DoD awards $219M contract for combustible cartridge cases, raising questions about competition and value
Contract Overview
Contract Amount: $219,154,601 ($219.2M)
Contractor: Armtec Defense Products CO.
Awarding Agency: Department of Defense
Start Date: 2025-09-25
End Date: 2030-02-28
Contract Duration: 1,617 days
Daily Burn Rate: $135.5K/day
Competition Type: NOT COMPETED
Pricing Type: FIRM FIXED PRICE
Sector: Defense
Official Description: THE MANUFACTURE, PRODUCTION AND DELIVERY OF MACS M231/M232-SERIES (M232A2) COMBUSTIBLE CARTRIDGE CASE ASSEMBLIES.
Place of Performance
Location: COACHELLA, RIVERSIDE County, CALIFORNIA, 92236
Plain-Language Summary
Department of Defense obligated $219.2 million to ARMTEC DEFENSE PRODUCTS CO. for work described as: THE MANUFACTURE, PRODUCTION AND DELIVERY OF MACS M231/M232-SERIES (M232A2) COMBUSTIBLE CARTRIDGE CASE ASSEMBLIES. Key points: 1. The contract's value of over $200 million warrants scrutiny for cost-effectiveness. 2. A 'not competed' award suggests potential limitations in market exploration and price discovery. 3. The long performance period (over 5 years) requires ongoing monitoring for sustained value. 4. The specific nature of the ammunition components indicates a critical defense supply chain role. 5. The absence of small business involvement raises concerns about broader economic impact. 6. The firm fixed-price contract type offers some cost certainty but may limit flexibility.
Value Assessment
Rating: fair
Benchmarking the value of this contract is challenging without detailed cost breakdowns or comparable contract data. However, a $219 million award for ammunition components over five years suggests a significant investment. The firm fixed-price structure provides some cost predictability, but the lack of competition means there's no direct market validation of the pricing. Further analysis would be needed to compare unit costs against industry standards or historical pricing for similar components.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was awarded on a 'not competed' basis, indicating that the Department of Defense did not solicit bids from multiple sources. This approach is typically used when only one source is capable of meeting the requirement, or in urgent situations. The lack of competition means that taxpayers did not benefit from the price discovery mechanisms inherent in a competitive bidding process, potentially leading to higher costs than might be achieved in an open market.
Taxpayer Impact: The absence of competition means taxpayers may not have received the best possible price for these critical ammunition components. This sole-source award limits the government's ability to leverage market forces to drive down costs.
Public Impact
The primary beneficiaries are the U.S. Army, receiving essential components for its ammunition. The contract ensures the supply of M231/M232-series (M232A2) combustible cartridge case assemblies. The geographic impact is primarily within the United States, with potential for distribution to operational theaters. The contract supports manufacturing jobs within the defense industrial base, specifically in California.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Lack of competition may lead to inflated prices.
- Long contract duration could mask inefficiencies over time.
- Sole-source awards can stifle innovation from potential new entrants.
- Dependence on a single supplier creates supply chain risk.
Positive Signals
- Firm fixed-price contract provides cost certainty for the government.
- Ensures a critical supply of defense materiel.
- Long-term award provides stability for the contractor and supply chain.
Sector Analysis
The defense manufacturing sector is characterized by specialized production capabilities and often long lead times for critical components. This contract falls within the ammunition manufacturing sub-sector, which is vital for national security. The market for such specialized components is typically limited to a few qualified manufacturers. Spending benchmarks for similar ammunition components can vary widely based on complexity, volume, and material costs. The $219 million award indicates a significant procurement for a specific, high-demand item.
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 subcontracting) is also false. This suggests that small businesses are not directly involved in fulfilling this prime contract, nor are there explicit requirements for subcontracting to them. This could limit opportunities for the small business defense industrial base to participate in this significant procurement.
Oversight & Accountability
Oversight for this contract will likely be managed by the Department of the Army's contracting and program management offices. Accountability measures are typically embedded within the contract terms, including delivery schedules and quality assurance provisions. Transparency may be limited due to the sole-source nature of the award, but contract awards are generally reported in federal procurement databases. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected.
Related Government Programs
- Department of Defense Ammunition Procurement
- Army Combat Ammunition Systems
- Defense Industrial Base Manufacturing
- Combustible Cartridge Case Production
Risk Flags
- Sole-source award raises concerns about price fairness and competition.
- Lack of small business participation limits economic opportunities.
- Long contract duration requires diligent oversight to ensure continued value.
Tags
defense, department-of-defense, department-of-the-army, ammunition, cartridge-cases, sole-source, firm-fixed-price, california, large-contract, national-security
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $219.2 million to ARMTEC DEFENSE PRODUCTS CO.. THE MANUFACTURE, PRODUCTION AND DELIVERY OF MACS M231/M232-SERIES (M232A2) COMBUSTIBLE CARTRIDGE CASE ASSEMBLIES.
Who is the contractor on this award?
The obligated recipient is ARMTEC DEFENSE PRODUCTS CO..
Which agency awarded this contract?
Awarding agency: Department of Defense (Department of the Army).
What is the total obligated amount?
The obligated amount is $219.2 million.
What is the period of performance?
Start: 2025-09-25. End: 2030-02-28.
What is the historical spending pattern for combustible cartridge case assemblies by the Department of Defense?
Analyzing historical spending on combustible cartridge case assemblies requires access to detailed procurement data over several fiscal years. Without specific historical data for this exact component (M231/M232-series M232A2), it's difficult to provide precise figures. However, general trends in defense spending on ammunition components are influenced by operational tempo, inventory levels, and modernization programs. The Department of Defense consistently allocates billions of dollars annually to ammunition procurement, encompassing a wide range of items from small arms ammunition to large-caliber projectiles and their associated components. The $219 million awarded here represents a significant, but not unprecedented, investment within the broader ammunition budget, likely reflecting a specific need for these particular case assemblies over the contract's five-year duration.
What are the specific technical requirements and performance standards for the M231/M232-series (M232A2) combustible cartridge case assemblies?
The M231/M232-series (M232A2) combustible cartridge case assemblies are critical components used in various artillery systems. Combustible cases are designed to burn completely during the firing cycle, eliminating the need for extraction and ejection of spent casings, which simplifies the loading process and reduces the risk of malfunctions. Specific technical requirements would include precise dimensions, material composition (often a nitrocellulose-based propellant integrated into the case structure), ignition characteristics, and durability under extreme temperatures and pressures. Performance standards would focus on reliability, ensuring consistent ignition and complete combustion without leaving residue that could impede subsequent firings. These specifications are crucial for the safe and effective operation of the artillery pieces they are designed for.
What is the typical profit margin for defense contractors manufacturing ammunition components?
Profit margins for defense contractors manufacturing ammunition components can vary significantly based on factors such as contract type, competition level, complexity of the item, and the contractor's overhead structure. For firm fixed-price contracts, which offer cost certainty to the government, contractors aim to build their profit margin into the initial price. Historically, profit margins in the defense industry have ranged from low single digits to over 15%, depending on the specific segment and risk. For specialized components like combustible cartridge cases, where production may be limited to a few qualified firms, margins could potentially be higher, especially in sole-source or limited-competition scenarios. Without access to Armtec Defense Products Co.'s specific financial data or industry-wide benchmarks for this niche, it's difficult to pinpoint an exact profit margin for this contract.
What are the risks associated with a sole-source award for critical defense components?
Sole-source awards for critical defense components carry several inherent risks. Foremost among these is the potential for inflated pricing, as the government lacks the leverage of competitive bidding to ensure the best possible value. This can lead to taxpayers bearing higher costs than necessary. Another significant risk is reduced innovation; without the pressure of competition, a sole-source contractor may have less incentive to invest in process improvements or develop more cost-effective solutions. Furthermore, sole-source awards can create a dependency on a single supplier, increasing supply chain vulnerability. If the sole-source provider experiences production issues, quality control problems, or faces financial instability, it can disrupt the supply of critical materiel, potentially impacting military readiness.
How does the PSC code 332993 (Ammunition (except Small Arms)) relate to the specific product being procured?
The Product Service Code (PSC) 332993, categorized under 'Ammunition (except Small Arms),' accurately reflects the nature of the procurement for M231/M232-series (M232A2) combustible cartridge case assemblies. This code specifically excludes small arms ammunition (typically defined as calibers below 20mm) and encompasses a broad range of larger ammunition types, including artillery shells, mortar rounds, and their components. Combustible cartridge cases are integral parts of artillery and mortar systems, designed to burn away during firing. Therefore, PSC 332993 is a fitting classification for this contract, indicating that the procurement is for a significant ordnance component rather than small arms ammunition.
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: FIRM FIXED PRICE (J)
Evaluated Preference: NONE
Contractor Details
Parent Company: Transdigm Group Incorporated
Address: 85901 AVE 53, COACHELLA, CA, 92236
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: $219,154,601
Exercised Options: $219,154,601
Current Obligation: $219,154,601
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: W15QKN21D0005
IDV Type: IDC
Timeline
Start Date: 2025-09-25
Current End Date: 2030-02-28
Potential End Date: 2030-02-28 12:02:00
Last Modified: 2025-09-25
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