ammunition, but significant government investment is typical for such critical components.

Small Business Impact

This contract was not set aside for small businesses, and there is no indication of subcontracting requirements for small businesses. The award to a large defense contractor like GENERAL DYNAMICS ORDNANCE AND TACTICAL SYSTEMS, INC. suggests that the primary focus was on established capabilities rather than fostering small business participation. This could limit opportunities for small businesses to engage in the supply chain for these specific ammunition components.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Army's contracting and program management offices. Accountability measures are inherent in the firm-fixed-price structure, which obligates the contractor to deliver specified goods at an agreed-upon price. Transparency regarding the justification for the sole-source award would be a key area for oversight. Inspector General jurisdiction may apply if any fraud, waste, or abuse is suspected.

Related Government Programs

Department of Defense Ammunition Procurement
Army Weapons Systems Support
Ordnance Manufacturing Contracts
KE-W A1 Ammunition Program

Risk Flags

Sole-source award
Lack of competition
Potential for cost overruns
Supply chain dependency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $24.8 million to GENERAL DYNAMICS ORDNANCE AND TACTICAL SYSTEMS, INC.. KE-W A1 DELIVERY ORDER 1 FOR 1,230 KE-W A1 CARTRIDGES, FAT AND CFAT

Who is the contractor on this award?

The obligated recipient is GENERAL DYNAMICS ORDNANCE AND TACTICAL SYSTEMS, INC..

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $24.8 million.

What is the period of performance?

Start: 2023-05-18. End: 2025-12-31.

What is the specific technical capability or justification that necessitated a sole-source award for these KE-W A1 cartridges?

Sole-source awards are typically justified when a product or service is available only from a single responsible source, or when there is an urgent and compelling need that precludes full and open competition. For specialized ammunition components like the KE-W A1 cartridges, the justification might stem from proprietary technology, unique manufacturing processes, or specific performance characteristics that only one contractor can meet. Without access to the official justification documentation (e.g., a Justification and Approval document), it is difficult to ascertain the precise technical or programmatic reasons. However, the nature of advanced ordnance often involves intellectual property and specialized production lines that limit the number of potential suppliers, making sole-source awards more common in this niche.

How does the per-unit cost of these KE-W A1 cartridges compare to similar ammunition components procured competitively by the DoD?

A direct comparison of the per-unit cost for these KE-W A1 cartridges to competitively procured similar ammunition components is challenging without more granular data. The provided data only gives a total contract value and quantity, not a detailed breakdown of per-unit pricing, which can vary significantly based on specific technical specifications, lot sizes, and contract terms. Furthermore, the sole-source nature of this award means there is no competitive benchmark to reference. To perform such a comparison, one would need access to detailed pricing information for this contract and data from other DoD contracts for ammunition with comparable performance characteristics, ideally awarded through full and open competition. Historical pricing trends for similar items and market research reports would also be crucial for a robust analysis.

What are the potential risks associated with relying on a single contractor for critical ammunition components?

Relying on a single contractor for critical ammunition components presents several risks. Firstly, there is a risk of supply chain disruption. If the sole-source provider experiences production issues, labor strikes, natural disasters, or financial instability, the supply of these essential components could be severely impacted, jeopardizing military readiness. Secondly, the lack of competition can lead to price escalation over time, as the government has limited leverage to negotiate better terms. Thirdly, it can stifle innovation, as there is less incentive for the contractor to invest in process improvements or alternative technologies when they face no competitive pressure. Finally, it can create a strategic vulnerability if the geopolitical landscape shifts and the sole-source country or company becomes unreliable.

What is the track record of GENERAL DYNAMICS ORDNANCE AND TACTICAL SYSTEMS, INC. in delivering similar defense contracts, particularly regarding quality and timeliness?

GENERAL DYNAMICS ORDNANCE AND TACTICAL SYSTEMS, INC. (GD-OTS) is a well-established entity within the defense industry, known for its extensive experience in manufacturing ordnance and tactical systems. They have a long history of supplying various types of ammunition and related components to the U.S. military and allied nations. While specific performance metrics for this particular delivery order are not detailed here, GD-OTS generally has a strong track record in terms of production capacity and technical expertise. However, like any large defense contractor, they may have faced occasional challenges related to delivery schedules or specific contract requirements on past projects. A comprehensive assessment would involve reviewing their performance history across multiple contracts, including any past performance evaluations or reported issues, to gauge their reliability for this specific procurement.

How does this contract's value and duration align with historical spending patterns for ammunition procurement by the Department of the Army?

The value of $24.7 million for this delivery order, while significant, represents a fraction of the Department of the Army's overall annual spending on ammunition, which can run into billions of dollars. The duration of 958 days (approximately 2.6 years) suggests a sustained need for these specific KE-W A1 cartridges, aligning with the Army's long-term planning for equipment sustainment and modernization. Historical spending patterns for ammunition are influenced by factors such as operational tempo, inventory levels, new system introductions, and budget allocations. This contract appears to be part of a larger, ongoing effort to maintain adequate stocks of critical munitions. Without access to detailed historical spending data specifically for KE-W A1 cartridges or similar items, it's difficult to pinpoint exact alignment, but the contract's characteristics are consistent with typical defense procurement cycles for essential materiel.

Industry Classification

NAICS: Manufacturing › Other Fabricated Metal Product Manufacturing › Ammunition (except Small Arms) 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

Parent Company: Wico Limited

Address: 100 CARILLON PKWY, SAINT PETERSBURG, FL, 33716

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

Financial Breakdown

Contract Ceiling: $24,764,124

Exercised Options: $24,764,124

Current Obligation: $24,764,124

Subaward Activity

Number of Subawards: 31

Total Subaward Amount: $15,226,108

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: W15QKN23D0035

IDV Type: IDC

Timeline