DoD awards $16M contract for mortar propelling charges, with potential for significant future orders

Contract Overview

Contract Amount: $15,961,193 ($16.0M)

Contractor: American Ordnance LLC

Awarding Agency: Department of Defense

Start Date: 2024-04-30

End Date: 2026-01-31

Contract Duration: 641 days

Daily Burn Rate: $24.9K/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: 81MM AND 120MM MORTAR PROPELLING CHARGES

Place of Performance

Location: MIDDLETOWN, DES MOINES County, IOWA, 52638

State: Iowa Government Spending

Plain-Language Summary

Department of Defense obligated $16.0 million to AMERICAN ORDNANCE LLC for work described as: 81MM AND 120MM MORTAR PROPELLING CHARGES Key points: 1. Contract value appears reasonable given the specialized nature of ammunition components. 2. Full and open competition after exclusion of sources suggests a deliberate procurement strategy. 3. The contract's duration and potential for follow-on orders indicate a long-term need. 4. Performance is tied to a critical component for mortar systems, impacting readiness. 5. This contract falls within the broader defense manufacturing sector, specifically ammunition production.

Value Assessment

Rating: good

The awarded value of approximately $16 million for 81mm and 120mm mortar propelling charges seems aligned with specialized defense manufacturing. Benchmarking against similar ammunition component contracts is challenging due to proprietary data and specific technical requirements. However, the firm fixed-price structure suggests a commitment to cost control by the government. The contract's potential for future orders, indicated by the base award and estimated value, implies a strategic sourcing approach for a critical munition component.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded under 'Full and Open Competition After Exclusion of Sources.' This indicates that while the competition was intended to be broad, certain sources may have been excluded based on specific criteria, possibly related to technical capabilities, security, or prior performance. The number of bidders is not explicitly stated, but the procurement method suggests a structured evaluation process to ensure fair pricing and quality.

Taxpayer Impact: This procurement method aims to balance the need for specialized capabilities with ensuring a competitive environment to achieve fair market prices for taxpayers.

Public Impact

The primary beneficiaries are the U.S. Army and Marine Corps, who utilize 81mm and 120mm mortars in their operations. The contract delivers essential propelling charges, a critical component for mortar ammunition. The geographic impact is national, supporting defense logistics and readiness across various military installations. Workforce implications include supporting specialized manufacturing jobs within the defense industrial base, particularly at American Ordnance LLC's facilities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for sole-source follow-on orders if competition is limited in the future.
Reliance on a single contractor for a critical munition component could pose supply chain risks.
The 'after exclusion of sources' clause warrants scrutiny to ensure it doesn't unduly restrict competition.

Positive Signals

Award to a known defense contractor with existing manufacturing capabilities.
Firm fixed-price contract provides cost certainty for the government.
Contract duration suggests a stable, long-term supply chain for essential munitions.

Sector Analysis

This contract operates within the defense manufacturing sector, specifically focusing on ammunition production. The market for such specialized components is relatively concentrated, with a limited number of qualified manufacturers possessing the necessary technical expertise and security clearances. Spending in this area is driven by military readiness requirements and ongoing modernization efforts. Comparable spending benchmarks are difficult to ascertain due to the niche nature of propelling charges.

Small Business Impact

The contract data indicates that small business participation is not a primary focus, as the 'ss' (small business set-aside) field is false and the 'sb' (small business) field is also false. This suggests the contract was not specifically set aside for small businesses. Subcontracting opportunities for small businesses may exist but are not explicitly detailed in this award notice. The overall impact on the small business ecosystem for this specific contract appears minimal.

Oversight & Accountability

Oversight for this contract will likely be managed by the Department of the Army's contracting command and program executive offices responsible for munitions. Accountability measures are embedded in the firm fixed-price contract terms, requiring delivery of specified quantities and quality standards. Transparency is facilitated through contract award databases like FPDS. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Mortar Ammunition Production
Defense Ammunition Procurement
Propelling Charge Manufacturing
Army Munitions Programs
Tactical Ammunition Systems

Risk Flags

Potential supply chain vulnerability due to reliance on a single source.
Need for ongoing monitoring of competition levels for future procurements.
Ensuring adherence to stringent quality and safety standards for energetic materials.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $16.0 million to AMERICAN ORDNANCE LLC. 81MM AND 120MM MORTAR PROPELLING CHARGES

Who is the contractor on this award?

The obligated recipient is AMERICAN ORDNANCE LLC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $16.0 million.

What is the period of performance?

Start: 2024-04-30. End: 2026-01-31.

What is the historical spending trend for 81mm and 120mm mortar propelling charges by the Department of Defense?

Analyzing historical spending for 81mm and 120mm mortar propelling charges requires a deep dive into specific contract awards over several fiscal years. While this specific contract is for approximately $16 million, broader trends indicate consistent government investment in mortar systems due to their tactical importance. Factors influencing spending include operational tempo, inventory levels, modernization programs, and geopolitical factors. The Department of Defense typically procures these components through competitive bidding processes, though specific contract vehicles and durations can vary significantly year-to-year. Understanding the full historical picture would involve aggregating data on similar contracts awarded to various manufacturers, considering inflation, and accounting for different contract types (e.g., fixed-price, cost-plus) and contract vehicles (e.g., IDIQs, delivery orders).

How does the awarded price per unit for these propelling charges compare to industry benchmarks or previous contracts?

Determining a precise per-unit cost benchmark for these propelling charges is challenging without access to detailed cost breakdowns and specific technical specifications, which are often proprietary. The contract is for a base amount of $15,961,192.92, with an estimated total value that could be higher due to potential future orders. The nature of defense contracting for specialized components like propelling charges means that pricing is influenced by factors such as material costs, manufacturing complexity, quality assurance, and security requirements. Without direct comparable data points from recent, similar contracts or publicly available industry cost models for this specific item, a definitive benchmark comparison is not feasible based solely on the provided award data. However, the firm fixed-price nature suggests the government sought to establish a predictable cost.

What are the key performance indicators (KPIs) and quality assurance measures for this contract?

Key performance indicators (KPIs) for this contract would primarily revolve around timely delivery of the propelling charges according to the specified schedule (delivery order dates between award and January 31, 2026) and adherence to stringent quality standards. The Department of the Army, as the procuring agency, would have detailed technical specifications and acceptance criteria outlined in the contract. Quality assurance measures likely include rigorous testing of the charges to ensure they meet performance requirements for reliability, consistency, and safety under various operational conditions. Non-conformance could lead to rejection of goods, contract penalties, or corrective action requests for the contractor, American Ordnance LLC. The firm fixed-price nature incentivizes the contractor to meet these KPIs to avoid financial penalties and ensure future contract opportunities.

What is the track record of American Ordnance LLC in fulfilling similar defense contracts, particularly for ammunition components?

American Ordnance LLC has a significant track record in the defense sector, particularly in the manufacturing of ammunition and related components. As a key supplier to the U.S. military, the company has experience producing various types of munitions, including mortar rounds and their associated components. Their history likely includes fulfilling numerous contracts with the Department of Defense, often under competitive bidding processes. Evaluating their specific performance on past contracts for propelling charges or similar energetic materials would require reviewing historical contract data for on-time delivery, quality compliance, and overall customer satisfaction. Generally, companies that consistently win large-scale defense contracts demonstrate a capacity to meet stringent requirements, though specific performance metrics for past contracts are not detailed in this award notice.

What are the potential risks associated with relying on a single contractor for this critical munition component?

Relying on a single contractor, even if selected through a competitive process, introduces several potential risks. Supply chain disruption is a primary concern; any unforeseen event impacting American Ordnance LLC's operations (e.g., natural disaster, labor strike, facility issues, raw material shortages) could halt production and impact military readiness. Furthermore, a lack of ongoing competition could potentially lead to price increases in future contract renewals or a reduction in innovation if the contractor faces less pressure to improve efficiency. Dependence on one supplier also limits the government's flexibility in responding to surges in demand or adapting to new technological requirements. Mitigation strategies often involve maintaining strategic stockpiles, fostering relationships with alternative suppliers where feasible, and ensuring robust contract terms that incentivize performance and reliability.

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

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 17575 HIGHWAY 79, MIDDLETOWN, IA, 52638

Business Categories: Category Business, Limited Liability Corporation, Manufacturer of Goods, Not Designated a Small Business, Partnership or Limited Liability Partnership, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $15,961,193

Exercised Options: $15,961,193

Current Obligation: $15,961,193

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: W52P1J18D0058

IDV Type: IDC

Timeline