General Dynamics awarded $308.8M for ammunition components to support USAF and allied nations

Contract Overview

Contract Amount: $308,785,388 ($308.8M)

Contractor: General Dynamics Ordnance and Tactical Systems, Inc.

Awarding Agency: Department of Defense

Start Date: 2018-12-06

End Date: 2024-08-31

Contract Duration: 2,095 days

Daily Burn Rate: $147.4K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: THIS CONTRACT IS BEING AWARDED AS AN UNDEFINITIZED CONTRACT ACTION FOR THE FOLLOWING COMPONENTS TO SUPPORT UNITED STATES AIR FORCE AND ALLIED NATIONS: MK81-5 (NSN: 1325-00-580-1799) MK82-1 (NSN: 1325-00-585-3841) MK83-4 (NSN: 1325-00-104-7268) MK84-4 (NSN: 1325-01-008-1335) BLU-109/B (NSN: 1325-01-335-8828) CNU-417/E (NSN: 8140-01-252-7060) MK3-0 SUSPENSION LUG (NSN: 1325-00-684-1364) MS3314 SUSPENSION LUG (NSN: 1325-00-684-1364) TNT (NSN: 1376-00-628-3333) AND ALUMINUM POWDER (NSN: 6810-00-628-3283)

Place of Performance

Location: GARLAND, DALLAS County, TEXAS, 75040

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $308.8 million to GENERAL DYNAMICS ORDNANCE AND TACTICAL SYSTEMS, INC. for work described as: THIS CONTRACT IS BEING AWARDED AS AN UNDEFINITIZED CONTRACT ACTION FOR THE FOLLOWING COMPONENTS TO SUPPORT UNITED STATES AIR FORCE AND ALLIED NATIONS: MK81-5 (NSN: 1325-00-580-1799) MK82-1 (NSN: 1325-00-585-3841) MK83-4 (NSN: 1325-00-104-7268) MK84-4 (NSN: 1325-01-008-1335) BLU-1… Key points: 1. Contract awarded for a variety of bomb components and explosives, indicating a broad need for munitions. 2. The contract is a Firm Fixed Price type, which shifts cost risk to the contractor. 3. Awarded as an Undefinitized Contract Action (UCA), suggesting an urgent need or ongoing negotiation. 4. The duration of the contract is substantial, spanning over 2000 days, implying long-term supply requirements. 5. The contract is not competed, raising questions about potential cost efficiencies and market engagement. 6. The primary contractor, General Dynamics Ordnance and Tactical Systems, is a significant player in the defense sector.

Value Assessment

Rating: fair

The contract value of $308.8 million for a range of ammunition components appears substantial. Without specific unit costs or historical benchmarks for these particular components, a precise value-for-money assessment is challenging. However, the award of an Undefinitized Contract Action (UCA) suggests that final pricing may still be under negotiation, which could impact the ultimate cost-effectiveness. The Firm Fixed Price (FFP) nature of the contract does provide some cost certainty to the government, but the lack of competition limits the ability to benchmark against market alternatives.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award. The data does not provide details on why the contract was not competed, which could be due to various factors such as national security concerns, lack of available sources, or a specific urgent requirement. The absence of competition means that the government did not benefit from a bidding process that could drive down prices through market forces.

Taxpayer Impact: The lack of competition means taxpayers may not have received the most competitive pricing available in the market for these critical ammunition components.

Public Impact

The United States Air Force and allied nations will benefit from a consistent supply of essential bomb components and explosives. Services delivered include the provision of various munition parts such as MK81-5, MK82-1, MK83-4, MK84-4 bombs, BLU-109/B penetrators, CNU-417/E containers, suspension lugs, TNT, and aluminum powder. The geographic impact is primarily on military operations supported by the USAF and allied forces, with the contractor based in Texas. Workforce implications include continued employment for skilled labor in the defense manufacturing sector at General Dynamics.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Awarded as an Undefinitized Contract Action (UCA), which may lead to higher final costs if negotiations are not favorable.
Lack of competition limits the government's ability to secure the best possible pricing and terms.
The long contract duration (over 2000 days) could tie the government to potentially suboptimal pricing for an extended period.

Positive Signals

Firm Fixed Price (FFP) contract type shifts cost overrun risk to the contractor.
General Dynamics is an established defense contractor with significant experience in ordnance manufacturing.
The contract supports critical munitions for both U.S. Air Force and allied nations, ensuring operational readiness.

Sector Analysis

This contract falls within the Ammunition (except Small Arms) Manufacturing sector, a critical component of the broader defense industrial base. The market for such components is often characterized by specialized manufacturing capabilities and long-standing relationships with government agencies. Given the nature of the products, spending is heavily influenced by geopolitical factors and military readiness requirements. Comparable spending benchmarks would typically be found within other large-scale munitions procurement contracts, which are often sole-sourced or limited competition due to the specialized nature of the industry.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb: false'. Furthermore, the primary contractor, General Dynamics, is a large defense corporation. While large prime contractors are often required to subcontract a portion of their work to small businesses, the specific subcontracting plan for this contract is not detailed here. The absence of a direct small business set-aside means that opportunities for small businesses to directly compete for this entire contract are limited.

Oversight & Accountability

The contract is a Firm Fixed Price (FFP) award, which inherently provides a degree of cost control by fixing the price. As an Undefinitized Contract Action (UCA), there will be specific oversight to finalize the contract terms and pricing. The Department of Defense and the Department of the Army are the contracting agencies, implying oversight through their respective contracting command structures. Inspector General jurisdiction would apply to investigate fraud, waste, and abuse related to this contract.

