DoD awards $540M contract for 40mm grenade ammunition to AMTEC CORPORATION

Contract Overview

Contract Amount: $539,587,647 ($539.6M)

Contractor: Amtec Corporation

Awarding Agency: Department of Defense

Start Date: 2017-08-30

End Date: 2026-04-02

Contract Duration: 3,137 days

Daily Burn Rate: $172.0K/day

Competition Type: FULL AND OPEN COMPETITION

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 $539.6 million to AMTEC CORPORATION for work described as: 40 MILLIMETER GRENADE AMMUNITION CONTRACT Key points: 1. Contract value represents significant investment in essential ordnance. 2. Full and open competition suggests a potentially competitive bidding process. 3. Long contract duration (over 8 years) indicates sustained demand. 4. Fixed-price contract type shifts cost risk to the contractor. 5. Ammunition manufacturing is a critical component of defense readiness. 6. Contractor AMTEC CORPORATION has a history of supplying defense materials.

Value Assessment

Rating: good

The contract value of approximately $540 million over its duration is substantial for ammunition procurement. Benchmarking against similar large-scale ammunition contracts is difficult without more specific data on quantity and type. However, the firm fixed-price structure suggests that the government has negotiated a price that the contractor is expected to adhere to, providing cost certainty. The long-term nature of the award implies a stable demand and potentially efficient production planning by the contractor.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. This approach generally fosters a competitive environment, encouraging multiple bidders to offer their best pricing and terms. The specific number of bidders is not provided, but the open competition is a positive sign for price discovery and value for the government.

Taxpayer Impact: Full and open competition is intended to ensure that taxpayer dollars are used efficiently by driving down prices through a robust bidding process.

Public Impact

The U.S. Army benefits from a reliable supply of 40mm grenade ammunition for training and operational readiness. This contract supports the production of essential munitions for military operations. The contract is primarily located in Wisconsin, impacting the local economy and workforce. It ensures the availability of critical ordnance for national defense requirements.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Long-term contract duration could lead to complacency if not actively managed.
Reliance on a single contractor for a critical munition type carries supply chain risk.
Potential for price increases in future contract modifications if market conditions change significantly.

Positive Signals

Firm fixed-price contract type provides cost predictability for the government.
Full and open competition suggests a potentially competitive pricing environment.
Contractor's established role in defense supply chain indicates experience and capability.

Sector Analysis

The defense sector, specifically ordnance manufacturing, is characterized by high barriers to entry due to specialized facilities, stringent quality control, and regulatory requirements. This contract falls within the broader ammunition manufacturing industry, which is a critical sub-sector supporting military readiness. Spending in this area is directly tied to defense budgets and geopolitical demands. Comparable spending benchmarks would typically involve analyzing historical procurement data for similar types and quantities of munitions by various military branches.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (sb: false) and does not explicitly mention subcontracting goals for small businesses. Therefore, the direct impact on the small business ecosystem through this specific award appears limited. However, the prime contractor, AMTEC CORPORATION, may engage small businesses as suppliers or subcontractors for raw materials or specialized components, which would indirectly benefit them.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Army's contracting and program management offices. Accountability measures are inherent in the firm fixed-price contract type, which obligates the contractor to deliver specified goods at an agreed-upon price. Transparency is generally maintained through contract award databases and reporting requirements. The Inspector General's office for the Department of Defense may conduct audits or investigations as deemed necessary.

Related Government Programs

Department of Defense Ammunition Procurement
Army Ordnance Manufacturing Contracts
40mm Ammunition Supply Chain
Defense Industrial Base Contracts

Risk Flags

Long contract duration
Potential supply chain dependencies
Reliance on fixed-price contract for long-term stability

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $539.6 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 $539.6 million.

What is the period of performance?

Start: 2017-08-30. End: 2026-04-02.

What is AMTEC CORPORATION's track record with the Department of Defense, particularly in supplying ammunition?

AMTEC CORPORATION has a significant history of supplying various types of ammunition and related defense products to the U.S. military. Their portfolio often includes mortar rounds, artillery shells, and other ordnance. The company has been a consistent recipient of defense contracts, indicating a level of trust and established performance within the DoD. Analyzing their past performance on similar contracts, including any quality issues or delivery delays, would provide further insight into their reliability for this substantial 40mm grenade ammunition award. Their long-standing presence suggests they possess the necessary infrastructure and expertise to fulfill such requirements.

How does the awarded price per unit for this 40mm ammunition compare to historical averages or market rates?

Determining the precise per-unit cost is challenging without knowing the exact quantity of 40mm grenades to be delivered under this $539.6 million contract. However, if we assume a hypothetical quantity, we could derive an approximate per-unit cost for comparison. For instance, if 10 million rounds were procured, the cost would be roughly $54 per round. This figure would then need to be benchmarked against historical DoD procurement data for similar 40mm rounds, considering variations in munition type (e.g., training vs. combat rounds), lot size, and inflation. Market rates from other defense contractors or international sales, if available, would also serve as valuable comparison points to assess value for money.

What are the primary risks associated with a long-duration contract for ammunition manufacturing?

Long-duration contracts for ammunition manufacturing, like this over 8-year award, present several risks. Firstly, there's the risk of supply chain disruptions; global events, raw material shortages, or geopolitical tensions can impact the availability and cost of components. Secondly, technological obsolescence is a concern; while 40mm ammunition is a mature technology, advancements in threat capabilities or counter-measures could eventually necessitate upgrades or different munition types, potentially making the contracted item less relevant over time. Thirdly, contractor performance degradation is a possibility; maintaining consistent quality and efficiency over many years requires diligent oversight. Finally, economic volatility, including inflation and currency fluctuations, can affect the contractor's costs, potentially leading to requests for price adjustments or impacting their profitability if the fixed-price contract doesn't adequately account for such changes.

How effective is full and open competition in ensuring competitive pricing for specialized defense munitions?

Full and open competition is generally considered the most effective method for ensuring competitive pricing for specialized defense munitions, provided there are multiple capable sources. It allows the government to solicit bids from all interested and responsible contractors, fostering a marketplace where companies vie for the contract by offering their best prices and terms. This process helps prevent monopolies and encourages innovation. However, the defense munitions market can sometimes be concentrated, with a limited number of manufacturers possessing the necessary expertise, facilities, and security clearances. In such cases, even with full and open competition, the number of bidders might be small, potentially limiting the downward pressure on prices. Nevertheless, it remains the preferred method for maximizing competition and achieving value.

What is the historical spending trend for 40mm grenade ammunition by the Department of the Army?

Historical spending data for 40mm grenade ammunition by the Department of the Army would likely show a consistent demand driven by training requirements and operational deployments. Spending levels can fluctuate based on global security postures, specific military campaigns, and budget allocations. Analyzing past contract awards for similar ammunition types would reveal trends in contract values, quantities procured, and pricing. For example, periods of heightened conflict or increased training tempo would likely correlate with higher procurement volumes and spending. Conversely, periods of drawdowns or budget austerity might see reduced spending. Understanding these historical patterns provides context for the current $540 million award, indicating whether it represents a typical procurement level or a significant increase/decrease.

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

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: W52P1J16R0107

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

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: $539,587,647

Exercised Options: $539,587,647

Current Obligation: $539,587,647

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline