DoD's $30.5M cartridge contract awarded to General Dynamics shows fair value with 2 bidders

Contract Overview

Contract Amount: $30,515,215 ($30.5M)

Contractor: General Dynamics Ordnance & Tactical Systems, Inc.

Awarding Agency: Department of Defense

Start Date: 2012-09-18

End Date: 2016-04-30

Contract Duration: 1,320 days

Daily Burn Rate: $23.1K/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 13 D/B CARTRIDGE

Place of Performance

Location: MARION, WILLIAMSON County, ILLINOIS, 62959

State: Illinois Government Spending

Plain-Language Summary

Department of Defense obligated $30.5 million to GENERAL DYNAMICS ORDNANCE & TACTICAL SYSTEMS, INC. for work described as: PGU 13 D/B CARTRIDGE Key points: 1. Contract value appears reasonable given the product and competition level. 2. Limited competition dynamics may have influenced final pricing. 3. Contract performance risk appears low due to contractor's experience. 4. This contract supports essential ammunition needs for the Army. 5. The contract falls within the broader defense manufacturing sector. 6. Small business participation was not a stated requirement.

Value Assessment

Rating: good

The contract's total value of $30.5 million for PGU 13 D/B cartridges appears to be within a reasonable range, especially considering it was awarded after a competitive process. Benchmarking against similar ammunition contracts is challenging without more specific data on unit quantities and specifications, but the presence of two bidders suggests a degree of market validation for the price. The firm fixed-price structure also provides cost certainty for the government.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

This contract was awarded under 'Full and Open Competition After Exclusion of Sources,' indicating that while competition was sought, certain sources were excluded. Two bidders participated in this process. The limited number of bidders suggests that the market for this specific type of ammunition may be concentrated among a few specialized manufacturers, potentially impacting the government's leverage in price negotiations.

Taxpayer Impact: With only two bidders, taxpayers may not have benefited from the most aggressive pricing that a wider competitive field could have generated. However, the exclusion of sources was justified, implying a strategic decision by the agency.

Public Impact

The primary beneficiaries are the Department of the Army, receiving critical ammunition for its operations. The service delivered is the supply of PGU 13 D/B cartridges, essential for certain aircraft and weapon systems. The geographic impact is primarily within the United States, where the contractor operates and the ammunition will be utilized. Workforce implications include supporting jobs in defense manufacturing at the contractor's facilities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition could lead to higher prices than a broader bidding process.
Exclusion of sources requires clear justification to ensure fairness and value.
Dependence on a few specialized contractors can create supply chain vulnerabilities.

Positive Signals

Firm fixed-price contract provides cost predictability.
Award to an established contractor like General Dynamics suggests reliability.
Contract duration of 1320 days indicates a sustained supply capability.

Sector Analysis

This contract falls within the defense manufacturing sector, specifically focusing on ammunition production. The market for specialized ammunition is often characterized by high barriers to entry due to technical expertise, manufacturing capabilities, and stringent quality control requirements. Spending in this sub-sector is driven by military readiness and operational demands. Comparable spending benchmarks would typically be found within the broader DoD ammunition procurement categories.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. There is no explicit mention of subcontracting goals for small businesses. This suggests that the primary focus was on securing the specialized ammunition from capable large manufacturers, with limited direct impact on the small business defense contracting ecosystem for this specific award.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and program management offices. Accountability measures are embedded in the firm fixed-price contract structure, which shifts cost risk to the contractor. Transparency is generally maintained through contract award databases, though specific performance details may be sensitive. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Department of Defense Ammunition Procurement
Ordnance and Munitions Manufacturing
Aircraft Ammunition Contracts
General Dynamics Contracts

Risk Flags

Limited competition
Exclusion of sources requires justification
Potential for concentrated market

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $30.5 million to GENERAL DYNAMICS ORDNANCE & TACTICAL SYSTEMS, INC.. PGU 13 D/B CARTRIDGE

Who is the contractor on this award?

The obligated recipient is GENERAL DYNAMICS ORDNANCE & TACTICAL SYSTEMS, 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 $30.5 million.

What is the period of performance?

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

What is the historical spending pattern for PGU 13 D/B cartridges by the Department of Defense?

Historical spending data for specific ammunition types like the PGU 13 D/B cartridge can be complex to isolate due to variations in contract vehicles, quantities, and fiscal years. However, aggregate spending on ammunition by the Department of Defense runs into billions of dollars annually. Contracts for such specialized munitions are often awarded through competitive processes, but can also be sole-source or limited competition due to the niche nature of the product and the limited number of qualified manufacturers. Analyzing past awards to General Dynamics Ordnance & Tactical Systems, Inc. and other key defense contractors for similar ordnance would provide a clearer picture of price trends and volume fluctuations over time.

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

Determining an exact unit price benchmark for the PGU 13 D/B cartridges is difficult without the specific quantity and detailed specifications from the contract award. The total award of $30.5 million over a period of 1320 days (approximately 3.6 years) suggests an average annual value of roughly $8.4 million. If we assume a significant quantity, the per-unit cost could be in the tens or hundreds of dollars, depending on the exact munition. General Dynamics is a major supplier, and their pricing is generally competitive within the defense industrial base. However, without direct comparisons to other recent awards for the same or highly similar items, a precise value-for-money assessment on a per-unit basis remains challenging.

What is General Dynamics Ordnance & Tactical Systems, Inc.'s track record with similar DoD contracts?

General Dynamics Ordnance & Tactical Systems, Inc. (GD-OTS) has a long-standing and extensive track record as a prime contractor for the U.S. Department of Defense, supplying a wide array of munitions, ordnance, and tactical systems. They are a significant producer of various types of ammunition, including artillery shells, mortar rounds, and aircraft munitions. Their history with the DoD includes numerous large-scale contracts, often awarded through competitive processes, demonstrating their capability to meet stringent military specifications, quality standards, and delivery schedules. GD-OTS is recognized for its manufacturing capacity and technical expertise in ordnance production, making them a reliable, albeit sometimes sole-source or limited-source, provider for critical defense materiel.

What are the potential risks associated with this contract, and how are they mitigated?

Potential risks for this contract include supply chain disruptions, manufacturing defects, or cost overruns if the firm fixed-price structure is insufficient to cover unforeseen expenses. Given that General Dynamics is an established large defense contractor, the risk of contractor failure is relatively low. Mitigation strategies employed by the DoD typically involve robust quality assurance and inspection processes throughout production, adherence to strict delivery schedules, and contract clauses that penalize non-performance. The firm fixed-price nature of the contract itself mitigates financial risk for the government by capping the total expenditure, provided the scope remains unchanged.

How does the competition level (limited) impact the overall value and efficiency for the taxpayer?

A limited competition, especially one that excludes certain sources, can potentially reduce the downward pressure on pricing that a fully open and robust competition might exert. While the contract was awarded under 'Full and Open Competition After Exclusion of Sources,' the fact that only two bidders participated suggests a concentrated market for this specific type of ammunition. This can mean that taxpayers may not achieve the lowest possible price. However, the exclusion of sources implies a deliberate agency decision, possibly based on specific technical requirements, security concerns, or the limited number of capable manufacturers. The value to the taxpayer is then balanced against the certainty of obtaining a required, specialized munition from a qualified source.

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: General Dynamics Corp (UEI: 001381284)

Address: 6658 ROUTE 148, MARION, IL, 62959

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

Financial Breakdown

Contract Ceiling: $30,515,215

Exercised Options: $30,515,215

Current Obligation: $30,515,215

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline