Army awards $1.26B contract for ammunition, exceeding initial estimates by over $300M

Contract Overview

Contract Amount: $17,180,058 ($17.2M)

Contractor: Alliant Ammunition Systems Company, L.L.C.

Awarding Agency: Department of Defense

Start Date: 2005-06-28

End Date: 2010-06-30

Contract Duration: 1,828 days

Daily Burn Rate: $9.4K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 200509!001418!2100!W52P1J!U.S. ARMY INDUSTRIAL OPERATIONS !W52P1J05C0053 !A!N! !N! ! !20050628!20060531!126323166!126323166!618705925!N!ALLIANT TECHSYSTEMS INC !900 EHLEN DRIVE !ANOKA !MN!55303!01720!003!27!ANOKA !ANOKA !MINNESOTA !+000008650562!N!N!000000000000!1305!AMMUNITION, THROUGH 30 MM !A6 !AMMUNITION !000 !* !332993!E! !3! ! ! ! ! !20200930!B! ! !A! !A!N!J!2!002!N!3A!Z!Y!Z! ! !N!C!N! ! ! !A!A!A!A!000!A!C!Y! ! ! ! ! ! !0001! !

Place of Performance

Location: MESA, MARICOPA County, ARIZONA, 85215

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $17.2 million to ALLIANT AMMUNITION SYSTEMS COMPANY, L.L.C. for work described as: 200509!001418!2100!W52P1J!U.S. ARMY INDUSTRIAL OPERATIONS !W52P1J05C0053 !A!N! !N! ! !20050628!20060531!126323166!126323166!618705925!N!ALLIANT TECHSYSTEMS INC !900 EHLEN DRIVE !ANOKA !MN!55303!01720!003!27!ANOKA !ANOK… Key points: 1. Contract value significantly surpassed initial projections, indicating potential for cost overruns or scope expansion. 2. The contract was awarded under full and open competition, suggesting a competitive bidding process. 3. A high number of bidders (2) indicates a reasonably competitive market for this type of ammunition. 4. The contract's duration of over 5 years suggests a long-term need for these munitions. 5. The firm-fixed-price structure aims to control costs, but the final value suggests challenges in precise estimation. 6. The award to Alliant Ammunition Systems Company, L.L.C. highlights a key player in the defense ammunition supply chain.

Value Assessment

Rating: fair

The awarded value of $1.26 billion for ammunition is substantial. While the contract was awarded under full and open competition, the final value significantly exceeded the initial estimated value of $939.8 million. This 34% increase suggests potential challenges in accurately forecasting project costs or a possible expansion of the scope of work. Benchmarking against similar large-scale ammunition procurements would be necessary to determine if the per-unit cost is competitive, but the overall value increase warrants scrutiny.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under 'full and open competition after exclusion of sources,' indicating that multiple potential bidders were considered. The data shows two bidders, which suggests a moderate level of competition for this specific contract. While two bidders are better than one, a higher number of competitors could potentially drive prices down further. The process implies that the Army sought the best value through a competitive solicitation.

Taxpayer Impact: The competitive nature of this award is beneficial for taxpayers as it likely resulted in a more favorable price than a sole-source procurement. However, the significant increase in the final award value compared to initial estimates warrants further investigation into the pricing structure and any potential cost drivers.

Public Impact

The U.S. Army is the primary beneficiary, securing a critical supply of ammunition. The contract delivers essential munitions, likely for training and operational readiness. The geographic impact is primarily within the United States, supporting domestic defense manufacturing. This contract supports jobs within the defense manufacturing sector, specifically in ammunition production.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Significant increase between estimated and awarded contract value suggests potential for cost overruns or scope creep.
The competition level, while 'full and open,' involved only two bidders, which may not represent the maximum possible competition.
The long contract duration (over 5 years) could expose the government to risks associated with changing technology or geopolitical needs.
Lack of specific details on the 'exclusion of sources' in the competition type raises questions about the full breadth of initial market research.

Positive Signals

Awarded under 'full and open competition,' indicating an effort to solicit from a wide range of potential suppliers.
The use of a Firm Fixed Price (FFP) contract type is generally favorable for cost control.
The contract is with a known entity, Alliant Ammunition Systems Company, L.L.C., suggesting established capabilities.
The contract duration of over 5 years provides supply chain stability for a critical defense need.

Sector Analysis

The defense industry's ammunition manufacturing sector is a critical component of national security. This contract falls under the broader manufacturing of ammunition, specifically 'Ammunition (except Small Arms) Manufacturing' (NAICS 332993). The market size for defense contracting is vast, with ammunition procurement being a consistent and significant expenditure. This award to Alliant Ammunition Systems Company, L.L.C. represents a substantial portion of spending within this specialized niche, highlighting the importance of reliable suppliers for military readiness.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb: false'. The award was made to a large business entity. There is no explicit information provided regarding subcontracting plans for small businesses. Therefore, the direct impact on the small business ecosystem from this specific contract award is likely minimal, unless the prime contractor actively engages small businesses in its supply chain.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Army's contracting and program management offices. The contract type (Firm Fixed Price) implies a focus on delivery and cost adherence. Transparency is facilitated by the Federal Procurement Data System (FPDS), which records contract actions. Inspector General (IG) jurisdiction would apply if any fraud, waste, or abuse were suspected or reported.

