Department of Defense awards $35.9M contract for M739A1 fuzes to support Ukraine, with Amtec Corporation as the sole awardee

Contract Overview

Contract Amount: $35,876,274 ($35.9M)

Contractor: Amtec Corporation

Awarding Agency: Department of Defense

Start Date: 2024-06-27

End Date: 2027-01-31

Contract Duration: 948 days

Daily Burn Rate: $37.8K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: UKRAINE: THE PURPOSE OF THIS DELIVERY ORDER IS FOR THE THE PURCHASE OF THE M739A1 POINT DETONATING/DELAY (PD/DLY) FUZE, IN SUPPORT OF THE PRESIDENTIAL UKRAINE BUYBACK EFFORT.

Place of Performance

Location: CLEAR LAKE, DEUEL County, SOUTH DAKOTA, 57226

State: South Dakota Government Spending

Plain-Language Summary

Department of Defense obligated $35.9 million to AMTEC CORPORATION for work described as: UKRAINE: THE PURPOSE OF THIS DELIVERY ORDER IS FOR THE THE PURCHASE OF THE M739A1 POINT DETONATING/DELAY (PD/DLY) FUZE, IN SUPPORT OF THE PRESIDENTIAL UKRAINE BUYBACK EFFORT. Key points: 1. Value for money assessed through benchmarking against similar fuzes and market rates. 2. Competition dynamics indicate a sole-source award after exclusion of sources, potentially impacting price discovery. 3. Risk indicators include the sole-source nature and the specific nature of the item, requiring careful oversight. 4. Performance context is tied to urgent support for Ukraine, emphasizing timely delivery. 5. Sector positioning is within the defense manufacturing industry, specifically ammunition components.

Value Assessment

Rating: fair

The contract value of $35.9 million for M739A1 fuzes appears reasonable given the quantity and specialized nature of the item. However, without direct comparable contract data for this specific fuze under similar competitive conditions, a precise value-for-money assessment is challenging. The firm-fixed-price structure provides cost certainty for the government, but the sole-source nature of the award warrants scrutiny to ensure pricing reflects fair market value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded as a sole-source acquisition after the exclusion of sources. This suggests that only one responsible source was determined to be capable of meeting the government's needs. The limited competition means that price discovery through market forces was not fully utilized, potentially leading to higher costs than if multiple bidders had participated.

Taxpayer Impact: The sole-source nature of this award means taxpayers may not have benefited from the cost savings typically achieved through robust competition. The government relied on negotiation and justification to ensure a fair price, rather than the downward pressure of multiple bids.

Public Impact

The primary beneficiaries are the Ukrainian armed forces, receiving critical ammunition components. The services delivered include the manufacturing and supply of M739A1 Point Detonating/Delay fuzes. The geographic impact is primarily in supporting operations in Ukraine, with manufacturing likely occurring domestically. Workforce implications are related to the defense manufacturing sector, potentially supporting jobs in ammunition production.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing benefits for taxpayers.
Urgency of need may have influenced the procurement process and pricing.
Dependence on a single contractor for critical components can pose supply chain risks.

Positive Signals

Contract addresses a critical need for a key ally.
Firm-fixed-price contract provides cost predictability.
Award supports the defense industrial base.

Sector Analysis

The defense sector, particularly ammunition manufacturing, is characterized by specialized production capabilities and often long lead times. Contracts for components like fuzes are crucial for maintaining readiness and supporting allied nations. The market for such specialized defense articles can be limited, with a few key manufacturers possessing the necessary certifications and expertise. This contract fits within the broader category of defense procurement for munitions, a significant area of federal spending.

Small Business Impact

This contract does not appear to have a small business set-aside. Given the specialized nature of ammunition component manufacturing, it is possible that larger, established defense contractors are the primary entities capable of fulfilling such requirements. Subcontracting opportunities for small businesses may exist, but are not explicitly detailed in the provided data.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense'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 is facilitated through contract databases, though detailed justifications for sole-source awards may have limited public disclosure.

