DoD awards $19.1M for small arms ammunition, raising questions about competition and value

Contract Overview

Contract Amount: $19,113,746 ($19.1M)

Contractor: UTM Limited

Awarding Agency: Department of Defense

Start Date: 2025-06-25

End Date: 2027-05-31

Contract Duration: 705 days

Daily Burn Rate: $27.1K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 5.56MM CCMCK OP4 DELIVERY ORDER 7 FY25

Plain-Language Summary

Department of Defense obligated $19.1 million to UTM LIMITED for work described as: 5.56MM CCMCK OP4 DELIVERY ORDER 7 FY25 Key points: 1. The contract was awarded on a sole-source basis, limiting potential cost savings through competition. 2. The duration of the contract (705 days) suggests a sustained need for these ammunition supplies. 3. The fixed-price contract type shifts performance risk to the contractor. 4. The specific product code (332992) indicates a focus on small arms ammunition manufacturing. 5. The award comes from the Department of the Army, a major consumer of such goods.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging without more detailed cost breakdowns or comparisons to similar sole-source awards. The fixed-price nature provides some cost certainty, but the lack of competition prevents a direct assessment of whether the price reflects the best possible value. Further analysis would require understanding the market for this specific type of ammunition and any unique capabilities of the sole-source provider.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded using a sole-source justification, meaning only one vendor was solicited. This approach bypasses the competitive bidding process, which typically drives down prices and encourages innovation. Without competition, it is difficult to ascertain if the selected vendor offered the most advantageous terms or if alternative suppliers could have provided the goods at a lower cost.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive pressure. The lack of open competition limits the government's ability to secure the best possible pricing and potentially miss out on more cost-effective solutions.

Public Impact

The primary beneficiaries are the Department of Defense and its personnel, who will receive essential small arms ammunition. This contract ensures the supply of ammunition for training, readiness, and operational needs. The geographic impact is likely concentrated around military installations where the ammunition will be utilized. Workforce implications may include continued employment for those involved in the manufacturing and distribution of ammunition.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competitive bidding may lead to inflated prices.
Sole-source awards can reduce transparency in pricing.
Dependence on a single supplier could create supply chain vulnerabilities.

Positive Signals

Fixed-price contract type offers cost certainty for the government.
Ensures a consistent supply of critical ammunition for military operations.
The award is for a specific, defined need within the Department of the Army.

Sector Analysis

The small arms ammunition manufacturing sector is a critical component of the defense industrial base. While there are multiple manufacturers, specific types of ammunition or specialized requirements can sometimes lead to sole-source or limited competition awards. The overall market size for defense-related ammunition is substantial, driven by ongoing military readiness requirements and global security demands. This contract fits within the broader category of defense procurement for essential materiel.

Small Business Impact

There is no indication that this contract includes a small business set-aside. Given the nature of ammunition manufacturing, it is possible that the sole-source provider is a large, specialized entity. Subcontracting opportunities for small businesses are not explicitly detailed in the provided data, but could exist if the primary contractor utilizes smaller suppliers for components or services.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Army's contracting and program management offices. Accountability measures are inherent in the fixed-price contract structure, which obligates the contractor to deliver specified goods. Transparency is limited by the sole-source nature of the award, but contract details should be available through federal procurement databases. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Department of Defense Ammunition Procurement
Small Arms Manufacturing
Military Readiness Supplies
Army Combat Support

Risk Flags

Sole-source award lacks competitive pricing.
Potential for inflated costs due to lack of competition.
Limited transparency on specific ammunition types and quantities.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $19.1 million to UTM LIMITED. 5.56MM CCMCK OP4 DELIVERY ORDER 7 FY25

Who is the contractor on this award?

The obligated recipient is UTM LIMITED.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $19.1 million.

What is the period of performance?

Start: 2025-06-25. End: 2027-05-31.

What is the historical spending pattern for small arms ammunition by the Department of the Army?

