DoD awards $31.2M contract for target practice cartridges to General Dynamics, with 1085 days duration

Contract Overview

Contract Amount: $31,206,914 ($31.2M)

Contractor: General Dynamics Ordnance & Tactical Systems, Inc.

Awarding Agency: Department of Defense

Start Date: 2024-07-10

End Date: 2027-06-30

Contract Duration: 1,085 days

Daily Burn Rate: $28.8K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 2

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Defense

Official Description: 25MM PGU-23/U TARGET PRACTICE CARTRIDGES NSN: 1305-01-210-6802

Place of Performance

Location: MARION, WILLIAMSON County, ILLINOIS, 62959

State: Illinois Government Spending

Plain-Language Summary

Department of Defense obligated $31.2 million to GENERAL DYNAMICS ORDNANCE & TACTICAL SYSTEMS, INC. for work described as: 25MM PGU-23/U TARGET PRACTICE CARTRIDGES NSN: 1305-01-210-6802 Key points: 1. Contract value appears reasonable given the specialized nature of ammunition manufacturing. 2. Full and open competition after exclusion of sources suggests a deliberate procurement strategy. 3. Fixed Price with Economic Price Adjustment (FPEPA) contract type introduces potential for cost fluctuations. 4. Contract duration of over three years allows for sustained supply chain planning. 5. The contract is positioned within the broader defense ammunition sector, a critical component of military readiness. 6. Performance risk is moderate, given the established nature of the contractor and product.

Value Assessment

Rating: good

The contract value of $31.2 million for target practice cartridges over approximately three years appears to be within a reasonable range for specialized defense procurement. Benchmarking against similar contracts for ammunition requires access to proprietary pricing data, but the fixed-price with economic price adjustment structure suggests an attempt to balance cost certainty with market volatility. The number of bids received (though not explicitly stated, implied by competition type) and the contractor's established position in the market contribute to a fair assessment of value.

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, specific sources were excluded, possibly due to unique capabilities, security requirements, or prior performance. The exact number of bidders is not provided, but the 'after exclusion' clause suggests a more controlled competition than a purely open solicitation. This approach can sometimes lead to higher prices if the pool of eligible bidders is significantly narrowed.

Taxpayer Impact: Taxpayers may see slightly higher costs due to the exclusion of certain potential bidders, though this is often balanced by ensuring specialized capabilities are met.

Public Impact

The Department of the Army is the primary beneficiary, ensuring readiness for training exercises. Services delivered include the provision of PGU-23/U target practice cartridges. Geographic impact is likely national, with potential distribution to various training ranges. Workforce implications include sustained employment at General Dynamics' manufacturing facilities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Economic price adjustment clause could lead to cost overruns if material prices increase significantly.
Exclusion of sources may limit competitive pressure, potentially impacting price efficiency.
Long contract duration increases exposure to potential supply chain disruptions or obsolescence.

Positive Signals

Award to an established contractor (General Dynamics) suggests a lower risk of performance failure.
The contract type (FPEPA) acknowledges and attempts to manage market price volatility.
Clear product specification (PGU-23/U TARGET PRACTICE CARTRIDGES) reduces ambiguity in delivery.

Sector Analysis

This contract falls within the Ammunition (except Small Arms) Manufacturing sector, a critical sub-segment of the defense industrial base. The market for military-grade ammunition is characterized by high barriers to entry, stringent quality control, and significant government procurement. Spending in this sector is directly tied to military training requirements and operational tempo. Comparable spending benchmarks would involve analyzing other large-volume ammunition procurements for training and operational use.

Small Business Impact

This contract does not appear to have a small business set-aside (ss: false, sb: false). Given the specialized nature of ammunition manufacturing and the large contract value, it is unlikely that small businesses would be primary awardees without subcontracting opportunities. The focus is on a large, established defense contractor, suggesting that any small business involvement would be through subcontracting tiers, the extent of which is not detailed in this award notice.

Oversight & Accountability

Oversight for this contract will primarily reside with the Department of the Army contracting and program management offices. Accountability measures are embedded in the contract terms, including delivery schedules and quality specifications. Transparency is facilitated through contract award databases like FPDS. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse related to the contract.

Related Government Programs

Department of Defense Ammunition Procurement
Army Training and Doctrine Command (TRADOC) Support
Defense Logistics Agency (DLA) Ammunition Stockpile Management
Small Arms and Ammunition Manufacturing

Risk Flags

Potential for price escalation due to Economic Price Adjustment clause.
Limited competition pool due to exclusion of sources.
Supply chain vulnerability if only a few manufacturers can meet specifications.
Long-term contract duration may not align with rapidly evolving technology or threat landscapes.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $31.2 million to GENERAL DYNAMICS ORDNANCE & TACTICAL SYSTEMS, INC.. 25MM PGU-23/U TARGET PRACTICE CARTRIDGES NSN: 1305-01-210-6802

Who is the contractor on this award?

The obligated recipient is GENERAL DYNAMICS ORDNANCE & 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 $31.2 million.

What is the period of performance?

Start: 2024-07-10. End: 2027-06-30.

What is the historical spending pattern for PGU-23/U target practice cartridges by the Department of the Army?

Analyzing historical spending for PGU-23/U target practice cartridges requires accessing detailed procurement data over multiple fiscal years. While this specific award is for $31.2 million, understanding the Army's typical annual or biennial expenditure on this item would provide context for its significance. Past awards might reveal trends in pricing, competition levels, and primary contractors. For instance, if previous awards were significantly smaller or larger, it could indicate changes in training tempo, inventory management strategies, or market dynamics. Without historical data, it's difficult to ascertain if this $31.2 million award represents a routine replenishment, a surge in demand, or a long-term strategic procurement.

How does the pricing of this contract compare to similar ammunition procurements?

Direct price comparison for specialized defense articles like PGU-23/U cartridges is challenging without access to detailed cost breakdowns and specific contract terms from other awards. The 'Fixed Price with Economic Price Adjustment' (FPEPA) structure complicates direct benchmarking, as the final price can fluctuate based on economic factors. However, the total award value of $31.2 million over approximately three years suggests an average annual spend of roughly $10.4 million. To assess value, one would ideally compare the per-unit cost or total contract value against other contracts for similar training ammunition, considering factors like quantity, specifications, and contract type. The 'Full and Open Competition After Exclusion of Sources' might also influence pricing compared to purely open solicitations.

What are the key performance risks associated with this contract?

Key performance risks for this contract include potential delays in delivery, quality control issues with the ammunition, and supply chain disruptions. Given that General Dynamics Ordnance & Tactical Systems, Inc. is an established contractor, the risk of outright non-performance is likely low. However, the FPEPA clause introduces economic risk, where unforeseen increases in raw material costs or labor could impact the contractor's profitability or lead to price escalations. Furthermore, the 'after exclusion of sources' competition type, while ensuring specific capabilities, might limit redundancy in the supply chain, making it more vulnerable to disruptions affecting the sole or primary manufacturer. Ensuring consistent quality and timely delivery of a critical training munition is paramount.

What is the strategic importance of this contract for the Department of the Army?

This contract is strategically important for the Department of the Army as it ensures the continuous availability of PGU-23/U target practice cartridges, which are essential for realistic and effective pilot training. Maintaining an adequate supply of training munitions allows pilots to hone their targeting skills, tactical maneuvers, and weapon system proficiency in a safe and cost-effective manner. The duration of the contract (over three years) suggests a commitment to sustained training readiness, preventing potential shortfalls that could impede pilot development and overall combat effectiveness. The specific type of cartridge indicates its role in training scenarios that simulate live-fire engagements.

What does the 'Full and Open Competition After Exclusion of Sources' procurement method imply?

The 'Full and Open Competition After Exclusion of Sources' method implies that the agency initially intended to conduct a broad competition but subsequently excluded specific sources from consideration. This exclusion is typically based on specific criteria, such as unique technical capabilities, proprietary technology, security clearances, or past performance requirements that only certain contractors can meet. While it aims for a competitive environment among the remaining eligible sources, it inherently narrows the field compared to a standard 'full and open' competition. This can sometimes lead to less aggressive pricing if the excluded sources represent significant competitive threats or if the remaining pool is limited.

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: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT (K)

Evaluated Preference: NONE

Contractor Details

Parent Company: Wico Limited

Address: 6658 ROUTE 148, MARION, IL, 62959

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: $31,206,914

Exercised Options: $31,206,914

Current Obligation: $31,206,914

Subaward Activity

Number of Subawards: 8

Total Subaward Amount: $4,010,901

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: W519TC24D0009

IDV Type: IDC

Timeline