DoD's $19.4M contract for improved 30-round magazines awarded to Okay Industries, Inc

Contract Overview

Contract Amount: $19,429,800 ($19.4M)

Contractor: Okay Industries, Inc.

Awarding Agency: Department of Defense

Start Date: 2009-08-18

End Date: 2012-04-30

Contract Duration: 986 days

Daily Burn Rate: $19.7K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: IMPROVED 30 ROUND MAGAZINE

Place of Performance

Location: NEW BRITAIN, HARTFORD County, CONNECTICUT, 06051

State: Connecticut Government Spending

Plain-Language Summary

Department of Defense obligated $19.4 million to OKAY INDUSTRIES, INC. for work described as: IMPROVED 30 ROUND MAGAZINE Key points: 1. Value for money assessed through comparison with similar procurement actions. 2. Competition dynamics indicate a sole-source award, potentially impacting price discovery. 3. Risk indicators include the sole-source nature and firm-fixed-price contract type. 4. Performance context is a 986-day duration for the supply of magazines. 5. Sector positioning within defense manufacturing, specifically small arms and ordnance.

Value Assessment

Rating: fair

The contract value of $19.4 million for 30-round magazines appears within a reasonable range for defense procurement, though a direct comparison to similar recent awards for identical items is needed for a definitive value assessment. The firm-fixed-price structure shifts risk to the contractor, which can be beneficial if costs are well-managed. However, without competitive bidding, it's harder to ascertain if the price reflects the best possible value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. This approach is typically used when only one source is capable of meeting the requirement, or in specific circumstances where competition is not feasible or advantageous. The lack of competition means there was no opportunity for multiple bidders to offer their best prices, potentially leading to a higher cost than if it had been competed.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive pressure to drive down costs. The government did not benefit from the price discovery mechanism inherent in a competitive bidding process.

Public Impact

The primary beneficiaries are the U.S. Army personnel who will receive the improved 30-round magazines. The service delivered is the supply of critical small arms accessories. The geographic impact is national, supporting U.S. military operations. Workforce implications are related to manufacturing jobs within the defense industrial base.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition.
Firm-fixed-price contract may not capture potential cost savings from efficiencies.
Lack of transparency in the justification for sole-source award.

Positive Signals

Contract awarded to a known entity in the defense manufacturing sector.
Firm-fixed-price contract provides cost certainty for the government.
Specific product improvement suggests an effort to enhance equipment.

Sector Analysis

This contract falls within the defense manufacturing sector, specifically the sub-sector of small arms and ordnance manufacturing. The market for such components is driven by military demand, with significant government oversight and procurement processes. Comparable spending benchmarks would involve analyzing other contracts for similar ammunition feeding devices or small arms components awarded by the Department of Defense.

Small Business Impact

This contract was not set aside for small businesses, nor does it appear to have significant subcontracting implications for small businesses based on the provided data. The award went to Okay Industries, Inc., which is likely a larger entity within the defense supply chain. The absence of small business involvement in this specific award means no direct boost to the small business defense ecosystem from this particular contract.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Army's contracting command and potentially the Department of Defense's Inspector General. Accountability measures are inherent in the firm-fixed-price contract type, requiring the contractor to deliver specified goods. Transparency is limited by the sole-source nature of the award, with the justification for this approach being a key area for scrutiny.

Related Government Programs

Department of the Army Small Arms Procurement
Ordnance and Accessories Manufacturing Contracts
Defense Logistics Agency (DLA) Contracts
Small Arms Ammunition Components

Risk Flags

Sole-source award lacks competitive pricing.
Potential for overpayment without competitive benchmarking.
Supply chain risk associated with single-source dependency.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $19.4 million to OKAY INDUSTRIES, INC.. IMPROVED 30 ROUND MAGAZINE

Who is the contractor on this award?

The obligated recipient is OKAY INDUSTRIES, 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 $19.4 million.

What is the period of performance?

Start: 2009-08-18. End: 2012-04-30.

What is the specific improvement in the 30-round magazine that justified this contract?

The data indicates the contract is for an 'IMPROVED 30 ROUND MAGAZINE.' While the specific nature of the improvement is not detailed in the provided snippet, it suggests enhancements over previous or standard models. These improvements could relate to durability, reliability, ease of use, weight reduction, or compatibility with newer weapon systems. Such upgrades are common in military procurement to maintain technological superiority and operational effectiveness. Further documentation, such as technical specifications or source selection documents, would be required to detail the exact improvements.

How does the unit price of these magazines compare to market rates or similar government contracts?

The total contract value is $19,429,800 for an unspecified quantity of magazines, making a direct unit price calculation impossible without the quantity. However, if we assume a typical quantity for such a contract, the unit price could be estimated. Without the quantity, a precise comparison to market rates or similar government contracts is not feasible. Generally, sole-source awards can result in higher unit prices compared to competitively procured items due to the lack of price pressure from multiple bidders. Benchmarking would require knowing the quantity and comparing it against historical data for similar magazine procurements.

What is Okay Industries, Inc.'s track record with the Department of Defense for similar products?

Okay Industries, Inc. has a history of supplying defense products, including firearm components, to the U.S. military. Their involvement in producing magazines suggests they are an established manufacturer in this niche. The 'IMPROVED 30 ROUND MAGAZINE' designation implies a potential prior relationship or a recognized capability to meet specific performance enhancements required by the Army. A deeper dive into their contract history with DoD would reveal the volume, types, and success rates of their previous awards, providing a clearer picture of their reliability and performance.

What are the risks associated with a sole-source award for critical equipment like magazines?

The primary risk of a sole-source award is the potential for inflated pricing due to the lack of competitive bidding. Without competing offers, the government may not achieve the best possible value. Another risk is dependency on a single supplier, which can create vulnerabilities in the supply chain if the sole source experiences production issues, financial instability, or geopolitical disruptions. Furthermore, it can stifle innovation by not encouraging other potential manufacturers to develop competing or superior products. Transparency regarding the justification for the sole-source award is crucial to mitigate these risks.

How does the firm-fixed-price contract type impact cost control and contractor performance?

A firm-fixed-price (FFP) contract is generally preferred by the government when the scope of work is well-defined and risks can be reasonably estimated. Under an FFP contract, the contractor agrees to a total price for a well-defined product or service. This shifts the risk of cost overruns to the contractor, providing cost certainty for the buyer. For the contractor, it incentivizes efficiency and cost control to maximize profit. However, if the initial price is set too high due to inadequate negotiation or lack of competition, the government may end up overpaying. Performance is typically monitored against delivery schedules and quality specifications.

What is the historical spending pattern for 30-round magazines by the Department of the Army?

Historical spending on 30-round magazines by the Department of the Army would likely show consistent procurement to meet the needs of infantry units. Spending patterns would fluctuate based on operational tempo, inventory levels, and the introduction of new weapon systems or magazine technologies. Contracts could range from small, competitive purchases for standard magazines to larger, potentially sole-source awards for specialized or improved versions like the one awarded to Okay Industries. Analyzing past contracts would reveal average quantities, price trends, and the prevalence of competitive versus sole-source awards over time.

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: W52H0908R0415

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 200 ELLIS ST, NEW BRITAIN, CT, 05

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Federally Funded Research and Development Corp, Manufacturer of Goods, Small Business, Special Designations, Subchapter S Corporation, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $19,429,800

Exercised Options: $19,429,800

Current Obligation: $19,429,800

Contract Characteristics

Cost or Pricing Data: YES

Timeline