DoD's $542M Grenade System Contract Awarded to Amtec Corporation Shows Long-Term Commitment

Contract Overview

Contract Amount: $542,531,121 ($542.5M)

Contractor: Amtec Corporation

Awarding Agency: Department of Defense

Start Date: 2010-02-18

End Date: 2026-09-30

Contract Duration: 6,068 days

Daily Burn Rate: $89.4K/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: 40MM GRENADE FAMILY SYSTEMS FOR FY10-FY14.

Place of Performance

Location: JANESVILLE, ROCK County, WISCONSIN, 53546

State: Wisconsin Government Spending

Plain-Language Summary

Department of Defense obligated $542.5 million to AMTEC CORPORATION for work described as: 40MM GRENADE FAMILY SYSTEMS FOR FY10-FY14. Key points: 1. Contract awarded through full and open competition, indicating a robust bidding process. 2. Long contract duration (6068 days) suggests a sustained need for these systems. 3. Fixed Price with Economic Price Adjustment (FP EP) contract type introduces potential for cost fluctuations. 4. The contract value of over half a billion dollars signifies a substantial investment in ordnance. 5. Amtec Corporation, the sole awardee, has a significant role in supplying these critical components. 6. The contract spans multiple fiscal years, highlighting consistent program support. 7. The award is for ammunition manufacturing, a key defense industrial base sector.

Value Assessment

Rating: good

The total contract value of $542.5 million over approximately 16.6 years represents a significant investment. Benchmarking this against similar long-term ammunition supply contracts is challenging due to the specific nature of the '40MM GRENADE FAMILY SYSTEMS'. However, the fixed-price with economic price adjustment structure suggests an attempt to balance cost certainty with market volatility. The sustained award over many years implies a perceived value and necessity for these systems by the Department of the Army.

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'. While this indicates an initial broad competition, the 'exclusion of sources' clause suggests specific criteria or prior arrangements may have narrowed the field before the final award. The presence of two bids (no: 2) indicates some level of competition, but the exact dynamics of the exclusion are not detailed. This approach aims to ensure fair opportunity while potentially leveraging existing capabilities or specialized technologies.

Taxpayer Impact: The full and open competition, even with exclusions, generally benefits taxpayers by encouraging multiple vendors to bid, driving down prices. However, the specifics of the exclusion could limit the full competitive advantage if it unduly restricted the number of capable bidders.

Public Impact

The Department of Defense, specifically the Department of the Army, benefits from a sustained supply of 40mm grenade family systems. These systems are crucial for infantry operations, providing essential munitions for various tactical scenarios. The contract supports the defense industrial base, particularly in ammunition manufacturing. The geographic impact is primarily within the United States, supporting domestic manufacturing capabilities. Workforce implications include jobs in manufacturing, engineering, and logistics related to ordnance production.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns due to the 'Economic Price Adjustment' clause in a long-term contract.
Reliance on a single contractor (Amtec Corporation) for a critical component could pose supply chain risks.
The 'exclusion of sources' in the competition phase might have limited the full competitive pressure on pricing.
Long contract duration increases exposure to technological obsolescence or shifts in military requirements.

Positive Signals

Awarded through a 'full and open competition' process, suggesting a structured procurement.
The sustained, multi-year nature of the contract indicates a stable and predictable demand, supporting industrial base readiness.
Amtec Corporation's role as the awardee suggests established capabilities in this specific defense niche.
The contract value signifies a significant commitment to equipping forces with necessary ordnance.

Sector Analysis

The contract falls within the Defense Industrial Base sector, specifically focusing on ammunition manufacturing. The North American Industry Classification System (NAICS) code 332993, 'Ammunition (except Small Arms) Manufacturing,' encompasses the production of artillery, missile, and small arms ammunition. This sector is critical for national security, requiring specialized manufacturing capabilities and adherence to stringent quality and safety standards. The total contract value of over $542 million over its duration places it as a significant procurement within this specialized market segment.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). Therefore, there are no direct subcontracting implications or specific benefits for small businesses stemming from a set-aside. The primary contractor, Amtec Corporation, is likely a large business. Any subcontracting opportunities would depend on Amtec's procurement strategy and the availability of small businesses within their supply chain for components or services related to grenade system manufacturing.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and program management structures, with potential involvement from the Department of the Army's specific oversight bodies. Inspector General (IG) jurisdiction would apply for investigations into fraud, waste, or abuse. Transparency is facilitated through contract databases like FPDS, which provide details on awards, values, and contractors. The fixed-price with economic price adjustment (FP EP) structure requires careful monitoring of cost adjustments to ensure they align with economic indices and contract terms.

