DoD's $25.7M contract for medium caliber ammunition awarded to General Dynamics, with 26,970 units procured

Contract Overview

Contract Amount: $25,729,581 ($25.7M)

Contractor: General Dynamics Ordnance & Tactical Systems, Inc.

Awarding Agency: Department of Defense

Start Date: 2025-05-21

End Date: 2027-12-31

Contract Duration: 954 days

Daily Burn Rate: $27.0K/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: 50X228MM XM1202 TARGET PRACTICE - TRACER (TP-T) CARTRIDGE FOR MEDIUM CALIBER FAMILY BUY 3 IDIQ.

Place of Performance

Location: MARION, WILLIAMSON County, ILLINOIS, 62959

State: Illinois Government Spending

Plain-Language Summary

Department of Defense obligated $25.7 million to GENERAL DYNAMICS ORDNANCE & TACTICAL SYSTEMS, INC. for work described as: 50X228MM XM1202 TARGET PRACTICE - TRACER (TP-T) CARTRIDGE FOR MEDIUM CALIBER FAMILY BUY 3 IDIQ. Key points: 1. Value for money assessed through fixed-price with economic price adjustment, allowing for market fluctuations. 2. Competition dynamics indicate a full and open process after exclusion of sources, suggesting a competitive environment. 3. Risk indicators include potential price volatility due to economic price adjustment clauses. 4. Performance context is a multi-year IDIQ contract for essential training ammunition. 5. Sector positioning within the defense industrial base, specifically ammunition manufacturing.

Value Assessment

Rating: good

The contract's total value of $25.7 million for ammunition is within a reasonable range for defense procurement. The fixed-price with economic price adjustment (FPEPA) contract type aims to balance cost certainty for the government with protection against significant material cost increases for the contractor. Benchmarking per-unit costs would require detailed analysis of specific ammunition types and market conditions, but the overall award appears to reflect competitive pricing for a specialized defense product.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded under 'Full and Open Competition After Exclusion of Sources.' This suggests that while the competition was intended to be broad, specific sources may have been excluded based on pre-qualification or other criteria. The number of bidders is not explicitly stated, but the 'limited' competition level implies fewer than a fully open solicitation, which could potentially impact price discovery.

Taxpayer Impact: While the competition was not fully open, the exclusion of sources was justified, aiming for specialized capabilities. Taxpayers benefit from a competitive process that still seeks to ensure the best value for critical defense materiel.

Public Impact

Benefits the Department of the Army by providing essential training ammunition for medium caliber weapons systems. Delivers tracer (TP-T) cartridges crucial for target practice and combat readiness. Geographic impact is primarily within the United States, supporting domestic defense manufacturing. Workforce implications include sustained employment at General Dynamics' manufacturing facilities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for price increases due to the economic price adjustment clause.
Reliance on a single contractor for a critical defense supply chain component.
Complexity of managing an IDIQ contract with multiple delivery orders.

Positive Signals

Award to an established defense contractor with a proven track record in ordnance.
Procurement of essential training ammunition to maintain military readiness.
Long-term contract structure provides supply chain stability for the duration.

Sector Analysis

This contract falls within the defense industrial base, specifically the ammunition manufacturing sector. The market for military-grade ammunition is characterized by specialized production capabilities, stringent quality control, and long-term government contracts. Comparable spending benchmarks would involve analyzing other large-volume ammunition procurements for medium caliber systems by various military branches.

Small Business Impact

The data indicates that small business participation was not a primary focus for this specific contract, as the 'sb' field is false. There is no explicit mention of small business set-asides or subcontracting plans. This suggests that the prime contractor, General Dynamics, is likely responsible for fulfilling the contract requirements directly or through its established supply chain, with limited direct impact on the small business ecosystem for this particular award.

Oversight & Accountability

Oversight for this contract will be managed by the Department of the Army, likely through contracting officers and program managers. Accountability measures are embedded in the contract terms, including delivery schedules and quality specifications. Transparency is facilitated through contract databases like FPDS. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Department of Defense Ammunition Procurement
Army Medium Caliber Ammunition Programs
General Dynamics Ordnance & Tactical Systems Contracts
Fixed Price with Economic Price Adjustment Contracts
Indefinite Delivery Indefinite Quantity (IDIQ) Contracts

Risk Flags

Potential for price escalation due to EPA clause.
Limited competition may impact optimal price discovery.
Reliance on a single contractor for critical supply.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $25.7 million to GENERAL DYNAMICS ORDNANCE & TACTICAL SYSTEMS, INC.. 50X228MM XM1202 TARGET PRACTICE - TRACER (TP-T) CARTRIDGE FOR MEDIUM CALIBER FAMILY BUY 3 IDIQ.

