Department of the Army awards $285.6M for small caliber ammunition, with Olin Winchester LLC as the primary contractor

Contract Overview

Contract Amount: $285,622,260 ($285.6M)

Contractor: Olin Winchester LLC

Awarding Agency: Department of Defense

Start Date: 2021-03-12

End Date: 2023-09-30

Contract Duration: 932 days

Daily Burn Rate: $306.5K/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 7.62MM SMALL CALIBER AMMUNITION

Place of Performance

Location: INDEPENDENCE, JACKSON County, MISSOURI, 64056

State: Missouri Government Spending

Plain-Language Summary

Department of Defense obligated $285.6 million to OLIN WINCHESTER LLC for work described as: AWARD OF 7.62MM SMALL CALIBER AMMUNITION Key points: 1. Contract awarded via full and open competition, suggesting a competitive bidding process. 2. The contract type, Fixed Price with Economic Price Adjustment, aims to balance cost certainty with market fluctuations. 3. Olin Winchester LLC, a known entity in ammunition manufacturing, is the awardee. 4. The contract duration spans over 900 days, indicating a significant, long-term supply need. 5. The award is for small caliber ammunition, a critical component for military operations. 6. The contract was issued as a delivery order under a larger contract vehicle.

Value Assessment

Rating: good

Benchmarking the value of this contract requires detailed analysis of historical ammunition pricing and market trends. However, the award of $285.6 million for small caliber ammunition over approximately 2.5 years suggests a substantial commitment. The Fixed Price with Economic Price Adjustment (FPEPA) contract type is common for goods subject to material cost volatility, aiming to provide a degree of price stability for the government while allowing the contractor to adjust for significant economic shifts. Without specific unit cost data or comparisons to similar recent awards for comparable ammunition types, a precise value-for-money assessment is challenging, but the competitive award process is a positive indicator.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under 'Full and Open Competition After Exclusion of Sources.' While the 'full and open' aspect indicates an intention to solicit broadly, the 'after exclusion of sources' clause suggests that specific sources may have been considered or excluded based on prior agreements or specific requirements. The number of bidders is not specified, but the 'full and open' nature generally implies a competitive environment that should drive price discovery and potentially lead to more favorable pricing for the government compared to sole-source or limited competition scenarios.

Taxpayer Impact: The use of full and open competition is beneficial for taxpayers as it encourages multiple companies to bid, fostering a competitive environment that can lead to lower prices and better terms for the government.

Public Impact

The primary beneficiaries are the U.S. Army personnel who will receive essential small caliber ammunition for training and operational readiness. The contract ensures the supply of critical munitions, supporting national defense objectives. The geographic impact is primarily within the United States, where the ammunition will be manufactured and potentially distributed. The contract supports jobs within the defense manufacturing sector, specifically in small arms ammunition production.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for price increases due to economic price adjustment clauses if raw material costs escalate significantly.
Reliance on a single primary contractor (Olin Winchester LLC) for a critical supply item could pose a risk if production is disrupted.
The 'exclusion of sources' clause warrants further investigation to ensure no viable competitors were unfairly barred.

Positive Signals

Awarded through full and open competition, indicating a robust bidding process.
Olin Winchester LLC is an established manufacturer with a track record in ammunition production.
The contract type (FPEPA) provides a mechanism to manage fluctuating material costs, potentially stabilizing long-term pricing.
The delivery order structure suggests it's part of a broader strategic sourcing effort.

Sector Analysis

The defense sector's ammunition market is a critical component of national security, characterized by specialized manufacturing processes and stringent quality requirements. Spending in this area is driven by military readiness needs, training cycles, and operational deployments. The market size for small caliber ammunition is substantial, with government contracts forming a significant portion. This contract fits within the broader defense industrial base, ensuring the availability of essential munitions. Comparable spending benchmarks would typically involve analyzing annual defense budgets allocated to ammunition procurement and specific contract awards for similar calibers and quantities.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. The awardee, Olin Winchester LLC, is a large corporation. There is no explicit information provided regarding subcontracting plans for small businesses within this specific award. Therefore, the direct impact on the small business ecosystem from this particular contract is likely minimal unless Olin Winchester LLC voluntarily engages small businesses in its supply chain.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and procurement regulations, managed by the Department of the Army. Accountability measures are embedded in the contract terms, including delivery schedules, quality standards, and payment terms. Transparency is facilitated through contract award databases like SAM.gov. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse related to the contract's execution.