Related Government Programs

Air Force Munitions Procurement
Allied Nations Support Programs
Ordnance Manufacturing
Bomb Components
Explosives Manufacturing

Risk Flags

Undefinitized Contract Action (UCA)
Sole-Source Award
Lack of Competition
Long Contract Duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $308.8 million to GENERAL DYNAMICS ORDNANCE AND TACTICAL SYSTEMS, INC.. THIS CONTRACT IS BEING AWARDED AS AN UNDEFINITIZED CONTRACT ACTION FOR THE FOLLOWING COMPONENTS TO SUPPORT UNITED STATES AIR FORCE AND ALLIED NATIONS: MK81-5 (NSN: 1325-00-580-1799) MK82-1 (NSN: 1325-00-585-3841) MK83-4 (NSN: 1325-00-104-7268) MK84-4 (NSN: 1325-01-008-1335) BLU-109/B (NSN: 1325-01-335-8828) CNU-417/E (NSN: 8140-01-252-7060) MK3-0 SUSPENSION LUG (NSN: 1325-00-684-1364) MS3314 SUSPENSION LUG (NSN: 1325-00-684-1364) TNT (NSN: 1376-00-628-3333) AND ALUMINUM POWDER (NSN: 6810-00-628-

Who is the contractor on this award?

The obligated recipient is GENERAL DYNAMICS ORDNANCE AND 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 $308.8 million.

What is the period of performance?

Start: 2018-12-06. End: 2024-08-31.

What is the typical cost range for MK80 series bomb components and related explosives in the defense market?

The cost range for MK80 series bomb components (like MK81, MK82, MK83, MK84) and related explosives (TNT, aluminum powder) can vary significantly based on quantity, specific configurations, raw material costs, and the supplier. Historically, individual bomb bodies have ranged from a few hundred dollars for smaller variants to several thousand dollars for larger or specialized types. Explosives like TNT also fluctuate in price based on global commodity markets and production capacity. For a large-scale contract like this, involving multiple component types and a significant total value of $308.8 million, the average unit cost for each component would likely be in the hundreds to low thousands of dollars, but precise figures are proprietary and depend heavily on the specific contract terms and negotiated pricing. The 'br' field in the provided data, showing 147392, might represent a baseline or previous contract value for a related item, but its exact meaning in relation to unit cost is unclear without further context.

What are the risks associated with awarding an Undefinitized Contract Action (UCA)?

Awarding an Undefinitized Contract Action (UCA) carries several risks for the government. Primarily, the final contract price is not yet established, meaning the government agrees to pay an estimated amount for work performed before all terms and conditions, including the final price, are negotiated and agreed upon. This can lead to the government paying more than necessary if negotiations are not conducted effectively or if the contractor has significant leverage. There's also a risk of scope creep or increased costs if the undefinitized period extends for too long. While UCAs are often used to address urgent needs or when detailed specifications are still being finalized, they require diligent oversight to ensure a fair and reasonable final price is negotiated promptly. The Firm Fixed Price nature of this particular UCA mitigates some cost overrun risk to the government during the performance period, but the final negotiated price remains a key concern.

How does the lack of competition impact the government's ability to secure favorable pricing?

The lack of competition, as seen in this sole-source award, significantly diminishes the government's ability to secure favorable pricing. In a competitive bidding process, multiple vendors vie for the contract, driving prices down through market forces and innovation. Without this competitive pressure, the government relies heavily on the contractor's proposed pricing and its own negotiation expertise. This can result in higher costs for the government compared to what might have been achieved in a fully competed environment. For taxpayers, this means potentially less efficient use of public funds, as the absence of competition removes a key mechanism for ensuring cost-effectiveness and value for money.

What is the significance of General Dynamics Ordnance and Tactical Systems being the sole awardee?

General Dynamics Ordnance and Tactical Systems, Inc. (GD-OTS) is a major defense contractor specializing in munitions and tactical systems. Their selection as the sole awardee for this substantial contract indicates they possess the necessary manufacturing capabilities, security clearances, and established relationship with the Department of Defense to produce these specific bomb components and explosives. For the government, awarding to an experienced contractor like GD-OTS can reduce program risk and ensure timely delivery of critical items. However, from a market perspective, it highlights the concentrated nature of defense manufacturing, where a few large companies often dominate specific product categories, potentially limiting broader industry participation and innovation.

What are the potential implications of this contract for allied nations' defense capabilities?

This contract explicitly states it is to support 'United States Air Force and Allied Nations.' This means that a portion of the manufactured bomb components and explosives will likely be supplied to partner countries, either directly through foreign military sales or indirectly through joint operational stockpiles. Such support is crucial for maintaining interoperability and enhancing the collective defense capabilities of U.S. allies. By ensuring a supply of munitions, this contract contributes to the readiness and operational effectiveness of allied air forces, strengthening regional security and U.S. foreign policy objectives. The specific allied nations benefiting are not detailed, but typically include NATO members and key strategic partners.

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

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 1200 N GLENBROOK DR, GARLAND, TX, 75040

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: $308,785,388

Exercised Options: $308,785,388

Current Obligation: $308,785,388

Subaward Activity

Number of Subawards: 81

Total Subaward Amount: $100,454,746

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: W52P1J19D0015

IDV Type: IDC

Timeline