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 $25.7 million.

What is the period of performance?

Start: 2025-05-21. End: 2027-12-31.

What is the historical spending pattern for similar medium caliber ammunition contracts by the Department of the Army?

Analyzing historical spending for similar medium caliber ammunition contracts by the Department of the Army reveals a consistent demand for training and operational rounds. Over the past five to ten years, the Army has awarded numerous IDIQ contracts and individual delivery orders for various types of ammunition, including those for medium caliber systems. Spending levels can fluctuate based on operational tempo, training requirements, and inventory management strategies. For instance, periods of heightened global engagement often correlate with increased ammunition procurement. The average value of these contracts can range from tens of millions to hundreds of millions of dollars annually, depending on the specific caliber, quantity, and contract type. General Dynamics has historically been a significant recipient of such contracts, reflecting its established position in the defense ordnance market. Understanding these patterns helps contextualize the current $25.7 million award as part of a larger, ongoing procurement strategy.

How does the economic price adjustment (EPA) clause in this contract typically impact cost certainty for the government?

The Economic Price Adjustment (EPA) clause in this contract introduces a mechanism to adjust the contract price based on fluctuations in specified economic factors, such as labor or material costs. While it aims to protect the contractor from unforeseen cost increases and ensure continued supply, it introduces a degree of cost uncertainty for the government. The government agrees to pay a potentially higher price than initially fixed if market conditions dictate. The extent of this uncertainty depends on the specific indices used in the EPA formula and the volatility of those indices. For the Department of the Army, this means that the final cost of the ammunition may exceed the initial $25.7 million if the EPA is triggered significantly. However, without an EPA, contractors might inflate their initial bids to account for perceived risks, potentially leading to higher baseline costs. Therefore, the EPA is a trade-off between upfront price certainty and potential future cost increases.

What is General Dynamics Ordnance & Tactical Systems' track record with similar ammunition contracts?

General Dynamics Ordnance & Tactical Systems (GD-OTS) has a substantial and long-standing track record in supplying ammunition to the U.S. military and allied nations. They are a major producer of medium and large caliber ammunition, including artillery shells, tank rounds, and mortar systems, as well as small arms ammunition. GD-OTS has frequently been awarded large Indefinite Delivery/Indefinite Quantity (IDIQ) contracts similar to this one, often valued in the hundreds of millions of dollars, for various types of munitions. Their history includes fulfilling significant orders for training and combat-use ammunition, demonstrating a capacity to meet demanding production schedules and quality standards. The company's experience with complex supply chains, advanced manufacturing processes, and adherence to stringent military specifications positions them as a reliable, albeit sometimes sole-source or limited-competition, provider for critical ordnance requirements.

What are the potential risks associated with a 'Full and Open Competition After Exclusion of Sources' award?

A 'Full and Open Competition After Exclusion of Sources' award, while intended to be competitive, carries specific risks. The primary risk is that by excluding certain potential sources, the pool of bidders is narrowed, potentially reducing the overall level of competition. This exclusion could be based on factors like specialized capabilities, past performance, or specific technological requirements. If the excluded sources were capable of offering a better price or superior product, the government might not achieve the best possible value. Furthermore, the justification for exclusion needs to be robust to ensure fairness and prevent anti-competitive practices. If the exclusion criteria are perceived as arbitrary or overly restrictive, it could lead to protests or challenges, delaying the award and increasing administrative costs. The government must carefully balance the need for specialized capabilities with the benefits of broader competition.

How does the procurement of tracer (TP-T) ammunition contribute to military readiness and training?

Tracer (TP-T) ammunition plays a critical role in military readiness and training by providing visual feedback during firing. For target practice, tracers allow instructors and trainees to easily observe the trajectory of rounds and confirm hits or misses, facilitating immediate correction and skill development. This visual cue is essential for learning proper aiming, lead, and fire control techniques, especially in dynamic training scenarios. In combat or tactical exercises, tracers help in fire adjustment, target designation, and assessing the effectiveness of fire. They enable units to communicate target engagement status and coordinate fire more effectively. The procurement of TP-T ammunition ensures that military personnel at various levels, from individual soldiers to unit commanders, have the necessary tools to conduct realistic training and maintain proficiency with medium caliber weapon systems, directly contributing to overall combat effectiveness.

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: $25,729,581

Exercised Options: $25,729,581

Current Obligation: $25,729,581

Subaward Activity

Number of Subawards: 5

Total Subaward Amount: $4,520,254

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