Related Government Programs

Department of Defense Ammunition Procurement
Small Arms Ammunition Manufacturing
Army Combat Support Systems
Defense Logistics Agency (DLA) Ammunition Programs

Risk Flags

Potential for price escalation due to economic price adjustment.
Dependence on a single awardee for a critical supply.
Need for clarity on 'exclusion of sources' in competition.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $285.6 million to OLIN WINCHESTER LLC. AWARD OF 7.62MM 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 $285.6 million.

What is the period of performance?

Start: 2021-03-12. End: 2023-09-30.

What is the historical spending pattern for small caliber ammunition by the Department of the Army?

Historical spending on small caliber ammunition by the Department of the Army has been substantial and consistent, reflecting the continuous need for training and operational readiness. Annual expenditures can fluctuate based on global security environments, training tempo, and inventory management strategies. For instance, in years with heightened operational tempo or significant modernization efforts, spending may increase. Conversely, periods of reduced deployment or strategic inventory adjustments could see lower spending. Analyzing multi-year trends reveals patterns of demand and the government's commitment to maintaining adequate stockpiles. This $285.6 million award represents a significant portion of the Army's ammunition budget for the period it covers, underscoring the importance of this procurement.

How does the unit cost of ammunition under this contract compare to market rates or previous contracts?

A precise unit cost comparison is not feasible with the provided data, as the total award amount and duration are given, but not the quantity of ammunition or specific unit prices. The contract type, Fixed Price with Economic Price Adjustment (FPEPA), also complicates direct comparisons, as prices can vary based on economic factors. To perform a robust comparison, one would need to know the exact number of rounds procured and the base price per round, along with any escalation factors applied. Benchmarking against publicly available data for similar ammunition types from other government contracts or commercial sales would be necessary. However, the competitive nature of the award suggests that the pricing is likely within a reasonable range achievable through market forces.

What is Olin Winchester LLC's track record with government ammunition contracts?

Olin Winchester LLC has a long and established history as a major supplier of ammunition to the U.S. military and law enforcement agencies. The company has been a significant contractor for various types of ammunition, including small caliber rounds, for decades. Their track record includes fulfilling large-scale, multi-year contracts for the Department of Defense and other federal agencies. While specific performance metrics for every contract are not always public, their continued success in winning competitive bids for critical ammunition supplies indicates a generally positive performance history and reliability in meeting government requirements. They are recognized as a key player in the domestic ammunition manufacturing industrial base.

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

Potential risks include supply chain disruptions (e.g., raw material shortages, manufacturing issues), price volatility not fully captured by the economic price adjustment, and potential delays in delivery. Mitigation strategies are inherent in the contract structure and oversight. The FPEPA clause helps manage price volatility. The competitive award process aims to select a reliable contractor. The contract's duration and delivery schedules provide performance benchmarks. Furthermore, the Department of Defense typically maintains strategic reserves and may have contingency plans or alternative suppliers to address significant disruptions. Robust quality assurance and inspection protocols are also in place to ensure the ammunition meets stringent military specifications.

How does this contract contribute to the overall readiness and capability of the U.S. Army?

This contract is crucial for maintaining the U.S. Army's readiness and operational capabilities by ensuring a consistent and adequate supply of small caliber ammunition. Ammunition is a fundamental consumable required for all levels of training, from basic marksmanship to complex tactical exercises. It is also essential for equipping soldiers during active deployments. By securing a significant supply through this contract, the Army can sustain its training programs, ensuring soldiers remain proficient with their standard-issue firearms. Furthermore, it supports the readiness of combat units by providing the necessary munitions for potential engagements, thereby directly contributing to national defense objectives.

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: $285,622,260

Exercised Options: $285,622,260

Current Obligation: $285,622,260

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