DoD's $32M contract for small arms manufacturing awarded to FN America LLC shows potential value concerns

Contract Overview

Contract Amount: $31,992,532 ($32.0M)

Contractor: FN America LLC

Awarding Agency: Department of Defense

Start Date: 2005-03-31

End Date: 2018-09-30

Contract Duration: 4,931 days

Daily Burn Rate: $6.5K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 200506!002201!2100!W52H09!TACOM ROCK ISLAND !W52H0905C0122 !A!N! !N! ! !20050331!20071230!098401086!098401086!370005936!N!F N MANUFACTURING LLC !797 OLD CLEMSON RD !COLUMBIA !SC!29229!16000!079!45!COLUMBIA !RICHLAND !S CAROLINA!+000016876904!N!N!000000000000!1005!GUNS, THROUGH 30 MM !A5 !WEAPONS !000 !* !332994!E! !3! ! ! ! ! !20200930!B! ! !A! !D!N!J!1!001!N!1G!A!Y!Z! ! !N!C!N! ! ! !B!B!A!A!000!A!C!N! ! ! ! ! ! !0001! !

Place of Performance

Location: COLUMBIA, RICHLAND County, SOUTH CAROLINA, 29229

State: South Carolina Government Spending

Plain-Language Summary

Department of Defense obligated $32.0 million to FN AMERICA LLC for work described as: 200506!002201!2100!W52H09!TACOM ROCK ISLAND !W52H0905C0122 !A!N! !N! ! !20050331!20071230!098401086!098401086!370005936!N!F N MANUFACTURING LLC !797 OLD CLEMSON RD !COLUMBIA !SC!29229!16000!079!45!COLUMBIA !RICH… Key points: 1. The contract's value appears high relative to its duration and the number of units procured. 2. Limited competition raises questions about price discovery and potential overpayment. 3. The contractor, FN America LLC, has a significant presence in defense manufacturing. 4. The contract falls under the 'Guns, Through 30 MM' product service code, indicating a focus on small arms. 5. The duration of the contract (over 13 years) suggests a long-term need for these components. 6. The lack of small business participation is noted.

Value Assessment

Rating: questionable

The total award amount of $31,992,532.26 over a period of approximately 13 years (from March 31, 2005, to September 30, 2018) for a single definitive contract warrants scrutiny. While the exact quantity of items procured is not detailed, the substantial dollar value suggests a high per-unit cost or a very large volume. Benchmarking against similar contracts for small arms manufacturing is difficult without more specific product details, but the extended duration and significant funding raise questions about whether this represented the best value for the taxpayer. The contract type, Firm Fixed Price, typically aims to control costs, but the overall expenditure requires further analysis to ensure efficiency.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning there was no open competition. This approach is often used when a specific contractor possesses unique capabilities, proprietary technology, or when urgency dictates a rapid award. However, the absence of competition limits the government's ability to explore alternative solutions or negotiate the most favorable pricing. Without a competitive bidding process, it is challenging to ascertain if the awarded price reflects market rates or if taxpayers received the best possible value.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as the government may not benefit from the price reductions typically achieved through competitive bidding. This limits the potential for cost savings and efficient use of public funds.

Public Impact

The primary beneficiaries are the U.S. Army and potentially other Department of Defense branches requiring small arms and related ordnance. The contract supports the production and supply of essential weaponry for national defense. The geographic impact is primarily centered around the contractor's facilities in South Carolina, supporting local employment and the regional economy. The contract sustains jobs within the defense manufacturing sector, particularly in specialized areas related to firearms production.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may have resulted in a higher price than could have been achieved through an open bidding process.
The extended contract duration without clear performance metrics or re-competition points raises concerns about sustained value.
Limited transparency due to sole-source award makes it difficult to assess the fairness of the price.
The contract does not appear to include specific provisions for small business subcontracting, potentially limiting opportunities for smaller enterprises.

Positive Signals

The contract was awarded to a known entity, FN America LLC, which has established expertise in defense manufacturing.
The Firm Fixed Price contract type generally provides cost certainty for the government.
The contract addresses a critical need for small arms within the Department of Defense.
The award was made to a domestic manufacturer, supporting U.S. industry.

Sector Analysis

This contract falls within the broader defense industrial base, specifically the manufacturing of small arms and ordnance. The market for such specialized components is often dominated by a few key players due to high barriers to entry, including technological expertise, regulatory compliance, and established relationships with government agencies. Spending in this sector is driven by military readiness requirements and modernization programs. Comparable spending benchmarks are difficult to establish without detailed specifications, but significant government investment is typical for maintaining and upgrading national defense capabilities.

Small Business Impact

This contract does not appear to have been set aside for small businesses, nor is there explicit information regarding small business subcontracting goals. The award to FN America LLC, a substantial entity, suggests that the primary focus was on the prime contractor's capabilities rather than fostering small business participation. This could limit opportunities for smaller firms to contribute to this specific defense procurement and potentially bypass the benefits of engaging with the small business ecosystem.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Army's contracting and program management offices. As a definitive contract, it would be subject to standard procurement regulations and oversight procedures. However, the sole-source nature of the award might reduce the level of scrutiny compared to a competitively bid contract. Transparency is limited due to the lack of public competition details. Inspector General involvement would likely be triggered by specific allegations of fraud, waste, or abuse.

Related Government Programs

Department of Defense Small Arms Procurement
Ordnance and Weapons Systems Manufacturing
Tactical Firearm Contracts
Army Weapons Systems Support
Defense Industrial Base Contracts

Risk Flags

Sole-source award lacks transparency
Potential for inflated pricing due to lack of competition
Extended contract duration without clear re-competition points
No explicit small business subcontracting requirements noted

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $32.0 million to FN AMERICA LLC. 200506!002201!2100!W52H09!TACOM ROCK ISLAND !W52H0905C0122 !A!N! !N! ! !20050331!20071230!098401086!098401086!370005936!N!F N MANUFACTURING LLC !797 OLD CLEMSON RD !COLUMBIA !SC!29229!16000!079!45!COLUMBIA !RICHLAND !S CAROLINA!+000016876904!N!N!000000000000!1005!GUNS, THROUGH 30 MM !A5 !WEAPONS !000 !* !332994!E! !3! ! ! ! ! !202

Who is the contractor on this award?

The obligated recipient is FN AMERICA 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 $32.0 million.

What is the period of performance?

Start: 2005-03-31. End: 2018-09-30.

What specific small arms or ordnance components were procured under this contract, and what was the quantity?

The provided data indicates the Product Service Code (PSC) as '332994' which corresponds to 'Guns, Through 30 MM'. However, the specific types and quantities of guns or ordnance components procured under this $31.99 million contract are not detailed in the available information. The contract was awarded to FN America LLC, a known manufacturer of firearms. Without more granular data, it is impossible to determine the exact nature of the items supplied. This lack of specificity makes it challenging to perform a precise value analysis or compare it to market rates for particular weapon systems or components.

How does the per-unit cost of the procured items compare to industry benchmarks or similar government contracts?

A direct per-unit cost comparison is not feasible with the provided data. The contract value is $31,992,532.26, and the duration spans from March 31, 2005, to September 30, 2018 (approximately 13.5 years). However, the specific number of units or the exact nature of the 'Guns, Through 30 MM' procured is not specified. To conduct a meaningful benchmark, we would need to know the exact item (e.g., M4 rifle, specific machine gun model, ammunition components) and the quantity purchased. Without this, any per-unit cost calculation would be speculative and potentially misleading. Industry benchmarks vary widely based on the complexity and type of firearm or ordnance.

What was the justification for awarding this contract on a sole-source basis instead of through full and open competition?

The data indicates the contract was 'NOT COMPETED,' implying a sole-source or limited competition award. The specific justification for this sole-source determination is not provided in the summary data. Typically, sole-source justifications are documented by the procuring agency and can include reasons such as the unique capability of a single contractor, the need for compatibility with existing systems, urgent and compelling circumstances, or when only one responsible source is available. Without access to the official justification document (e.g., a Justification and Approval or J&A), the rationale remains unknown, making it difficult to assess if competition was appropriately bypassed.

What is FN America LLC's track record with similar Department of Defense contracts, particularly regarding performance and delivery?

FN America LLC (and its predecessor FN Manufacturing LLC, as indicated by the data) has a long-standing relationship with the Department of Defense, particularly the U.S. Army, for the supply of small arms. They are known manufacturers of systems like the M4 and M16 rifles, M249 SAW, and M240 machine gun. While specific performance metrics for this particular contract (W52H0905C0122) are not detailed here, FN America generally has a significant track record in fulfilling large-scale defense contracts. However, like many large defense suppliers, they may have faced scrutiny or performance issues on specific contracts over the years, which would require a deeper dive into contract performance databases and historical records.

How has overall spending on 'Guns, Through 30 MM' (PSC 332994) trended over the past decade, and how does this contract fit into that trend?

Spending on PSC 332994, 'Guns, Through 30 MM,' can fluctuate significantly based on military modernization programs, operational tempo, and specific service needs. While this specific contract ended in 2018, overall government spending in this category has historically been substantial, driven by the Army, Marine Corps, and Special Operations Command requirements. Analyzing trends would require aggregating data across multiple contracts and fiscal years. This $32 million contract, awarded over a 13-year period, represents a consistent, albeit not massive, annual investment in small arms manufacturing during its term. It fits within the broader pattern of sustained government procurement of these essential weapon systems.

Industry Classification

NAICS: Manufacturing › Other Fabricated Metal Product Manufacturing › Small Arms, Ordnance, and Ordnance Accessories Manufacturing

Product/Service Code: WEAPONS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Wespavia SA (UEI: 371972030)

Address: 797 OLD CLEMSON RD, COLUMBIA, SC, 29229

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $148,100

Exercised Options: $148,100

Current Obligation: $31,992,532

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline