DoD awards $133M for M119A2 propelling charges, a sole-source contract for ammunition manufacturing

Contract Overview

Contract Amount: $133,108,433 ($133.1M)

Contractor: General Dynamics Ordnance and Tactical Systems, Inc.

Awarding Agency: Department of Defense

Start Date: 2025-09-26

End Date: 2027-11-30

Contract Duration: 795 days

Daily Burn Rate: $167.4K/day

Competition Type: NOT COMPETED

Pricing Type: FIXED PRICE INCENTIVE

Sector: Defense

Official Description: THIS DELIVERY ORDER IS FOR PURCHASE OF M119A2 PROPELLING BAG CHARGES.

Place of Performance

Location: MARION, WILLIAMSON County, ILLINOIS, 62959

State: Illinois Government Spending

Plain-Language Summary

Department of Defense obligated $133.1 million to GENERAL DYNAMICS ORDNANCE AND TACTICAL SYSTEMS, INC. for work described as: THIS DELIVERY ORDER IS FOR PURCHASE OF M119A2 PROPELLING BAG CHARGES. Key points: 1. The contract is a sole-source award, raising questions about potential price overruns and lack of competitive pressure. 2. The fixed-price incentive contract type suggests a shared risk between the government and contractor, but the sole-source nature limits benchmarking. 3. The duration of the contract (795 days) indicates a sustained need for these specific ammunition components. 4. The award is for a critical component of artillery systems, highlighting its importance to military readiness. 5. The contractor, General Dynamics Ordnance and Tactical Systems, Inc., is a significant player in defense manufacturing.

Value Assessment

Rating: questionable

Without competitive bids, it is difficult to definitively assess the value for money. The fixed-price incentive structure aims to control costs, but the absence of competition means there's no external market validation of the pricing. Benchmarking against similar contracts for propelling charges is challenging due to the specialized nature and sole-source award. Further analysis would require access to the contractor's cost data or comparable sole-source awards for similar defense components.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor was solicited. This typically occurs when a unique capability or proprietary technology is required, or in situations where only one responsible source can fulfill the requirement. The lack of competition means that the government did not benefit from a bidding process that could drive down prices through market forces. The number of potential bidders was effectively one.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive bidding. Without multiple offers, there is less assurance that the price reflects the lowest possible cost to the government for these essential ammunition components.

Public Impact

The primary beneficiaries are the U.S. Army, which will receive the M119A2 propelling charges for its artillery systems. The services delivered are the manufacturing and supply of critical ammunition components essential for military operations and training. The geographic impact is primarily within the United States, where the contractor's manufacturing facilities are located and where the ammunition will be deployed. Workforce implications include employment at the contractor's facilities, supporting skilled labor in the defense manufacturing sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potential for cost savings.
Fixed-price incentive contract requires careful monitoring to ensure contractor efficiency.
Reliance on a single supplier for critical defense components could pose supply chain risks.
Lack of transparency in pricing due to sole-source nature.

Positive Signals

Contract awarded to an established defense contractor with a track record in ordnance manufacturing.
The contract addresses a clear and sustained need for essential military equipment.
Fixed-price incentive contract structure aligns some contractor incentives with government cost objectives.
The contract duration suggests a stable supply chain for a critical component.

Sector Analysis

This contract falls within the Ammunition (except Small Arms) Manufacturing sector, a specialized segment of the broader defense industrial base. The market for such components is often characterized by high barriers to entry due to specialized knowledge, capital investment, and stringent quality control requirements. Spending in this sector is driven by military readiness needs and modernization programs. Comparable spending benchmarks are difficult to establish precisely due to the proprietary nature of many defense components and the infrequent competitive bidding for specialized items.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Furthermore, the 'ss' (small business set-aside) is also false. This suggests that the prime contract was not specifically targeted towards small businesses. While General Dynamics Ordnance and Tactical Systems, Inc. may utilize small businesses as subcontractors, the primary award is to a large defense contractor. The impact on the small business ecosystem would depend on the extent of subcontracting opportunities offered by the prime contractor.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and procurement regulations, likely managed by the Department of the Army. Accountability measures are embedded within the contract terms, particularly the fixed-price incentive structure which aims to share risk and reward performance. Transparency may be limited due to the sole-source nature of the award. Inspector General jurisdiction would apply to any allegations of fraud, waste, or abuse related to the contract.

Related Government Programs

M119 Howitzer Systems
Artillery Ammunition
Defense Procurement
Ordnance Manufacturing
Ammunition Supply Chain

Risk Flags

Sole-source award
Lack of competitive bidding
Potential for cost overruns
Limited price transparency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $133.1 million to GENERAL DYNAMICS ORDNANCE AND TACTICAL SYSTEMS, INC.. THIS DELIVERY ORDER IS FOR PURCHASE OF M119A2 PROPELLING BAG CHARGES.

Who is the contractor on this award?

The obligated recipient is GENERAL DYNAMICS ORDNANCE AND TACTICAL SYSTEMS, INC..

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $133.1 million.

What is the period of performance?

Start: 2025-09-26. End: 2027-11-30.

What is the track record of General Dynamics Ordnance and Tactical Systems, Inc. with similar sole-source contracts for ammunition components?

General Dynamics Ordnance and Tactical Systems, Inc. (GD-OTS) has a long history of supplying defense products, including ammunition and ordnance systems, to the U.S. military. As a major defense contractor, they frequently engage in large-scale contracts. While specific data on their sole-source awards for M119A2 propelling charges is not publicly detailed, their extensive experience suggests a capacity to meet the technical and production requirements. However, the absence of competition in sole-source awards means that historical performance alone does not guarantee optimal pricing or value for money compared to a competitive scenario. Analysis of their past performance on fixed-price incentive contracts would be more relevant for assessing cost control effectiveness.

How does the pricing of this contract compare to market rates for similar propelling charges, given it's a sole-source award?

Direct comparison to market rates for similar propelling charges is challenging due to the sole-source nature of this award and the specialized, often proprietary, specifications of military-grade ammunition components. Market rates are typically established through competitive bidding processes. In a sole-source scenario, the government relies on negotiation and the contractor's cost proposals, which are not publicly disclosed. Without access to detailed cost breakdowns or comparable sole-source awards for identical or highly similar items, it's difficult to benchmark the pricing against external market standards. The fixed-price incentive structure implies that the price is intended to be fair and reasonable, but the lack of competition prevents definitive validation.

What are the primary risks associated with a sole-source award for critical defense components like propelling charges?

The primary risks associated with a sole-source award for critical defense components include potential for inflated pricing due to the absence of competitive pressure, reduced incentive for the contractor to innovate or improve efficiency, and a potential lack of supply chain resilience if the sole supplier faces production issues or goes out of business. For taxpayers, this can translate to higher costs for essential military equipment. Furthermore, it limits the government's ability to explore alternative technologies or suppliers that might offer better value or performance. The government must rely heavily on robust negotiation and oversight to mitigate these risks.

How effective is the fixed-price incentive (FPI) contract type in controlling costs for ammunition manufacturing, especially in a sole-source context?

The Fixed-Price Incentive (FPI) contract type aims to control costs by sharing cost savings or overruns between the government and the contractor. It establishes a target cost, a target profit, and a price ceiling. If the final cost is below the target, both parties share the savings; if it's above, they share the overrun, up to the ceiling. In a sole-source context, FPI can still provide some cost control by incentivizing the contractor to be efficient, as they share in any savings. However, its effectiveness is diminished without competitive pressure to establish a realistic target cost and price ceiling from the outset. The government's negotiation and cost analysis capabilities become paramount in ensuring the FPI terms are fair and lead to value.

What is the historical spending pattern for M119A2 propelling charges or similar ammunition components by the Department of the Army?

Historical spending patterns for specific ammunition components like M119A2 propelling charges are often tied to the operational tempo, modernization cycles, and inventory management strategies of the Department of the Army. While aggregate spending on ammunition is substantial, detailed historical data for individual components, especially those procured via sole-source contracts, is not always readily available in public databases. Such spending would likely fluctuate based on the service life of the M119A2 system, training requirements, and strategic stockpiling. Analyzing past contracts for similar ordnance items, even if not identical, could provide some context, but direct historical spending on this specific item would require deeper access to Army procurement records.

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

Pricing Type: FIXED PRICE INCENTIVE (L)

Evaluated Preference: NONE

Contractor Details

Parent Company: Wico Limited

Address: 100 CARILLON PKWY, SAINT PETERSBURG, FL, 33716

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

Financial Breakdown

Contract Ceiling: $133,108,433

Exercised Options: $133,108,433

Current Obligation: $133,108,433

Subaward Activity

Number of Subawards: 8

Total Subaward Amount: $15,590,156

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: W15QKN23D0054

IDV Type: IDC

Timeline