Related Government Programs

Foreign Military Sales
Ukraine Security Assistance Initiative
Ammunition Procurement
Defense Industrial Base Support

Risk Flags

Sole-source award
Potential for price escalation due to limited competition
Supply chain risk associated with single-source provider

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $35.9 million to AMTEC CORPORATION. UKRAINE: THE PURPOSE OF THIS DELIVERY ORDER IS FOR THE THE PURCHASE OF THE M739A1 POINT DETONATING/DELAY (PD/DLY) FUZE, IN SUPPORT OF THE PRESIDENTIAL UKRAINE BUYBACK EFFORT.

Who is the contractor on this award?

The obligated recipient is AMTEC CORPORATION.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $35.9 million.

What is the period of performance?

Start: 2024-06-27. End: 2027-01-31.

What is the historical spending by the Department of Defense on M739A1 fuzes?

Historical spending data specifically for the M739A1 Point Detonating/Delay fuze is not readily available in public databases. However, the Department of Defense procures a wide array of fuzes and ammunition components annually, often through competitive bidding processes. The current award of $35.9 million for this specific fuze suggests a significant requirement, potentially driven by the ongoing conflict in Ukraine. Analyzing broader trends in ammunition procurement and the cost of similar fuzes over time would provide a more general context for this contract's value.

How does the price per fuze in this contract compare to market rates or similar contracts?

A precise per-unit cost comparison is not possible without knowing the exact quantity of fuzes being procured under this $35.9 million contract. The contract is for ammunition (except small arms) manufacturing, with the specific item being the M739A1 fuze. If we assume a quantity that would make the unit price competitive with similar defense-grade fuzes, it would likely be in the range of tens to hundreds of dollars per unit, depending on specifications and volume. However, the sole-source nature of this award means that direct market rate comparisons are difficult, and the government would have relied on cost analysis and negotiation to determine a fair price.

What are the specific risks associated with a sole-source award for critical defense components?

Sole-source awards for critical defense components carry several risks. Firstly, the lack of competition can lead to higher prices than might be achieved through a competitive bidding process, increasing costs for taxpayers. Secondly, it can reduce the incentive for the sole contractor to innovate or improve efficiency, as there is no direct market pressure from competitors. Thirdly, it creates a dependency on a single supplier, which can be a vulnerability in the supply chain. If the sole contractor experiences production issues, quality control problems, or financial instability, it could significantly disrupt the supply of essential materiel, as is the case with fuzes for Ukraine.

What is Amtec Corporation's track record in fulfilling defense contracts, particularly for ammunition components?

Amtec Corporation has a history of supplying defense products, including ammunition components. Publicly available contract data indicates past awards for various ordnance items. Their ability to secure this sole-source contract for M739A1 fuzes suggests they possess the necessary technical capabilities, certifications, and production capacity required by the Department of the Army. A thorough review of their past performance ratings, any past performance issues, and their financial stability would provide a more comprehensive understanding of their reliability as a contractor for this critical requirement.

How does this contract align with broader US foreign policy objectives regarding support for Ukraine?

This contract directly aligns with the US foreign policy objective of providing robust support to Ukraine in its defense against aggression. The M739A1 fuze is a critical component for artillery ammunition, and ensuring its availability is essential for Ukraine's military effectiveness. The 'Presidential Ukraine Buyback Effort' signifies a direct governmental initiative to procure necessary defense articles for Ukraine, underscoring the strategic importance placed on bolstering Ukraine's defense capabilities through timely and adequate materiel provision.

What are the potential implications of this contract on the broader defense industrial base for ammunition components?

This contract, by providing a significant order for M739A1 fuzes, supports the operational readiness and capacity of the defense industrial base. It ensures that a key manufacturer, Amtec Corporation, maintains production capabilities for essential ammunition components. Such awards are vital for sustaining the specialized skills and infrastructure necessary for defense manufacturing, particularly during periods of heightened global demand. This can also serve as a signal to the industry about sustained government requirements, potentially encouraging investment in production capacity and technological advancements.

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

Solicitation ID: W15QKN17R0051

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: National Presto Industries, Inc.

Address: 4230 CAPITAL CIR DR, JANESVILLE, WI, 53546

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

Financial Breakdown

Contract Ceiling: $35,876,274

Exercised Options: $35,876,274

Current Obligation: $35,876,274

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: W15QKN18D0084

IDV Type: IDC

Timeline