Related Government Programs

Department of Defense Ammunition Procurement
Army Combat Systems
Ordnance Manufacturing Contracts
Long-Term Defense Supply Contracts
Fixed-Price with Economic Price Adjustment Contracts

Risk Flags

Potential Cost Overruns due to Economic Price Adjustment
Single Source Dependency Risk
Limited Competition Dynamics
Long-Term Contractual Exposure

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $542.5 million to AMTEC CORPORATION. 40MM GRENADE FAMILY SYSTEMS FOR FY10-FY14.

Who is the contractor on this award?

The obligated recipient is AMTEC CORPORATION.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $542.5 million.

What is the period of performance?

Start: 2010-02-18. End: 2026-09-30.

What is Amtec Corporation's track record with similar defense contracts, particularly for ammunition systems?

Amtec Corporation has a history of supplying various defense components, including ammunition. While specific details on their track record for '40MM GRENADE FAMILY SYSTEMS' are not provided in this data snippet, their selection for a contract of this magnitude ($542.5M) suggests they possess the necessary technical capabilities, production capacity, and quality assurance systems required by the Department of the Army. Further investigation into their past performance ratings, delivery history on previous contracts, and any significant issues or commendations would provide a more comprehensive understanding of their reliability and expertise in this domain. Their sustained involvement in defense contracting indicates a level of established competence.

How does the $542.5 million contract value compare to historical spending on 40mm grenade systems?

Direct historical spending comparisons for '40MM GRENADE FAMILY SYSTEMS' are difficult without access to specific historical procurement data for this exact family of systems. However, a contract value exceeding half a billion dollars over its duration indicates a substantial and sustained requirement. This figure suggests that these systems are critical and are being procured in significant quantities to meet operational demands across multiple fiscal years. To benchmark effectively, one would need to analyze aggregate spending on similar caliber munitions or specific grenade launcher ammunition programs over comparable timeframes, considering inflation and changes in military doctrine or threat assessments.

What are the primary risks associated with a Fixed Price with Economic Price Adjustment (FP EP) contract of this duration?

The primary risks with a long-term FP EP contract involve cost volatility and potential for contractor overreach. The 'Economic Price Adjustment' clause allows for price changes based on specified economic factors (e.g., labor, material costs), which can lead to increased costs for the government if these factors rise significantly. For the contractor, the risk is mitigated as they are protected against unforeseen cost increases. Over the contract's 6068-day (approx. 16.6 years) duration, these adjustments can accumulate, potentially leading to costs exceeding initial projections. Careful monitoring of the economic indices and justification for adjustments is crucial for the government to manage this risk effectively and ensure fair pricing.

How does the 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES' impact price discovery and taxpayer value?

The 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES' aims to balance broad market access with specific requirements. Initially, 'full and open' suggests a wide solicitation. However, the 'exclusion of sources' implies that certain potential bidders were disqualified or not considered based on predefined criteria, possibly related to security, capability, or prior relationships. While this can ensure that only qualified entities participate, it may limit the number of bidders, potentially reducing the competitive pressure on price. If the exclusion was overly restrictive, it could lead to less aggressive bidding and potentially higher costs for taxpayers compared to a truly unrestricted full and open competition with maximum bidder participation.

What are the implications of awarding this contract to a single entity (Amtec Corporation) for supply chain resilience?

Awarding a critical supply contract to a single entity, as seen with Amtec Corporation for the 40mm grenade systems, presents inherent supply chain risks. This sole-source dependency means that any disruption at Amtec—whether due to production issues, financial instability, geopolitical events, or natural disasters—could directly impact the Department of the Army's ability to procure these essential munitions. While the initial award may have been based on best value or capability, the government often seeks to mitigate such risks through measures like maintaining strategic reserves, encouraging second-sourcing where feasible, or closely monitoring the contractor's operational health and contingency planning. The long duration further amplifies this risk.

What is the significance of the PSC (Product Service Code) and NAICS (North American Industry Classification System) codes in understanding this contract's scope?

The Product Service Code (PSC) and North American Industry Classification System (NAICS) codes provide crucial context for the contract's scope. Although the PSC is listed as blank (''), the NAICS code 332993, 'Ammunition (except Small Arms) Manufacturing,' clearly defines the industry sector. This code signifies that the contract is for the production of ammunition, excluding small arms ammunition, which typically includes items like mortar rounds, artillery shells, and, relevantly, grenade family systems. Understanding these codes helps categorize the contract within the broader federal procurement landscape, identify relevant industries, and compare spending patterns across similar goods and services.

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: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: W52P1J08R0153

Offers Received: 2

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT (K)

Evaluated Preference: NONE

Contractor Details

Parent Company: National Presto Industries, Inc.

Address: 4230 CAPITAL CIR DR, JANESVILLE, WI, 53546

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $542,531,121

Exercised Options: $542,531,121

Current Obligation: $542,531,121

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline