DoD awards $55.7M for foreign military sales, with a focus on ordnance and accessories

Contract Overview

Contract Amount: $55,736,002 ($55.7M)

Contractor: Kongsberg Defence & Aerospace AS

Awarding Agency: Department of Defense

Start Date: 2024-08-27

End Date: 2026-07-31

Contract Duration: 703 days

Daily Burn Rate: $79.3K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: DELIVERY ORDER FOR VARIOUS FOREIGN MILITARY SALES (FMS) CUSTOMERS.

Place of Performance

Location: JOHNSTOWN, CAMBRIA County, PENNSYLVANIA, 15904

State: Pennsylvania Government Spending

Plain-Language Summary

Department of Defense obligated $55.7 million to KONGSBERG DEFENCE & AEROSPACE AS for work described as: DELIVERY ORDER FOR VARIOUS FOREIGN MILITARY SALES (FMS) CUSTOMERS. Key points: 1. Contract value represents a significant investment in supporting allied defense capabilities. 2. Competition was full and open, suggesting a potentially competitive pricing environment. 3. The contract duration of over two years indicates a sustained need for these supplies. 4. Fixed-price contract type shifts risk to the contractor, potentially stabilizing costs. 5. This award falls within the manufacturing sector for small arms and ordnance. 6. The delivery order structure implies flexibility in meeting evolving FMS requirements.

Value Assessment

Rating: good

The contract value of $55.7 million for ordnance and accessories for foreign military sales appears reasonable given the scope and duration. Benchmarking against similar FMS support contracts is challenging due to the specialized nature of foreign military sales and varying customer requirements. However, the firm fixed-price structure suggests that the government has negotiated a ceiling price, which is a positive indicator for cost control. The absence of extensive modifications or change orders in the provided data also suggests initial pricing was well-defined.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit offers. This approach generally fosters a competitive environment, encouraging multiple bidders to present their best pricing and technical solutions. The specific number of bidders is not provided, but the open competition suggests a robust process aimed at achieving value for the government and its allies.

Taxpayer Impact: Full and open competition is beneficial for taxpayers as it increases the likelihood of securing goods and services at competitive prices, maximizing the return on investment for defense spending.

Public Impact

Foreign military sales customers benefit from the timely provision of essential ordnance and accessories, enhancing their defense capabilities. The contract supports the manufacturing and supply chain for small arms and related ordnance. The geographic impact is global, as the supplies are destined for various foreign military customers. Workforce implications are likely within the defense manufacturing sector, supporting jobs in production and logistics.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for price increases if raw material costs fluctuate significantly, despite the fixed-price nature.
Ensuring timely delivery to diverse FMS customers across different geographic regions can present logistical challenges.
Maintaining quality control for ordnance and accessories is critical for operational effectiveness and safety.
Geopolitical factors could impact the demand or delivery schedules for FMS customers.

Positive Signals

Firm fixed-price contract provides cost certainty for the government.
Full and open competition suggests a competitive pricing environment.
The contract supports established defense industrial base capabilities.
Delivery order structure allows for flexibility in meeting specific customer needs.

Sector Analysis

This contract falls within the broader defense manufacturing sector, specifically focusing on small arms, ordnance, and related accessories. The market for such defense articles is driven by global security needs and international cooperation agreements like Foreign Military Sales (FMS). Spending in this area is often influenced by geopolitical stability, regional conflicts, and the modernization efforts of allied nations. Comparable spending benchmarks would typically involve analyzing aggregate FMS sales data and specific procurement trends for ordnance within allied defense budgets.

Small Business Impact

The provided data does not indicate any specific small business set-aside provisions for this contract. As it is a delivery order for foreign military sales, the primary focus is likely on large-scale manufacturing capabilities. There is no explicit information on subcontracting plans for small businesses, though it is possible that the prime contractor may engage small businesses for specific components or services.

Oversight & Accountability

Oversight for this contract would primarily reside within the Department of Defense, specifically the Department of the Army, which awarded the delivery order. Accountability measures are inherent in the firm fixed-price contract type, requiring the contractor to deliver specified goods within the agreed-upon price. Transparency is facilitated through contract award databases, though specific details of FMS agreements may be subject to international sensitivities. Inspector General jurisdiction would apply to any allegations of fraud, waste, or abuse.

Related Government Programs

Foreign Military Sales Program
Ordnance and Ammunition Procurement
Defense Articles and Services
Small Arms Manufacturing
Department of Defense Supply Chain Management

Risk Flags

Supply Chain Vulnerability
Geopolitical Risk
Logistical Complexity

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $55.7 million to KONGSBERG DEFENCE & AEROSPACE AS. DELIVERY ORDER FOR VARIOUS FOREIGN MILITARY SALES (FMS) CUSTOMERS.

Who is the contractor on this award?

The obligated recipient is KONGSBERG DEFENCE & AEROSPACE AS.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $55.7 million.

What is the period of performance?

Start: 2024-08-27. End: 2026-07-31.

What is the historical spending trend for KONGSBERG DEFENCE & AEROSPACE AS with the Department of the Army?

Analyzing the historical spending trend for KONGSBERG DEFENCE & AEROSPACE AS with the Department of the Army requires access to comprehensive contract databases. Without specific historical data, it's difficult to provide a precise trend. However, this $55.7 million delivery order suggests a significant engagement for the specified period (2024-2026). Generally, a contractor's history with an agency can indicate reliability, performance quality, and pricing competitiveness. A pattern of successful contract completions and positive performance reviews would support the 'good' or 'excellent' rating for value. Conversely, a history of disputes, cost overruns, or performance issues might raise concerns, even for a single large award.

How does the unit cost of the ordnance and accessories compare to similar items procured domestically by the U.S. military?

Direct comparison of unit costs for ordnance and accessories procured under this Foreign Military Sales (FMS) contract to similar items procured domestically by the U.S. military is complex. FMS contracts often include additional costs related to program management, unique country requirements, and specific logistical support that may not be present in purely domestic procurements. Furthermore, the 'various foreign military sales customers' implies a range of potential specifications and quantities that could influence unit pricing. While the firm fixed-price nature aims for cost control, the specific benchmark for 'value for money' would ideally involve comparing the negotiated price against a baseline of similar, non-FMS domestic procurements, adjusted for any unique FMS-related overhead or service components.

What are the primary risks associated with fulfilling this delivery order, and how are they being mitigated?

The primary risks associated with fulfilling this delivery order include potential supply chain disruptions for raw materials, manufacturing quality control issues, and logistical challenges in delivering to diverse international locations. Geopolitical instability in regions where FMS customers are located could also pose risks to delivery schedules or demand. Mitigation strategies likely involve robust supplier management, stringent quality assurance processes throughout manufacturing, and detailed logistical planning with international partners. The firm fixed-price contract shifts some financial risk to the contractor, incentivizing them to manage these operational risks effectively to avoid cost overruns.

What is the expected impact of this contract on the U.S. defense industrial base and related employment?

This contract is expected to have a positive impact on the U.S. defense industrial base, particularly for manufacturers specializing in small arms and ordnance. It provides a significant revenue stream for KONGSBERG DEFENCE & AEROSPACE AS and potentially its subcontractors, supporting jobs in manufacturing, engineering, quality control, and logistics. By fulfilling FMS requirements, the contract helps maintain critical production capabilities within the U.S. defense sector, ensuring readiness and capacity for both domestic needs and international partnerships. This sustained demand can foster innovation and investment in advanced manufacturing techniques within the industry.

How does the 'full and open competition' for this contract ensure fair pricing and prevent potential price gouging?

Full and open competition is a key mechanism designed to ensure fair pricing and prevent price gouging by fostering a competitive marketplace. By allowing all responsible sources to submit bids, the government increases the likelihood of receiving multiple offers, which drives down prices as contractors vie for the award. This process allows for price discovery, where the market itself helps establish a reasonable price for the goods and services. While a firm fixed-price contract further locks in costs, the competitive bidding process is the primary safeguard against inflated pricing from the outset. The government's evaluation criteria would also assess the reasonableness of proposed prices.

Industry Classification

NAICS: Manufacturing › Other Fabricated Metal Product Manufacturing › Small Arms, Ordnance, and Ordnance Accessories Manufacturing

Product/Service Code: FIRE CONTROL EQPT.

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: KIRKEGAARDSVEIEN 45, KONGSBERG

Business Categories: Category Business, Foreign Owned, Foreign-Owned and U.S.-Incorporated Business, Manufacturer of Goods, Not Designated a Small Business, Special Designations

Financial Breakdown

Contract Ceiling: $55,736,002

Exercised Options: $55,736,002

Current Obligation: $55,736,002

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: W15QKN23D0003

IDV Type: IDC

Timeline