FN America LLC awarded $14.46M for M240 machine guns, with contract performance spanning 2008-2012
Contract Overview
Contract Amount: $14,460,294 ($14.5M)
Contractor: FN America LLC
Awarding Agency: Department of Defense
Start Date: 2008-08-01
End Date: 2012-03-31
Contract Duration: 1,338 days
Daily Burn Rate: $10.8K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: FIXED PRICE LEVEL OF EFFORT
Sector: Defense
Official Description: M240, M240C, M240D, AND M240E1 MACHINE GUNS - VARIOUS QUANTITIES
Place of Performance
Location: COLUMBIA, RICHLAND County, SOUTH CAROLINA, 29229
Plain-Language Summary
Department of Defense obligated $14.5 million to FN AMERICA LLC for work described as: M240, M240C, M240D, AND M240E1 MACHINE GUNS - VARIOUS QUANTITIES Key points: 1. The contract was awarded on a fixed-price level-of-effort basis, indicating a focus on achieving specific effort levels rather than fixed deliverables. 2. The sole-source nature of this award warrants scrutiny regarding the justification for not pursuing a competitive bidding process. 3. Performance occurred over a significant duration (1338 days), suggesting a substantial and ongoing requirement for these weapon systems. 4. The contract was awarded by the Department of the Army, highlighting its role in equipping ground forces. 5. The North American Industry Classification System (NAICS) code 332994 points to the manufacturing of small arms and ordnance. 6. The contract's value, while significant, needs to be benchmarked against similar procurements for small arms to assess value for money.
Value Assessment
Rating: fair
Benchmarking the value of this contract is challenging without comparable sole-source procurements for the M240 machine gun. The fixed-price level-of-effort structure can sometimes lead to less cost certainty compared to fixed-price-incentive or firm-fixed-price contracts with defined deliverables. Further analysis would require access to detailed cost breakdowns and justification for the pricing structure.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was awarded on a sole-source basis, meaning FN America LLC was the only vendor considered. The justification for this approach is not provided, but sole-source awards typically occur when only one vendor can meet the requirement, often due to proprietary technology, unique capabilities, or urgent needs. The lack of competition limits price discovery and potentially increases costs for the government.
Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive bidding. Without a competitive process, there is less pressure on the contractor to offer the most cost-effective solution.
Public Impact
The primary beneficiaries are the U.S. Army personnel who will be equipped with M240 machine guns, enhancing their combat capabilities. The services delivered include the manufacturing and supply of M240 machine guns and potentially related parts or accessories. The geographic impact is primarily within the United States, where FN America LLC manufactures these weapons, and at military installations where they are deployed. Workforce implications include employment at FN America LLC's manufacturing facilities and potentially within its supply chain.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award limits competitive pricing and potentially increases cost to taxpayers.
- Fixed-price level-of-effort contract structure may offer less cost control than other fixed-price types.
- Lack of transparency on the justification for sole-source procurement.
Positive Signals
- Ensures supply of a critical weapon system (M240 machine gun) to the U.S. Army.
- Contract awarded to a known manufacturer with a track record in producing such systems.
- Contract performance period indicates a sustained need and commitment to equipping forces.
Sector Analysis
The defense manufacturing sector, specifically small arms and ordnance, is characterized by specialized production capabilities and often involves long-term contracts with government entities. FN America LLC is a significant player in this market. The M240 machine gun is a standard infantry weapon, and its procurement is a routine but critical activity for the Army. Spending in this sub-sector is driven by military readiness requirements and modernization efforts.
Small Business Impact
This contract does not appear to have a small business set-aside. There is no indication of subcontracting plans specifically targeting small businesses within the provided data. The focus is on the prime contractor, FN America LLC, which is a large business.
Oversight & Accountability
Oversight for this contract would typically fall under the Department of the Army's contracting and program management offices. Inspector General (IG) investigations could be initiated if any irregularities or fraud were suspected. Transparency is limited by the sole-source nature and the lack of publicly available detailed performance reports or cost justifications.
Related Government Programs
- M240B Machine Gun Procurement
- Small Arms Manufacturing Contracts
- Department of Defense Ordnance Procurement
- FN America LLC Defense Contracts
Risk Flags
- Sole-source award justification required.
- Potential for non-competitive pricing.
- Need for detailed cost and performance analysis.
Tags
defense, department-of-defense, department-of-the-army, fn-america-llc, m240-machine-gun, small-arms, ordnance, sole-source, fixed-price-level-of-effort, manufacturing, south-carolina, 2008-2012
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $14.5 million to FN AMERICA LLC. M240, M240C, M240D, AND M240E1 MACHINE GUNS - VARIOUS QUANTITIES
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 $14.5 million.
What is the period of performance?
Start: 2008-08-01. End: 2012-03-31.
What is the historical spending trend for M240 machine guns by the Department of the Army?
Analyzing historical spending trends for M240 machine guns requires aggregating data from multiple contract awards over several years. This specific contract represents a portion of that spending between 2008 and 2012. To understand the broader trend, one would need to examine all contracts awarded for M240 variants, including modifications, spare parts, and sustainment, across different fiscal years. Factors influencing spending include operational tempo, inventory levels, planned upgrades, and budget allocations. Without a comprehensive dataset of all M240-related procurements, it is difficult to establish a definitive spending trend solely from this single award.
How does the unit cost of the M240 machine gun under this contract compare to other similar procurements?
Determining the precise unit cost requires dividing the total contract value by the number of units procured. However, the contract is for 'various quantities' and is a 'fixed-price level-of-effort,' making a direct unit cost calculation difficult without knowing the exact number of machine guns delivered. Furthermore, comparing unit costs is complex due to variations in contract types, quantities, specific configurations (e.g., M240B, M240L), included accessories, and the time of procurement. Sole-source awards, like this one, often lack the competitive pressure that drives down prices, potentially leading to higher unit costs compared to competitively awarded contracts for similar items.
What is FN America LLC's track record with the Department of Defense for weapon system manufacturing?
FN America LLC has a long-standing and significant track record with the Department of Defense, particularly in the manufacturing of small arms. They are the original equipment manufacturer (OEM) for the M240 family of machine guns, as well as other key weapon systems such as the M249 Squad Automatic Weapon and the M4/M4A1 carbine. Their history includes numerous contracts for production, upgrades, and spare parts. This extensive experience suggests a deep understanding of military requirements and production capabilities, although the nature of sole-source awards warrants careful review of pricing and performance.
What are the risks associated with a sole-source award for critical weapon systems?
Sole-source awards for critical weapon systems carry several risks. Primarily, the absence of competition can lead to inflated prices, as the government lacks the leverage of multiple bids to negotiate the best value. This can result in higher costs for taxpayers. Additionally, sole-sourcing can stifle innovation by reducing the incentive for alternative suppliers to develop competing technologies or more cost-effective manufacturing processes. It also creates a dependency on a single supplier, which can be a vulnerability if that supplier faces production issues, financial instability, or geopolitical challenges. Ensuring robust oversight and justification for sole-source awards is crucial to mitigate these risks.
How does the fixed-price level-of-effort contract type impact cost control and contractor performance?
A Fixed-Price Level-of-Effort (FPLE) contract guarantees payment for a specified level of effort (e.g., labor hours) at a fixed price, regardless of the exact quantity or final outcome. This type of contract is often used when the government knows the effort required but not the precise quantity or end product. While it provides cost certainty for the government regarding the effort expended, it can be less effective at controlling overall costs compared to firm-fixed-price contracts with defined deliverables. Contractor performance is measured against the completion of the agreed-upon effort. There's a risk that the contractor might focus on expending hours rather than achieving optimal efficiency or delivering the most value, especially in a sole-source scenario where there's less pressure to innovate for cost savings.
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
Solicitation ID: W52H0907R0477
Offers Received: 1
Pricing Type: FIXED PRICE LEVEL OF EFFORT (B)
Evaluated Preference: NONE
Contractor Details
Parent Company: Societ Herstalienne Pour LA Finance L'industrielle ET LE C (UEI: 370005936)
Address: 797 OLD CLEMSON RD, COLUMBIA, SC, 90
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Foreign-Owned and U.S.-Incorporated Business, Limited Liability Corporation, Manufacturer of Goods, Not Designated a Small Business, Special Designations
Financial Breakdown
Contract Ceiling: $14,460,294
Exercised Options: $14,460,294
Current Obligation: $14,460,294
Contract Characteristics
Cost or Pricing Data: YES
Timeline
Start Date: 2008-08-01
Current End Date: 2012-03-31
Potential End Date: 2012-03-31 00:00:00
Last Modified: 2013-03-27
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