DoD awards $165M for 155mm artillery shells to support Ukraine, with no competition

Contract Overview

Contract Amount: $165,074,006 ($165.1M)

Contractor: IMT Defense Corp

Awarding Agency: Department of Defense

Start Date: 2023-09-14

End Date: 2027-12-31

Contract Duration: 1,569 days

Daily Burn Rate: $105.2K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: MANUFACTURE, PRODUCE, AND DELIVER 155MM M795 METAL PARTS IN SUPPORT OF UKRAINE.

Plain-Language Summary

Department of Defense obligated $165.1 million to IMT DEFENSE CORP for work described as: MANUFACTURE, PRODUCE, AND DELIVER 155MM M795 METAL PARTS IN SUPPORT OF UKRAINE. Key points: 1. Contract awarded to IMT Defense Corp for critical artillery components. 2. Significant funding allocated for ammunition manufacturing to aid international allies. 3. Sole-source award raises questions about price discovery and potential cost efficiencies. 4. Long-term contract duration suggests sustained demand for these munitions. 5. Focus on manufacturing essential military hardware for a high-intensity conflict zone. 6. Lack of competition may limit opportunities for other domestic manufacturers.

Value Assessment

Rating: questionable

The contract value of $165 million for 155mm artillery parts is substantial. Without competitive bidding, it is difficult to benchmark the value for money. The firm fixed-price contract type provides some cost certainty for the government, but the absence of competition means there's no direct comparison to market rates or other potential suppliers to assess if this represents a fair price. Further analysis would require understanding the specific components, production costs, and profit margins.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, IMT Defense Corp, was solicited. This approach is typically used when only one responsible source is available or when urgent and compelling circumstances exist. The lack of competition means the government did not explore pricing or capabilities from other potential manufacturers, which could lead to higher costs than if multiple bids were considered.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive pressure. Without alternative bids, there is less assurance that the negotiated price reflects the lowest possible cost for these essential munitions.

Public Impact

Directly benefits the Ukrainian armed forces by providing essential artillery ammunition. Supports the Department of Defense's strategic objective of aiding allies in conflict. Impacts the defense industrial base by securing production capacity for critical munitions. Contributes to the global supply of 155mm artillery shells during a period of high demand.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potential cost savings.
Long contract duration (over 3 years) may lock in prices that could become unfavorable if market conditions change.
Dependence on a single supplier for critical wartime materiel could pose a supply chain risk if the contractor faces production issues.

Positive Signals

Addresses a critical and urgent need for artillery support in a major conflict.
Firm fixed-price contract provides cost predictability for the government.
Secures production capacity for a key munition type, bolstering defense industrial readiness.

Sector Analysis

This contract falls within the Ammunition (except Small Arms) Manufacturing sector, a critical component of the defense industrial base. The global demand for 155mm artillery shells has surged due to the conflict in Ukraine, placing significant pressure on manufacturing capacity. The market size for such munitions is substantial, driven by both ongoing military operations and strategic stockpiling by allied nations. This contract represents a significant investment in ensuring the supply of these vital components.

Small Business Impact

The contract was awarded to IMT Defense Corp, and there is no indication of a small business set-aside. Furthermore, the data does not specify any subcontracting requirements for small businesses. This suggests that the primary focus is on securing the manufacturing capability from a large prime contractor, potentially limiting direct opportunities for small businesses within this specific award, unless they are part of IMT Defense Corp's supply chain.

Oversight & Accountability

The Department of the Army, under the Department of Defense, is the awarding agency. Oversight would typically involve contract administration by the relevant Army contracting office, ensuring delivery schedules and quality standards are met. Transparency is provided through contract award databases, but detailed operational oversight and performance metrics are generally not publicly disclosed. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Foreign Military Sales
Ukraine Security Assistance Initiative
Department of Defense Ammunition Procurement
Artillery Systems Manufacturing

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 $165.1 million to IMT DEFENSE CORP. MANUFACTURE, PRODUCE, AND DELIVER 155MM M795 METAL PARTS IN SUPPORT OF 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 $165.1 million.

What is the period of performance?

Start: 2023-09-14. End: 2027-12-31.

What is the track record of IMT Defense Corp in fulfilling large-scale defense contracts, particularly for munitions?

Information regarding IMT Defense Corp's specific track record for large-scale munitions contracts is not detailed in the provided data. However, as a recipient of a significant sole-source award for 155mm artillery parts, it is implied that the Department of the Army has assessed their capability to produce these items. Further investigation into the company's past performance, delivery history on previous contracts, and quality control measures would be necessary for a comprehensive assessment. Publicly available contract databases and industry reports could offer insights into their broader performance history within the defense sector.

How does the unit cost of these 155mm artillery parts compare to historical government purchases or industry benchmarks?

The provided data does not include the unit cost for the 155mm artillery parts, only the total contract value. Without this specific unit pricing, a direct comparison to historical government purchases or industry benchmarks is not possible. The total value of $165 million spread over the contract duration and the quantity of parts to be delivered would be needed to calculate an average unit cost. Given the sole-source nature of the award, any benchmark comparison would need to rely on publicly available data for similar, potentially competitively awarded, contracts for the same or comparable munitions.

What are the primary risks associated with a sole-source award for critical wartime materiel like artillery shells?

The primary risks associated with a sole-source award for critical wartime materiel include a lack of price competition, potentially leading to inflated costs for taxpayers. There is also a risk of reduced innovation and efficiency, as the contractor faces less pressure to optimize production processes. Furthermore, over-reliance on a single supplier can create supply chain vulnerabilities; if the contractor experiences production delays, quality issues, or financial instability, the availability of essential munitions could be jeopardized, impacting military readiness and support for allies.

What is the expected impact of this contract on the overall supply of 155mm artillery shells available to U.S. and allied forces?

This contract is expected to have a positive impact on the overall supply of 155mm artillery shells. By awarding $165 million for the production and delivery of these parts, the Department of Defense is directly increasing the manufacturing output of a critical munition. This is particularly important given the high consumption rates in ongoing conflicts, such as in Ukraine. The sustained production enabled by this long-term contract (ending in late 2027) should help replenish stocks and ensure continued availability for both U.S. forces and allied nations relying on these shells.

Are there any specific performance metrics or quality assurance measures outlined in the contract that are publicly available?

The provided data summary does not detail specific performance metrics or quality assurance measures stipulated within the contract. Typically, government contracts include clauses related to quality control, inspection, and acceptance criteria. For a contract of this nature, stringent quality standards for the 155mm artillery parts would be expected to ensure their reliability and safety in combat. However, the specifics of these measures, such as defect rates, testing protocols, and acceptance thresholds, are usually found in the full contract document and are not publicly disclosed in summaries.

How does this contract fit into the broader U.S. strategy for supporting Ukraine's defense capabilities?

This contract is a direct component of the broader U.S. strategy to support Ukraine's defense capabilities by ensuring a consistent supply of essential munitions. The 155mm artillery shell is a cornerstone of modern artillery warfare, and Ukraine has heavily relied on these rounds. By funding the production of these parts through IMT Defense Corp, the U.S. is bolstering the defense industrial base to meet sustained demand, thereby enabling Ukraine to continue its defensive operations effectively. This award signifies a long-term commitment to providing Ukraine with the materiel necessary to sustain its fight against aggression.

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

Solicitation ID: W15QKN23R0006

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

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

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Foreign Owned, Foreign-Owned and U.S.-Incorporated Business, Small Business, Special Designations

Financial Breakdown

Contract Ceiling: $165,074,006

Exercised Options: $165,074,006

Current Obligation: $165,074,006

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: W15QKN23D0009

IDV Type: IDC

Timeline