DoD Awards Olin Winchester $257M for Small Caliber Ammunition, Raising Concerns Over Competition and Pricing

Contract Overview

Contract Amount: $256,874,440 ($256.9M)

Contractor: Olin Winchester LLC

Awarding Agency: Department of Defense

Start Date: 2019-10-01

End Date: 2021-09-30

Contract Duration: 730 days

Daily Burn Rate: $351.9K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Defense

Official Description: AWARD OF SMALL CALIBER AMMUNITION

Place of Performance

Location: INDEPENDENCE, JACKSON County, MISSOURI, 64056

State: Missouri Government Spending

Plain-Language Summary

Department of Defense obligated $256.9 million to OLIN WINCHESTER LLC for work described as: AWARD OF SMALL CALIBER AMMUNITION Key points: 1. Significant award of $257M for essential ammunition. 2. Olin Winchester LLC is the sole awardee, raising competition questions. 3. Fixed Price with Economic Price Adjustment contract type introduces price volatility risk. 4. The sector is defense manufacturing, critical for national security.

Value Assessment

Rating: questionable

The contract's fixed-price with economic price adjustment structure can lead to cost overruns if market prices for raw materials increase significantly. Benchmarking against similar ammunition contracts is difficult without more granular data on unit costs and specific ammunition types.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded under 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES,' indicating a limited competition scenario. This method may not have resulted in the most competitive pricing, as alternative suppliers were excluded.

Taxpayer Impact: The limited competition and economic price adjustment clauses may lead to higher costs for taxpayers compared to a fully open and competitively bid contract.

Public Impact

Ensures supply of critical small caliber ammunition for military operations. Potential for increased costs due to limited competition and price adjustment clauses. Impacts the defense industrial base and reliance on a single supplier for this specific contract. Supports jobs within Olin Winchester LLC and its supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition
Economic price adjustment
Sole awardee for this specific contract
Lack of clear unit cost benchmark

Positive Signals

Ensures critical supply
Long-term contract provides stability

Sector Analysis

This award falls within the defense manufacturing sector, specifically small arms ammunition. Spending benchmarks for this niche are difficult to ascertain publicly, but consistent, large-volume awards suggest significant and ongoing demand.

Small Business Impact

The awardee, Olin Winchester LLC, is a large business. There is no indication in the provided data that small businesses were significantly involved in this specific award, either as prime contractors or subcontractors.

Oversight & Accountability

The contract type and limited competition warrant further oversight to ensure fair pricing and prevent potential cost creep. Regular reviews of the economic price adjustment mechanism are crucial for accountability.

Related Government Programs

Small Arms Ammunition Manufacturing
Department of Defense Contracting
Department of the Army Programs

Risk Flags

Limited competition may result in higher prices.
Economic price adjustment introduces cost uncertainty.
Reliance on a single awardee for a critical item.
Lack of transparency on specific cost drivers and benchmarks.
Potential for cost overruns due to market fluctuations.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $256.9 million to OLIN WINCHESTER LLC. AWARD OF SMALL CALIBER AMMUNITION

Who is the contractor on this award?

The obligated recipient is OLIN WINCHESTER 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 $256.9 million.

What is the period of performance?

Start: 2019-10-01. End: 2021-09-30.

What specific factors led to the exclusion of other sources in this 'full and open competition after exclusion of sources' award, and how were these justified?

The justification for excluding other sources is not provided in the data. Typically, such exclusions are based on factors like proprietary technology, unique manufacturing capabilities, or specific security requirements that only a particular source can meet. A thorough review would examine the validity and necessity of these exclusion criteria to ensure they genuinely served a government need and did not unduly restrict competition.

How does the economic price adjustment (EPA) clause function in this contract, and what are the potential upper limits of cost increases for the government?

The EPA clause allows for adjustments to the contract price based on fluctuations in specified economic factors, such as raw material costs or labor indices. Without the specific details of the EPA formula and the indices used, it's impossible to determine the potential upper limits of cost increases. This lack of transparency poses a risk of significant, unpredictable cost escalation for the taxpayer.

What is the government's strategy for ensuring long-term cost-effectiveness and supply chain resilience given the reliance on a single awardee for this ammunition type?

The government's strategy likely involves periodic re-competition of contracts, exploring alternative suppliers for future needs, and potentially investing in developing additional sources. However, the current data suggests a reliance on Olin Winchester LLC. Proactive market research and fostering competition are key to ensuring long-term cost-effectiveness and mitigating supply chain risks.

Industry Classification

NAICS: Manufacturing › Other Fabricated Metal Product Manufacturing › Small Arms Ammunition Manufacturing

Product/Service Code: AMMUNITION AND EXPLOSIVES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT (K)

Evaluated Preference: NONE

Contractor Details

Parent Company: Olin Corporation

Address: 25201 E 78 HWY, INDEPENDENCE, MO, 64056

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

Financial Breakdown

Contract Ceiling: $256,874,440

Exercised Options: $256,874,440

Current Obligation: $256,874,440

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: W52P1J19D0085

IDV Type: IDC

Timeline