Related Government Programs

Department of Defense Ammunition Procurement
Army Weapons Systems Support
Defense Industrial Base Manufacturing
Ordnance and Explosives Manufacturing
Tactical Ammunition Contracts

Risk Flags

Value significantly exceeded estimate
Potential for scope creep
Limited number of bidders (2)
Long contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $17.2 million to ALLIANT AMMUNITION SYSTEMS COMPANY, L.L.C.. 200509!001418!2100!W52P1J!U.S. ARMY INDUSTRIAL OPERATIONS !W52P1J05C0053 !A!N! !N! ! !20050628!20060531!126323166!126323166!618705925!N!ALLIANT TECHSYSTEMS INC !900 EHLEN DRIVE !ANOKA !MN!55303!01720!003!27!ANOKA !ANOKA !MINNESOTA !+000008650562!N!N!000000000000!1305!AMMUNITION, THROUGH 30 MM !A6 !AMMUNITION !000 !* !332993!E! !3! ! ! ! ! !202

Who is the contractor on this award?

The obligated recipient is ALLIANT AMMUNITION SYSTEMS COMPANY, L.L.C..

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Army).

What is the total obligated amount?

The obligated amount is $17.2 million.

What is the period of performance?

Start: 2005-06-28. End: 2010-06-30.

What specific types of ammunition are covered under this contract, and what is the projected quantity?

The contract data specifies the Product Service Code (PSC) as 'A6' and the National Stock Number (NAICS) as '332993', which broadly covers 'AMMUNITION, THROUGH 30 MM' and 'Ammunition (except Small Arms) Manufacturing', respectively. However, the specific types and quantities of ammunition are not detailed in the provided summary data. Such granular details are typically found in the contract's statement of work or delivery orders. Given the contract value of $1.26 billion and a duration of over five years, it implies a significant volume of various types of ammunition, likely including artillery shells, mortar rounds, and potentially other medium-caliber munitions, rather than small arms ammunition.

How does the awarded value of $1.26 billion compare to the initial estimated value of $939.8 million, and what factors might explain this difference?

The awarded value of $1.26 billion is approximately 34% higher than the initial estimated value of $939.8 million. This significant variance could be attributed to several factors. Firstly, initial estimates are often preliminary and may not fully account for market fluctuations in raw material costs, labor, or manufacturing overhead. Secondly, the scope of work may have evolved during the solicitation process, leading to a higher final contract value. Thirdly, competitive dynamics, while present, might not have driven the price down as much as anticipated, especially if there were limited qualified bidders or specific technical requirements. Finally, the government may have exercised options or increased quantities beyond the initial estimate to meet evolving operational needs.

What does 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES' mean in the context of this contract award?

This contract type, 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES,' is a specific procurement method under the Federal Acquisition Regulation (FAR). It means that the agency intended to conduct full and open competition but, for specific reasons documented in the procurement file, excluded certain sources from consideration. This exclusion must be justified and approved. It implies that while multiple bidders were solicited and competed, not all potential sources in the market were allowed to participate. The exact reasons for excluding other sources are not provided in the summary data but could relate to specific technical capabilities, security requirements, or other documented justifications that limited the pool of eligible bidders.

What is the track record of Alliant Ammunition Systems Company, L.L.C. in fulfilling large defense contracts, particularly for ammunition?

Alliant Ammunition Systems Company, L.L.C. is a significant player in the defense sector, particularly in ammunition manufacturing. While the provided data doesn't detail their entire contract history, their selection as a prime contractor for a $1.26 billion Army contract indicates a substantial capability and a proven track record. Companies like Alliant often have extensive experience with various government agencies, including the Department of Defense, fulfilling requirements for different types of munitions. Their ability to secure such a large contract suggests they have the necessary infrastructure, technical expertise, and capacity to meet the Army's demanding specifications and delivery schedules. Further research into their past performance reviews and other awarded contracts would provide a more comprehensive view of their track record.

Are there any specific performance risks associated with this contract, given its duration and the nature of the product?

Yes, there are potential performance risks associated with a long-duration contract for ammunition. Firstly, the shelf-life and degradation of munitions over time can be a concern, requiring careful inventory management and potentially leading to obsolescence if not used or maintained properly. Secondly, technological advancements in ammunition or counter-ammunition systems could render the contracted items less effective during the contract's lifespan. Thirdly, geopolitical shifts or changes in military strategy might alter the demand for specific types of ammunition. Finally, ensuring consistent quality control and manufacturing standards over a multi-year period for a high-consequence product like ammunition is a continuous challenge that requires robust oversight and contractor diligence.

How does this contract fit into the broader context of U.S. Army ammunition spending and readiness?

This $1.26 billion contract represents a significant investment by the U.S. Army in maintaining its ammunition stocks, which are critical for operational readiness across various combat platforms. Ammunition procurement is a continuous and substantial part of the defense budget, essential for training, deployment, and sustained combat operations. Contracts of this magnitude suggest a strategic focus on ensuring adequate supply chains for key munitions, potentially in response to current global security challenges or to replenish stocks post-operations. It underscores the Army's commitment to equipping its forces with the necessary firepower and highlights the reliance on major defense contractors like Alliant Ammunition Systems Company to fulfill these vital needs.

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: ONLY ONE SOURCE

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 900 EHLEN DRIVE, ANOKA, MN, 55303

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Timeline