Analyzing historical spending patterns for small arms ammunition by the Department of the Army is crucial for context. While specific figures for this exact contract type and duration are not provided, the Army consistently procures significant quantities of ammunition annually to support training, exercises, and operational deployments. Past spending data, often available through federal procurement databases like USAspending.gov, can reveal trends in pricing, volume, and the prevalence of competitive versus sole-source awards. Understanding these historical trends helps in assessing whether the current $19.1 million award is consistent with past expenditures or represents an anomaly, particularly in light of its sole-source nature. For instance, if similar quantities have been procured competitively at lower aggregate costs in the past, it would heighten concerns about the value proposition of this current award.

What are the specific types of small arms ammunition being procured under this contract?

The provided data indicates the contract is for 'Small Arms Ammunition Manufacturing' under NAICS code 332992, but it does not specify the exact types of ammunition. This is a critical detail for a comprehensive analysis. Small arms ammunition encompasses a wide range of calibers and types, from pistol rounds to rifle cartridges, including various specialized rounds (e.g., armor-piercing, training, match-grade). The specific type directly impacts manufacturing complexity, material costs, and market pricing. Without this information, it's difficult to benchmark the unit cost or assess the technical requirements. For example, procuring high-volume, standard rifle cartridges might have different competitive dynamics and cost structures compared to specialized machine gun rounds or less common calibers.

Who is the sole-source contractor, and what is their track record with DoD contracts?

The provided data identifies the contractor as 'UTM LIMITED'. To assess their track record, a deeper dive into federal procurement databases (like SAM.gov or USAspending.gov) would be necessary. This would involve examining their past performance on Department of Defense contracts, specifically looking at the types of goods or services previously provided, contract values, performance ratings (if available), and any history of contract modifications, disputes, or terminations. Understanding UTM LIMITED's experience with similar ammunition contracts, their production capacity, and their history of meeting delivery schedules and quality standards is essential for evaluating the risk associated with this sole-source award. A strong, proven track record could partially mitigate concerns stemming from the lack of competition.

Are there any alternative suppliers for this specific type of ammunition, and why was this contract sole-sourced?

The designation 'NOT COMPETED' and 'sole-source' implies that the Department of the Army determined, for specific reasons, that only UTM LIMITED could fulfill this requirement. Justifications for sole-source awards typically fall into categories such as urgency, unique capabilities, standardization requirements, or lack of adequate competition. Without access to the official justification documentation (often found in contract award notices or justifications for other than full and open competition), it's impossible to definitively state why alternatives were not pursued. However, potential reasons could include proprietary manufacturing processes, specific technical specifications that only UTM LIMITED meets, or a critical need where initiating a full competition would cause unacceptable delays. Investigating the market for this specific ammunition type would be necessary to independently verify the necessity of a sole-source approach.

What is the projected unit cost of the ammunition, and how does it compare to market rates or previous contracts?

The provided data gives a total award amount ($19,113,745.80) and a duration (705 days), but it does not specify the quantity of ammunition being procured. Therefore, calculating a precise unit cost is not possible. To perform a meaningful comparison to market rates or previous contracts, the total quantity must be known. If, for example, the contract was for 1 million rounds, the unit cost would be approximately $19.11 per round. This figure could then be benchmarked against publicly available pricing for similar ammunition types from other government contracts or commercial vendors. The lack of quantity information is a significant gap in assessing the value-for-money aspect of this sole-source award.

Industry Classification

NAICS: Manufacturing › Other Fabricated Metal Product Manufacturing › Small Arms Ammunition Manufacturing

Product/Service Code: AMMUNITION AND EXPLOSIVES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: HAMPSTEAD AVENUE, BURY ST EDMUNDS

Business Categories: Category Business, Foreign Owned, Manufacturer of Goods, Not Designated a Small Business, Special Designations

Financial Breakdown

Contract Ceiling: $19,113,746

Exercised Options: $19,113,746

Current Obligation: $19,113,746

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: W15QKN21D0035

IDV Type: IDC

Timeline