DoD awards $965M for 40mm grenade systems, with Amtec Corporation as the sole provider

Contract Overview

Contract Amount: $965,085,860 ($965.1M)

Contractor: Amtec Corporation

Awarding Agency: Department of Defense

Start Date: 2022-09-23

End Date: 2030-03-31

Contract Duration: 2,746 days

Daily Burn Rate: $351.5K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: FIXED PRICE W/ EPA CONTRACT. THIS CONTRACT IS FOR THE PRODUCTION OF 40MM GRENADE SYSTEMS FAMILY OF AMMUNITION: M430A1-METAL PALLET, M430A1-WOOD PALLET, M433, M583A1, M781, M918, MIXED BELT, M385A1, M992, M585, M661, M662, AND M433E1, AND M583A1.

Place of Performance

Location: JANESVILLE, ROCK County, WISCONSIN, 53546

State: Wisconsin Government Spending

Plain-Language Summary

Department of Defense obligated $965.1 million to AMTEC CORPORATION for work described as: FIXED PRICE W/ EPA CONTRACT. THIS CONTRACT IS FOR THE PRODUCTION OF 40MM GRENADE SYSTEMS FAMILY OF AMMUNITION: M430A1-METAL PALLET, M430A1-WOOD PALLET, M433, M583A1, M781, M918, MIXED BELT, M385A1, M992, M585, M661, M662, AND M433E1, AND M583A1. Key points: 1. Contract awarded for a broad range of 40mm grenade systems, indicating a significant need for this ammunition type. 2. The contract's duration extends over several years, suggesting a long-term requirement for these munitions. 3. The fixed-price contract type offers cost certainty for the government, assuming Amtec meets production targets. 4. The absence of competition raises questions about potential cost efficiencies and market innovation. 5. Amtec Corporation's role as the sole provider highlights its specialized manufacturing capabilities in this niche. 6. The contract's value suggests a substantial investment in the nation's ordnance capabilities.

Value Assessment

Rating: fair

The contract value of over $965 million for 40mm grenade systems is substantial. Without comparable contract data or detailed cost breakdowns, it is difficult to definitively benchmark the value for money. The firm fixed-price structure provides some cost control, but the lack of competition means the government cannot leverage market forces to ensure the most competitive pricing. Further analysis would require understanding the specific components, production volumes, and historical pricing trends for these grenade systems.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award to Amtec Corporation. The data does not provide details on why the contract was not competed, such as a lack of alternative sources or a specific national security requirement. The absence of competition limits the government's ability to explore pricing options from multiple vendors, potentially leading to higher costs than if the contract had been open to a bidding process.

Taxpayer Impact: The lack of competition means taxpayers may not be receiving the best possible price for these essential munitions, as there was no opportunity for multiple companies to bid and drive down costs through a competitive process.

Public Impact

The Department of the Army is the primary beneficiary, securing a critical supply of 40mm grenade systems. This contract ensures the availability of various types of 40mm ammunition, including M430A1, M433, M583A1, and others, for military operations. The geographic impact is primarily centered around Amtec Corporation's facilities in Wisconsin, where production will likely occur. The contract supports jobs within Amtec Corporation and potentially its supply chain, contributing to the defense manufacturing workforce.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to higher prices and reduced innovation.
Sole-source awards can create dependency on a single contractor.
Limited transparency into the justification for not competing the award.
Potential for cost overruns if production efficiencies are not realized without competitive pressure.

Positive Signals

Firm fixed-price contract provides cost certainty for the government.
Long contract duration (over 6 years) ensures a stable supply chain.
Amtec Corporation is a specialized manufacturer, potentially offering unique expertise.
Contract supports critical ordnance requirements for the Department of Defense.

Sector Analysis

The defense manufacturing sector, specifically ammunition production, is characterized by specialized capabilities and often involves long production lead times. The market for certain types of ordnance can be limited due to stringent quality and performance requirements, as well as national security considerations. This contract for 40mm grenade systems fits within the broader 'Ammunition (except Small Arms) Manufacturing' industry. Benchmarking this spending would require comparing it to other large-scale ammunition procurements, which are often awarded through competitive processes or under specific long-term agreements.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (sb: false) and there is no explicit mention of subcontracting requirements for small businesses. This suggests that the primary awardee, Amtec Corporation, is likely a large business, and the contract may not directly benefit the small business ecosystem through set-asides or mandated subcontracting. Further investigation into Amtec's subcontracting plans would be needed to assess any indirect impact on small businesses.

Oversight & Accountability

Oversight for this contract would fall under the Department of Defense's contracting and procurement regulations. The contract type (Firm Fixed Price) implies that Amtec Corporation is responsible for delivering the specified grenade systems at an agreed-upon price. Accountability measures would likely include performance metrics, delivery schedules, and quality control standards. Transparency regarding the justification for the sole-source award and ongoing performance monitoring would be key areas for oversight. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Department of Defense Ammunition Procurement
Ordnance Manufacturing Contracts
40mm Ammunition Systems
Defense Industrial Base Contracts
Fixed-Price Contracts
Sole-Source Defense Contracts

Risk Flags

Sole-source award lacks competitive pricing.
Potential for cost overruns without competitive pressure.
Dependency on a single supplier for critical munitions.
Limited transparency on justification for sole-source award.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $965.1 million to AMTEC CORPORATION. FIXED PRICE W/ EPA CONTRACT. THIS CONTRACT IS FOR THE PRODUCTION OF 40MM GRENADE SYSTEMS FAMILY OF AMMUNITION: M430A1-METAL PALLET, M430A1-WOOD PALLET, M433, M583A1, M781, M918, MIXED BELT, M385A1, M992, M585, M661, M662, AND M433E1, AND M583A1.

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 $965.1 million.

What is the period of performance?

Start: 2022-09-23. End: 2030-03-31.

What is Amtec Corporation's track record with the Department of Defense, particularly concerning 40mm ammunition production?

Amtec Corporation has a history of supplying ammunition to the U.S. military. While specific details on their track record for 40mm grenade systems are not provided in this data snippet, their selection as the sole source for this significant contract suggests a level of established capability and past performance that the Department of the Army deems sufficient. To fully assess their track record, one would need to review past contract awards, performance reviews, and any documented issues or successes related to their previous defense contracts, especially those involving similar ordnance.

How does the per-unit cost of these 40mm grenade systems compare to historical or market benchmarks, given the sole-source nature of the award?

Determining the precise per-unit cost is challenging without a breakdown of the total contract value by specific munition type and quantity. However, the sole-source nature of this award raises concerns about potential price inflation compared to a competitive environment. In a competitive bid, multiple manufacturers would vie for the contract, driving prices down. Without this competitive pressure, the government relies on Amtec Corporation's pricing to be fair and reasonable, which can be harder to verify. A thorough analysis would involve comparing the implied per-unit costs for each munition type against any available historical data for similar procurements or against industry cost models, if accessible.

What are the specific risks associated with awarding a large, long-term contract for critical munitions on a sole-source basis?

The primary risks of a sole-source award for critical munitions include potential price gouging, lack of incentive for innovation, and supply chain vulnerability. Without competition, Amtec Corporation may not feel the same pressure to optimize production costs or explore more efficient manufacturing methods. Furthermore, the Department of Defense becomes heavily reliant on a single supplier, making the supply chain susceptible to disruptions caused by the contractor's operational issues, financial instability, or geopolitical factors affecting their facilities. There's also a risk that the government might overpay for the munitions due to the absence of market-driven price discovery.

What is the expected program effectiveness and impact of securing this supply of 40mm grenade systems for the Department of the Army?

The effectiveness of this contract lies in ensuring the Department of the Army has a consistent and reliable supply of various 40mm grenade systems, which are crucial for infantry support, training, and combat operations. The long-term nature of the contract (ending in 2030) suggests a strategic commitment to maintaining adequate stockpiles and operational readiness. The impact is significant, as it directly supports the warfighting capabilities of ground forces by providing essential munitions. The breadth of grenade types covered indicates a comprehensive approach to meeting diverse tactical needs.

How does the total contract value of $965 million compare to historical spending patterns for 40mm ammunition by the Department of Defense?

The $965 million awarded to Amtec Corporation represents a substantial investment in 40mm ammunition. To contextualize this, one would need to examine historical spending data for similar ammunition categories over previous fiscal years. For instance, comparing this award to the total annual expenditure on all types of grenades or specific 40mm variants over the last 5-10 years would reveal whether this represents an increase, decrease, or a steady level of investment. Given the duration of the contract, it suggests a significant portion of the anticipated need over the contract period is being consolidated into this single award.

What is the justification provided by the Department of Defense for awarding this contract as sole-source rather than through full and open competition?

The provided data does not include the specific justification for awarding this contract as sole-source. Typically, sole-source awards are made when only one responsible source is available, or when there is a compelling justification for excluding full and open competition, such as urgent and compelling needs, or when the acquisition is a follow-on to a previously competed contract where only one source can meet the requirements. Without this official justification, it is difficult to assess the validity of the sole-source determination and its implications for cost and competition.

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: W52P1J22R0009

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: $1,581,301,189

Exercised Options: $965,085,860

Current Obligation: $965,085,860

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline