DoD awards $84.8M for 40mm grenade ammunition, a sole-source contract to AMTEC CORPORATION

Contract Overview

Contract Amount: $84,764,827 ($84.8M)

Contractor: Amtec Corporation

Awarding Agency: Department of Defense

Start Date: 2016-06-07

End Date: 2019-12-31

Contract Duration: 1,302 days

Daily Burn Rate: $65.1K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 40 MILLIMETER GRENADE AMMUNITION CONTRACT

Place of Performance

Location: JANESVILLE, ROCK County, WISCONSIN, 53546

State: Wisconsin Government Spending

Plain-Language Summary

Department of Defense obligated $84.8 million to AMTEC CORPORATION for work described as: 40 MILLIMETER GRENADE AMMUNITION CONTRACT Key points: 1. Contract awarded to a single supplier suggests potential for higher pricing due to lack of competition. 2. The contract duration of 1302 days indicates a long-term need for this specific type of ammunition. 3. Fixed-price contract type aims to transfer cost risk to the contractor, but may not guarantee best value without competition. 4. Awarded by the Department of the Army, this contract supports critical ordnance needs. 5. The North American Industry Classification System (NAICS) code 332993 points to ammunition manufacturing. 6. No small business set-aside was applied, indicating the primary contractor is not a small business.

Value Assessment

Rating: questionable

Without competitive bidding, it is difficult to assess if the $84.8 million award represents good value for money. The fixed-price nature provides some cost certainty, but the absence of competing offers means there's no benchmark to gauge pricing efficiency. Further analysis would require comparing this contract's unit costs to similar ammunition procurements or market rates, which are not readily available in the provided data.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, AMTEC CORPORATION, was solicited. This approach is typically used when only one source is capable of meeting the requirement, or in cases of urgent need. The lack of competition limits price discovery and may result in less favorable terms for the government compared to a fully competed procurement.

Taxpayer Impact: Sole-source awards mean taxpayers do not benefit from the cost savings that competitive bidding typically generates. This can lead to higher overall expenditure for essential defense supplies.

Public Impact

This contract directly benefits the Department of the Army by ensuring a supply of 40mm grenade ammunition. The ammunition procured is essential for training and operational readiness of military personnel. The primary beneficiary is the end-user, the soldier, who relies on this ordnance for mission success. The contract supports AMTEC CORPORATION's manufacturing operations, potentially sustaining jobs in Wisconsin.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially leading to suboptimal pricing.
Lack of transparency in the justification for sole-source award.
Fixed-price contract, while transferring risk, may not reflect the lowest possible cost without competition.

Positive Signals

Fixed-price contract type provides cost certainty for the government.
Contract awarded to a known entity (AMTEC CORPORATION) with presumed capability in ammunition manufacturing.
Long contract duration suggests a stable, long-term supply chain for a critical defense item.

Sector Analysis

The defense sector relies heavily on specialized manufacturers for munitions. AMTEC CORPORATION operates within the ammunition manufacturing sub-sector, a critical component of the broader defense industrial base. Spending in this area is driven by military readiness requirements and geopolitical factors. Benchmarking this contract's value is challenging without access to detailed cost breakdowns or comparable sole-source awards within the defense munitions market.

Small Business Impact

This contract was not set aside for small businesses, and there is no indication of subcontracting requirements for small businesses. The award to AMTEC CORPORATION, a likely larger entity, means that opportunities for small business participation in this specific procurement are minimal. This contract does not appear to contribute to the government's small business contracting goals.

Oversight & Accountability

Oversight for this contract would fall under the Department of the Army's contracting and program management offices. Transparency is limited due to the sole-source nature of the award. Inspector General (IG) investigations could be initiated if performance issues or allegations of impropriety arise, but specific oversight mechanisms beyond standard contract management are not detailed in the provided data.

Related Government Programs

Department of Defense Ammunition Procurement
Army Ordnance Programs
Tactical Ammunition Contracts
Fixed-Price Defense Contracts

Risk Flags

Sole-source award may lead to higher costs.
Lack of competitive bidding limits price discovery.
Potential for vendor lock-in.
No small business participation noted.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $84.8 million to AMTEC CORPORATION. 40 MILLIMETER GRENADE AMMUNITION CONTRACT

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 $84.8 million.

What is the period of performance?

Start: 2016-06-07. End: 2019-12-31.

What is AMTEC CORPORATION's track record with the Department of Defense, particularly for similar ammunition contracts?

AMTEC CORPORATION has a history of contracting with the Department of Defense for various ordnance and ammunition supplies. While specific details on past performance for 40mm grenade ammunition are not provided in this data snippet, their engagement in this sector suggests established capabilities. A deeper dive into contract databases like FPDS or SAM.gov would reveal the volume, value, and performance history of their prior awards, including any past issues or commendations. This context is crucial for assessing the reliability and potential risks associated with awarding them this significant sole-source contract.

How does the unit cost of this 40mm grenade ammunition compare to historical or market benchmarks, given it's a sole-source award?

Direct comparison of unit costs is challenging without specific pricing data for this contract and access to market benchmarks. Sole-source awards inherently lack the price discovery mechanism of competition, often leading to higher unit costs. To assess value, one would need to obtain the detailed unit pricing from the contract and compare it against: 1) previous contracts for the same or similar ammunition by the DoD, 2) prices offered by other potential suppliers if they exist but were not solicited, or 3) publicly available market research data on 40mm grenade ammunition production costs. Without this comparative data, the $84.8 million award's cost-effectiveness remains uncertain.

What specific risks are associated with a sole-source award for critical defense materiel like 40mm grenade ammunition?

The primary risk of a sole-source award for critical defense materiel is the potential for inflated pricing due to the absence of competitive pressure. This can lead to inefficient use of taxpayer funds. Another risk is vendor lock-in, where the government becomes overly reliant on a single supplier, potentially limiting future flexibility and negotiation power. Furthermore, if the sole-source provider experiences production issues, supply chain disruptions, or financial instability, it could create significant gaps in the availability of essential ammunition, impacting military readiness. The lack of competition also reduces the incentive for the contractor to innovate or improve efficiency.

What is the strategic importance of 40mm grenade ammunition, and how does this contract contribute to the Army's overall readiness?

40mm grenade ammunition is a versatile and widely used munition in the U.S. military, particularly by the Army and Marine Corps. It is employed in various platforms, including grenade launchers attached to rifles and dedicated stand-alone systems, providing soldiers with indirect fire support, anti-personnel capabilities, and breaching options. Ensuring a consistent and adequate supply of this ammunition is critical for troop training, operational deployments, and maintaining combat readiness. This $84.8 million contract directly addresses the Army's need for this essential ordnance, aiming to replenish stocks and support ongoing operational requirements.

What is the historical spending pattern for 40mm grenade ammunition by the Department of the Army, and how does this award fit within that trend?

Historical spending on 40mm grenade ammunition by the Department of the Army typically fluctuates based on operational tempo, training cycles, and inventory management strategies. While this specific data point shows an $84.8 million award over approximately 3.5 years (1302 days), a comprehensive analysis would require examining spending data over multiple fiscal years. This would reveal whether this award represents a typical procurement volume, an increase due to heightened demand, or a decrease reflecting sufficient existing stockpiles. Understanding these trends helps assess the long-term fiscal commitment and strategic planning related to this munition.

Industry Classification

NAICS: Manufacturing › Other Fabricated Metal Product Manufacturing › Ammunition (except Small Arms) Manufacturing

Product/Service Code: AMMUNITION AND EXPLOSIVES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: W52P1J16R0012

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: National Presto Industries Inc (UEI: 006196174)

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: $84,764,827

Exercised Options: $84,764,827

Current Obligation: $84,764,827

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline