Department of the Army awards $32.8M contract for PGU Ammunition, with Alliant Techsystems Operations LLC as the primary contractor

Contract Overview

Contract Amount: $32,853,141 ($32.9M)

Contractor: Alliant Techsystems Operations LLC

Awarding Agency: Department of Defense

Start Date: 2012-09-18

End Date: 2016-04-30

Contract Duration: 1,320 days

Daily Burn Rate: $24.9K/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: PGU AMMUNITION

Place of Performance

Location: MINNEAPOLIS, HENNEPIN County, MINNESOTA, 55442

State: Minnesota Government Spending

Plain-Language Summary

Department of Defense obligated $32.9 million to ALLIANT TECHSYSTEMS OPERATIONS LLC for work described as: PGU AMMUNITION Key points: 1. Contract awarded through full and open competition after exclusion of sources, indicating a specific justification for limiting initial bidders. 2. The contract type is a definitive contract with a firm fixed price, suggesting predictable costs for the government. 3. The duration of 1320 days (approximately 3.6 years) indicates a long-term need for these ammunition supplies. 4. The North American Industry Classification System (NAICS) code 332993 points to the manufacturing of ammunition, excluding small arms. 5. The contract value of $32.8 million falls within a moderate spending range for defense procurement. 6. The award was made to Alliant Techsystems Operations LLC, a known defense contractor. 7. The contract was not set aside for small businesses, suggesting larger prime contractors were targeted. 8. The contract was not awarded to a small business, indicating the prime contractor is likely a large entity.

Value Assessment

Rating: good

The contract value of $32.8 million for PGU ammunition over approximately 3.6 years appears reasonable given the nature of defense procurement. Without specific per-unit cost data or direct comparisons to similar recent contracts for the same type of ammunition, a precise value-for-money assessment is challenging. However, the firm fixed-price structure provides cost certainty. The award to a single, established contractor suggests a focus on reliable supply chains and proven manufacturing capabilities, which can sometimes come at a premium compared to highly competitive, lower-priced bids.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded under 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES.' This solicitation type indicates that while the competition was intended to be open, certain sources were excluded, likely due to specific requirements, existing contracts, or national security considerations. The number of bidders is not explicitly stated in the provided data, but the 'exclusion of sources' suggests a potentially narrower field than a completely open competition. This approach can sometimes lead to higher prices if the excluded sources represent significant competition.

Taxpayer Impact: Taxpayers may see slightly higher costs due to the exclusion of potential bidders, but this approach might be justified if it ensures specialized capabilities or national security requirements are met.

Public Impact

The primary beneficiaries are the Department of the Army and its personnel, who will receive essential ammunition for training and operations. The services delivered include the manufacturing and supply of PGU ammunition, crucial for various military applications. The geographic impact is primarily within the United States, where the manufacturing and distribution of this ammunition would occur. Workforce implications include employment opportunities within Alliant Techsystems Operations LLC and its supply chain, particularly in Minnesota where the contractor is located.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The 'exclusion of sources' in the competition method warrants scrutiny to ensure it was fully justified and did not unduly limit competition, potentially increasing costs.
Lack of detailed performance metrics or quality assurance data in the provided summary makes it difficult to assess the contractor's past performance and reliability.
The firm fixed-price contract, while offering cost certainty, could lead to the contractor absorbing less risk if unforeseen production issues arise, potentially impacting overall value.
The absence of small business subcontracting goals or reporting in the summary raises questions about the extent to which small businesses benefit from this contract.

Positive Signals

The award to Alliant Techsystems Operations LLC, a known defense contractor, suggests a reliance on established expertise and a proven track record in ammunition manufacturing.
The firm fixed-price contract structure provides budget predictability for the Department of the Army, minimizing the risk of cost overruns.
The definitive contract award indicates a commitment to a specific supply of ammunition, ensuring availability for military needs.
The contract duration of over three years suggests a stable and long-term supply chain for critical defense materiel.

Sector Analysis

The defense sector, particularly ammunition manufacturing, is characterized by high barriers to entry, stringent quality control, and significant government oversight. Contracts like this are vital for maintaining national defense readiness. The market size for defense ammunition is substantial, driven by military budgets and geopolitical factors. Alliant Techsystems Operations LLC is a major player in this space, often competing for large-scale contracts. Benchmarks for similar ammunition contracts would typically consider factors like quantity, specific type of munition, and contract duration.

Small Business Impact

This contract was not set aside for small businesses, and the data indicates the prime contractor is not a small business. This suggests that the procurement was aimed at larger, established defense manufacturers. While there are no explicit small business set-aside requirements mentioned, there may be opportunities for small businesses to participate as subcontractors to Alliant Techsystems Operations LLC. The extent of this subcontracting and its impact on the small business ecosystem would depend on the prime contractor's subcontracting plan and execution.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and procurement regulations, managed by the Department of the Army. Accountability measures are inherent in the firm fixed-price contract type, which holds the contractor responsible for delivering goods within the agreed-upon price. Transparency is generally maintained through contract databases like FPDS, though specific performance details and audits may be less publicly accessible. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Department of Defense Ammunition Procurement
Army Combat Ammunition Systems
Defense Industrial Base Manufacturing
Ordnance and Ammunition Manufacturing Contracts

Risk Flags

Competition Method Justification
Contractor Performance History
Unit Cost Analysis
Small Business Subcontracting Opportunities

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $32.9 million to ALLIANT TECHSYSTEMS OPERATIONS LLC. PGU AMMUNITION

Who is the contractor on this award?

The obligated recipient is ALLIANT TECHSYSTEMS OPERATIONS 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 $32.9 million.

What is the period of performance?

Start: 2012-09-18. End: 2016-04-30.

What is the specific type of PGU ammunition being procured, and what are its primary military applications?

The provided data identifies the product as 'PGU AMMUNITION' and the NAICS code as '332993' (Ammunition (except Small Arms) Manufacturing). PGU typically refers to 'Programable Gun Unit' ammunition, often used in aircraft cannons or other advanced weapon systems. These rounds are designed for precision and can be programmed for specific detonation timings or impact effects. Their primary military applications include air-to-air combat, ground attack missions by aircraft, and potentially defensive systems on naval vessels or ground platforms. The exact specifications would be detailed in the contract's statement of work, which is not publicly available in this summary.

How does the contract value of $32.8 million compare to historical spending on similar PGU ammunition contracts?

Comparing the $32.8 million contract value requires access to historical data for similar PGU ammunition procurements by the Department of the Army or other branches. Without specific historical contract details (quantity, unit price, duration, specific PGU variant), a direct comparison is difficult. However, $32.8 million over approximately 3.6 years suggests an average annual spending of roughly $9.1 million. This figure needs to be contextualized against the scale of military operations, inventory needs, and the unit cost of advanced munitions. Larger, multi-year contracts for major weapon systems often run into hundreds of millions or billions, placing this contract in a moderate spending category for a specific type of ammunition.

What are the potential risks associated with a 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES' award method?

The 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES' method presents several potential risks. Primarily, it can limit the pool of potential bidders, potentially reducing overall competition and leading to higher prices than a truly open competition might yield. The justification for excluding sources must be robust; if not, it could be seen as an artificial barrier. This method might also exclude innovative solutions or more cost-effective approaches from companies that were not initially considered. For taxpayers, the risk is paying a premium due to reduced market pressure. Ensuring the exclusion was necessary for national security, specialized capabilities, or existing infrastructure integration is crucial for mitigating these risks.

What is Alliant Techsystems Operations LLC's track record in fulfilling defense ammunition contracts?

Alliant Techsystems Operations LLC (now part of Northrop Grumman) has a long and significant track record in fulfilling defense contracts, particularly in munitions and aerospace. They are a major supplier of various types of ammunition, propellants, and related defense products to the U.S. military and allied nations. Their history includes large-scale contracts for artillery shells, mortar rounds, and advanced munitions. While specific performance details for every contract are not always public, their continued success in winning substantial defense awards suggests a generally reliable performance history. However, like any large contractor, they may have faced challenges or scrutiny on specific programs over the years.

How does the firm fixed-price (FFP) contract type impact the government's risk and potential value for money?

A Firm Fixed-Price (FFP) contract type places the primary cost risk on the contractor. This means Alliant Techsystems Operations LLC is obligated to deliver the PGU ammunition for the agreed-upon price, regardless of their actual costs incurred during production. For the government (Department of the Army), this offers significant budget certainty and predictability, minimizing the risk of cost overruns. From a value-for-money perspective, FFP contracts are generally considered advantageous when the scope of work is well-defined and the contractor has a clear understanding of costs. It incentivizes the contractor to control costs efficiently to maximize profit. However, if the initial price is set too high due to inadequate competition or poor estimation, the government might overpay.

What are the implications of this contract not being a small business set-aside?

The fact that this contract was not designated as a small business set-aside implies that the procurement was likely aimed at large defense contractors with the capacity and expertise to handle the production of PGU ammunition. This is common for specialized or high-volume defense manufacturing. For small businesses, it means they were not the primary target recipients of this specific award. However, it does not preclude them from participating indirectly. Small businesses may have opportunities to serve as subcontractors to Alliant Techsystems Operations LLC, supplying components, materials, or specialized services. The overall impact on the small business ecosystem depends on the prime contractor's subcontracting efforts and the specific capabilities of small firms within the defense supply chain.

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: W52P1J12R0030

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Innovation Systems LLC (UEI: 618705925)

Address: 4700 NATHAN LN N, PLYMOUTH, MN, 55442

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $32,853,141

Exercised Options: $32,853,141

Current Obligation: $32,853,141

Contract Characteristics

Consolidated Contract: Yes

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline