DoD awards $140M for Ukraine M1128 metal parts, competing the requirement for army stockpile replenishment

Contract Overview

Contract Amount: $139,755,851 ($139.8M)

Contractor: IMT Defense Corp

Awarding Agency: Department of Defense

Start Date: 2023-08-02

End Date: 2029-02-28

Contract Duration: 2,037 days

Daily Burn Rate: $68.6K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 2

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Defense

Official Description: UKRAINE: PRODUCE AND DELIVER 151,503 M1128 METAL PARTS. THE GOVERNMENT COMPETED THE REQUIREMENT AND MADE A MULTI-YEAR SINGLE AWARD TO AID ARMY STOCKPILE REPLENISHMENTS AND SUPPORT THE CONFLICT IN UKRAINE.

Place of Performance

Location: CHAMPAIGN, CHAMPAIGN County, ILLINOIS, 61822

State: Illinois Government Spending

Plain-Language Summary

Department of Defense obligated $139.8 million to IMT DEFENSE CORP for work described as: UKRAINE: PRODUCE AND DELIVER 151,503 M1128 METAL PARTS. THE GOVERNMENT COMPETED THE REQUIREMENT AND MADE A MULTI-YEAR SINGLE AWARD TO AID ARMY STOCKPILE REPLENISHMENTS AND SUPPORT THE CONFLICT IN UKRAINE. Key points: 1. The contract's value of approximately $140 million is allocated for essential metal parts for the M1128 system, crucial for supporting the conflict in Ukraine. 2. Competition dynamics indicate a full and open process, suggesting a robust market engagement for this critical defense need. 3. Risk indicators are moderate, given the multi-year nature of the award and the inherent complexities of international military support. 4. Performance context involves timely delivery of components to replenish army stockpiles, directly impacting operational readiness. 5. Sector positioning places this contract within the defense manufacturing industry, specifically focusing on ammunition and related components.

Value Assessment

Rating: good

The contract value of $139,755,850.92 for 151,503 metal parts translates to a per-unit cost of approximately $922.50. Benchmarking this against similar defense component contracts is challenging without specific part identification, but the fixed-price with economic price adjustment structure aims to mitigate cost fluctuations. The multi-year award suggests a strategic procurement approach to ensure sustained supply.

Cost Per Unit: Approximately $922.50 per unit (M1128 metal part).

Competition Analysis

Competition Level: full-and-open

The requirement was competed under a 'full and open competition after exclusion of sources' mechanism, indicating that while sources were initially excluded, the final award was made through an open competitive process. The number of bidders is not specified, but the open competition suggests a healthy level of market interest, which typically drives better pricing and value.

Taxpayer Impact: The open competition is beneficial for taxpayers as it encourages multiple suppliers to bid, potentially leading to more competitive pricing and ensuring the government receives the best value for its investment in critical defense materiel.

Public Impact

The primary beneficiaries are the U.S. Army and allied forces in Ukraine, receiving essential components for military equipment. Services delivered include the production and delivery of 151,503 specific metal parts for the M1128 system. The geographic impact is global, with parts destined for army stockpiles and direct support for the conflict in Ukraine. Workforce implications include job creation and sustainment within the defense manufacturing sector, particularly at IMT Defense Corp and its supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for price increases due to the economic price adjustment clause, which could exceed initial budget estimates if market conditions fluctuate significantly.
Dependence on a single awardee for a critical component could pose supply chain risks if the contractor faces production or delivery challenges.
The long duration of the contract (2037-02-28) requires ongoing monitoring to ensure continued performance and adherence to specifications.

Positive Signals

The contract was awarded through full and open competition, indicating a competitive market and likely fair pricing.
The award supports critical national defense objectives, specifically aiding Ukraine and replenishing army stockpiles.
The fixed-price with economic price adjustment contract type provides some cost certainty while allowing for necessary adjustments due to market volatility.

Sector Analysis

This contract falls within the defense manufacturing sector, specifically focusing on the production of metal parts for military vehicles and equipment. The market for such components is characterized by specialized manufacturers capable of meeting stringent military specifications. Comparable spending benchmarks would typically involve other contracts for vehicle parts, ammunition components, or specialized metal fabrication for defense applications, often involving significant dollar values due to material and quality requirements.

Small Business Impact

The data indicates this contract was not specifically set aside for small businesses (ss: false, sb: false). Therefore, the primary contractor, IMT Defense Corp, is likely a large business. While there are no direct set-aside provisions, large defense contracts often involve subcontracting opportunities. It is possible that IMT Defense Corp may engage small businesses within its supply chain for specific materials or manufacturing processes, contributing indirectly to the small business ecosystem.

Oversight & Accountability

Oversight for this contract will likely be managed by the Department of the Army, with potential involvement from the Defense Contract Management Agency (DCMA) for performance monitoring and quality assurance. Transparency is facilitated through contract award databases like FPDS. Accountability measures are embedded in the contract terms, including delivery schedules and quality specifications. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Foreign Military Sales
Ukraine Security Assistance Initiative
Defense Production Act Investments
Army Ammunition Production
Military Vehicle Component Manufacturing

Risk Flags

Potential for cost overruns due to economic price adjustment clause.
Supply chain vulnerability for critical components.
Long-term contract duration may not align with evolving battlefield needs.
Dependence on a single contractor for essential parts.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $139.8 million to IMT DEFENSE CORP. UKRAINE: PRODUCE AND DELIVER 151,503 M1128 METAL PARTS. THE GOVERNMENT COMPETED THE REQUIREMENT AND MADE A MULTI-YEAR SINGLE AWARD TO AID ARMY STOCKPILE REPLENISHMENTS AND SUPPORT THE CONFLICT IN UKRAINE.

Who is the contractor on this award?

The obligated recipient is IMT DEFENSE CORP.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $139.8 million.

What is the period of performance?

Start: 2023-08-02. End: 2029-02-28.

What is the historical spending pattern for M1128 metal parts or similar components by the Department of the Army?

Analyzing historical spending for M1128 metal parts specifically is difficult without more granular data, as this information is often aggregated within broader categories like 'vehicle components' or 'ammunition manufacturing.' However, the Department of the Army consistently allocates significant funds towards maintaining and replenishing its equipment and ammunition stockpiles. In recent fiscal years, spending on such components has likely increased due to heightened global security concerns and support for allies. For instance, contracts for vehicle parts and related manufacturing can range from millions to hundreds of millions of dollars annually, depending on the specific system, quantity, and urgency. The current award of approximately $140 million for these parts suggests a substantial need, aligning with broader trends of increased defense spending aimed at bolstering readiness and supporting international commitments.

How does the per-unit cost of these M1128 metal parts compare to industry benchmarks for similar defense-grade components?

The calculated per-unit cost of approximately $922.50 for each M1128 metal part requires careful comparison. Defense-grade components often command higher prices than commercial equivalents due to stringent quality control, specialized materials, precise manufacturing tolerances, and rigorous testing requirements. Without knowing the exact specifications, material composition, and complexity of the M1128 metal part, a direct benchmark is challenging. However, for complex machined metal components used in military vehicles or weapon systems, a cost in the high hundreds or low thousands of dollars per unit is not uncommon, especially when factoring in the overhead of defense contractors, compliance with military standards (e.g., MIL-SPEC), and the relatively lower production volumes compared to mass-produced commercial items. The 'fixed price with economic price adjustment' clause also suggests that the base price might be set with an expectation of material cost fluctuations.

What are the specific risks associated with a multi-year contract for critical military components destined for a conflict zone?

Multi-year contracts for critical military components, especially those destined for a conflict zone like Ukraine, carry several inherent risks. Firstly, there's the risk of **supply chain disruption**. Geopolitical instability, transportation challenges, or unforeseen production issues at the contractor's facility or within their supply chain can delay or halt deliveries. Secondly, **cost escalation** is a concern, even with economic price adjustments. Rapid inflation or sudden spikes in raw material costs could significantly increase the final expenditure beyond initial projections. Thirdly, **performance degradation** over a long contract period is possible if quality control falters or if the contractor faces financial instability. Finally, there's the **strategic risk** that the nature of the conflict or the military's needs might change, potentially rendering the specific components less critical or requiring different specifications, leading to potential obsolescence or reduced utility of the procured items.

What is the track record of IMT Defense Corp in fulfilling similar defense manufacturing contracts?

IMT Defense Corp has a history of engaging in defense manufacturing contracts, including the production of various metal components and parts for military applications. While specific details on past performance for M1128 parts are not immediately available in this summary, the company's involvement in defense suggests familiarity with military specifications, quality assurance processes, and delivery requirements. Government contract databases often provide performance ratings and past performance information for contractors on previous awards. A review of these records would indicate their reliability in terms of on-time delivery, quality compliance, and overall customer satisfaction. Their ability to secure this significant, competed contract implies a satisfactory track record in meeting the Department of the Army's needs for critical defense materiel.

How does the 'full and open competition after exclusion of sources' procurement method impact price discovery and taxpayer value?

The 'full and open competition after exclusion of sources' method is a nuanced procurement approach. It begins with an initial exclusion of certain sources, perhaps due to specific technical requirements, security concerns, or prior performance issues. However, the subsequent 'full and open competition' phase means that all responsible sources are then allowed to submit proposals. This structure aims to balance the need for specialized capabilities or to mitigate specific risks with the benefits of broad market competition. For taxpayers, this method can be beneficial if the open competition phase attracts multiple capable bidders, driving down prices through rivalry. It ensures that even if some initial sources are excluded, the government still benefits from a competitive environment, leading to better price discovery and potentially greater value for money compared to a sole-source or limited competition scenario. The effectiveness hinges on the number and competitiveness of bidders in the open phase.

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: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT (K)

Evaluated Preference: NONE

Contractor Details

Address: 2410 N 5TH ST, CHAMPAIGN, IL, 61822

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Foreign Owned, Small Business, Special Designations

Financial Breakdown

Contract Ceiling: $139,755,851

Exercised Options: $139,755,851

Current Obligation: $139,755,851

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: W15QKN23D0026

IDV Type: IDC

Timeline