DoD awards $22.6M contract for 120mm mortar shell bodies to General Dynamics OTS for Ukraine support

Contract Overview

Contract Amount: $22,622,895 ($22.6M)

Contractor: General Dynamics OTS (wilkes Barre), LLC

Awarding Agency: Department of Defense

Start Date: 2024-04-15

End Date: 2029-01-31

Contract Duration: 1,752 days

Daily Burn Rate: $12.9K/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 IN SUPPORT OF UKRAINE.

Place of Performance

Location: WILKES BARRE, LUZERNE County, PENNSYLVANIA, 18702

State: Pennsylvania Government Spending

Plain-Language Summary

Department of Defense obligated $22.6 million to GENERAL DYNAMICS OTS (WILKES BARRE), LLC for work described as: MANUFACTURE, PRODUCTION, AND DELIVERY OF 120MM MORTAR SHELL BODIES IN SUPPORT OF UKRAINE. Key points: 1. Contract aims to bolster Ukraine's defense capabilities by supplying essential ammunition components. 2. General Dynamics OTS, a known defense contractor, is positioned to fulfill this critical need. 3. The fixed-price contract with economic price adjustment introduces potential cost fluctuations. 4. Delivery order signifies an immediate need for these components. 5. The contract duration extends through January 2029, indicating a sustained requirement. 6. Pennsylvania-based facility will likely be the primary production site.

Value Assessment

Rating: good

The contract value of $22.6 million for 120mm mortar shell bodies appears reasonable given the current geopolitical climate and the specialized nature of defense manufacturing. Benchmarking against similar ammunition production contracts is challenging due to the specific nature of this order and its direct support to a foreign military. However, the fixed-price with economic price adjustment structure suggests an effort to balance cost control with the need to account for potential material and labor cost increases in a volatile market.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple qualified vendors had the opportunity to bid. This competitive process is expected to drive a more favorable price for the government compared to a sole-source or limited competition award. The specific number of bidders is not provided, but the 'full and open' designation suggests a robust bidding environment.

Taxpayer Impact: Full and open competition generally benefits taxpayers by ensuring that the government receives the best possible value through a competitive bidding process, leading to potentially lower prices and higher quality goods.

Public Impact

The primary beneficiaries are the Ukrainian armed forces, who will receive critical components for their defense efforts. The contract directly supports the production of 120mm mortar shell bodies, a key munition type. Production is likely to occur within the United States, potentially supporting domestic manufacturing jobs. The successful execution of this contract contributes to broader U.S. foreign policy objectives related to supporting allies.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Economic price adjustment clause could lead to costs exceeding initial estimates if market prices for raw materials or labor increase significantly.
Reliance on a single contractor for a critical component could pose supply chain risks if unforeseen production issues arise.
The extended contract duration may not fully account for potential shifts in battlefield needs or technological advancements in munitions.

Positive Signals

Awarding to General Dynamics OTS leverages an established defense contractor with proven manufacturing capabilities.
Full and open competition suggests a competitive pricing environment was sought.
The contract directly addresses a pressing need for military aid to an ally, demonstrating responsiveness to global security challenges.

Sector Analysis

The defense manufacturing sector, particularly for munitions, is characterized by high barriers to entry, stringent quality control, and significant government oversight. This contract falls within the ammunition manufacturing sub-sector, which is critical for national security and supporting allied forces. The market is dominated by a few large, specialized contractors capable of meeting the demanding specifications and production volumes required. Spending in this area is often driven by geopolitical events and the need to replenish stockpiles or provide aid.

Small Business Impact

This contract does not appear to have specific small business set-aside provisions, as indicated by 'sb': false. The prime contractor, General Dynamics OTS, is a large defense manufacturer. While there is no direct set-aside, large prime contractors are often encouraged or required to subcontract portions of their work to small businesses. The extent of small business participation will depend on General Dynamics OTS's subcontracting plan and the availability of qualified small businesses within the supply chain for specialized components.

Oversight & Accountability

Oversight for this contract will be managed by the Department of the Army, likely through the contracting officer and program management offices responsible for ammunition procurement. The contract's fixed-price nature with economic price adjustment will require careful monitoring of cost factors to ensure fair pricing. Transparency is generally maintained through contract award announcements and reporting requirements. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Foreign Military Sales Program
Department of Defense Ammunition Procurement
Ukraine Security Assistance Initiative

Risk Flags

Potential for cost increases due to Economic Price Adjustment clause.
Supply chain vulnerability for specialized components.
Geopolitical instability impacting material costs and delivery timelines.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $22.6 million to GENERAL DYNAMICS OTS (WILKES BARRE), LLC. MANUFACTURE, PRODUCTION, AND DELIVERY OF 120MM MORTAR SHELL BODIES IN SUPPORT OF UKRAINE.

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 $22.6 million.

What is the period of performance?

Start: 2024-04-15. End: 2029-01-31.

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

Historical spending on 120mm mortar shell bodies by the Department of Defense can fluctuate significantly based on operational tempo, training requirements, and foreign military aid packages. While specific aggregate data for this particular munition type is not readily available in the public domain without extensive database queries, the DoD consistently procures large quantities of various munitions annually. Contracts for such items are often awarded through competitive processes to major defense manufacturers like General Dynamics, BAE Systems, and Northrop Grumman. Spending is typically driven by readiness goals and strategic commitments, such as support for allies like Ukraine, which has seen increased demand for artillery and mortar systems since 2022. The value of individual contracts can range from millions to hundreds of millions of dollars depending on quantity, specifications, and delivery timelines.

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

Determining the precise unit cost for these 120mm mortar shell bodies is not possible with the provided data, as the total contract value is given without the quantity of shells. The contract specifies '120MM MORTAR SHELL BODIES,' implying components rather than complete rounds, and the quantity is not explicitly stated. Furthermore, the 'fixed price with economic price adjustment' (FPEPA) clause introduces variability. However, based on industry knowledge, the cost of such specialized components can range significantly based on material costs, manufacturing complexity, and required certifications. Without a stated quantity or a breakdown of the price per unit, a direct comparison to market rates or similar contracts is speculative. Generally, components for advanced munitions are costly due to precision engineering and material science involved.

What is General Dynamics OTS's track record in fulfilling 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 a significant supplier of mortar systems and ammunition to the U.S. military and allied nations. Their capabilities include the manufacturing of mortar rounds, artillery shells, and related components. Historically, they have demonstrated the capacity to handle large-scale production contracts and meet stringent quality and delivery requirements. While specific performance metrics for every contract are not publicly detailed, their continued success in securing major defense contracts suggests a consistent ability to deliver on complex manufacturing requirements. Their involvement in supplying ammunition for ongoing conflicts underscores their role as a key player in the defense industrial base.

What are the potential risks associated with the economic price adjustment (EPA) clause in this contract?

The Economic Price Adjustment (EPA) clause in this contract allows for adjustments to the contract price based on fluctuations in specified economic factors, typically related to labor and material costs. The primary risk for the government (and taxpayers) is that these costs could increase significantly over the contract's duration, leading to a final price higher than initially anticipated. This is particularly relevant in the current global economic climate, which has seen volatility in raw material prices (metals, chemicals) and labor markets. For General Dynamics OTS, the EPA mitigates their risk of cost overruns due to unforeseen market changes, ensuring they can maintain profitability and continue production. Effective oversight is crucial to ensure that any price adjustments are justified and align with the contract's stipulated economic indicators.

How does this contract align with broader U.S. defense industrial base strategies?

This contract aligns with broader U.S. defense industrial base strategies by supporting the production of critical munitions necessary for both U.S. readiness and the defense of allies. By awarding to a domestic manufacturer like General Dynamics OTS, the contract helps sustain and potentially expand capabilities within the U.S. defense industrial base. Furthermore, providing ammunition components to Ukraine directly supports U.S. foreign policy objectives and contributes to the stability of Eastern Europe. This type of contract also reinforces the importance of maintaining a robust industrial capacity for munitions, which is a key component of national security preparedness. The emphasis on full and open competition also encourages efficiency and innovation within the sector.

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: $22,622,895

Exercised Options: $22,622,895

Current Obligation: $22,622,895

Subaward Activity

Number of Subawards: 2

Total Subaward Amount: $506,194

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