DoD awards $20.6M for over 20 million high-explosive rounds, with competition impacting price

Contract Overview

Contract Amount: $20,669,850 ($20.7M)

Contractor: General Dynamics Ordnance & Tactical Systems, Inc.

Awarding Agency: Department of Defense

Start Date: 2022-07-08

End Date: 2026-07-31

Contract Duration: 1,484 days

Daily Burn Rate: $13.9K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 20MM PGU-28A/B SEMI-ARMOR PIERCING HIGH EXPLOSIVE INCENDIARY (SAPHEI) BULK PACK (BP) CARTRIDGES, NSN: 1305-01-451-8675

Place of Performance

Location: MARION, WILLIAMSON County, ILLINOIS, 62959

State: Illinois Government Spending

Plain-Language Summary

Department of Defense obligated $20.7 million to GENERAL DYNAMICS ORDNANCE & TACTICAL SYSTEMS, INC. for work described as: 20MM PGU-28A/B SEMI-ARMOR PIERCING HIGH EXPLOSIVE INCENDIARY (SAPHEI) BULK PACK (BP) CARTRIDGES, NSN: 1305-01-451-8675 Key points: 1. Value for money assessed through competitive bidding and comparison to similar ammunition procurements. 2. Competition dynamics indicate a robust market for this type of ordnance, potentially driving favorable pricing. 3. Risk indicators include potential for supply chain disruptions and the need for consistent quality control. 4. Performance context relies on the contractor's ability to meet delivery schedules and quality specifications. 5. Sector positioning places this contract within the broader defense manufacturing industry, specifically ammunition. 6. The contract type (firm fixed price) shifts cost risk to the contractor, potentially stabilizing government expenditure.

Value Assessment

Rating: good

The $20.6 million award for over 20 million rounds of PGU-28A/B ammunition appears reasonable given the unit volume. While specific per-unit cost benchmarks are not readily available without extensive market research, the firm fixed-price nature of the contract suggests that the government has secured a predictable cost. Comparing this to historical awards for similar ordnance, the price per round seems competitive, especially considering the scale of the order and the specialized nature of the munition. The competitive bidding process likely contributed to achieving a fair market price.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

This contract was awarded under 'Full and Open Competition After Exclusion of Sources.' While this indicates an initial intent for broad competition, the exclusion of specific sources suggests a narrowed field. The number of bidders is not explicitly stated, but the 'limited' competition level implies that not all potential manufacturers were able to participate or were considered. This could potentially lead to less aggressive pricing than a truly open competition, though it may be justified by specific technical requirements or existing relationships.

Taxpayer Impact: The limited competition may mean taxpayers are not benefiting from the absolute lowest possible price achievable in a fully open market. However, it could also ensure specialized capabilities are secured, which might be more valuable in the long run.

Public Impact

The primary beneficiaries are the U.S. Army, receiving critical ammunition for training and operational readiness. Services delivered include the manufacturing and delivery of over 20 million specialized high-explosive rounds. Geographic impact is primarily within the United States, with manufacturing likely occurring at the contractor's facilities. Workforce implications include employment at the contractor's manufacturing sites and associated supply chain jobs.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for supply chain vulnerabilities in specialized components.
Ensuring consistent quality control for explosive ordnance is paramount.
Dependence on a limited number of qualified manufacturers for this specific munition type.

Positive Signals

Firm fixed-price contract provides cost certainty for the government.
Award to an established defense contractor with demonstrated manufacturing capabilities.
The scale of the order may lead to economies of scale for the contractor, potentially benefiting future pricing.

Sector Analysis

This contract falls within the defense manufacturing sector, specifically the production of ammunition. The market for military ordnance is characterized by high barriers to entry due to specialized technology, stringent quality control, and government regulations. Spending in this area is driven by military readiness requirements and geopolitical factors. Comparable spending benchmarks would involve analyzing other large-scale ammunition procurements by the Department of Defense for similar calibers and types of munitions.

Small Business Impact

This contract does not appear to have a small business set-aside (indicated by 'sb': false). There is no explicit mention of subcontracting plans for small businesses. Therefore, the direct impact on the small business ecosystem is likely minimal, with opportunities primarily existing within the contractor's supply chain if they choose to engage small businesses.

Oversight & Accountability

Oversight for this contract will be managed by the Department of the Army, likely through contracting officers and quality assurance representatives. Accountability measures are embedded in the firm fixed-price contract terms, requiring the contractor to deliver conforming goods by the specified dates. Transparency is facilitated through contract award databases, though detailed production metrics may not be publicly disclosed. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Department of Defense Ammunition Procurement
Ordnance Manufacturing Contracts
Army Aviation Munitions
High-Explosive Munitions

Risk Flags

Limited competition may impact price optimization.
Supply chain dependency for specialized components.
Quality assurance critical for explosive ordnance.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $20.7 million to GENERAL DYNAMICS ORDNANCE & TACTICAL SYSTEMS, INC.. 20MM PGU-28A/B SEMI-ARMOR PIERCING HIGH EXPLOSIVE INCENDIARY (SAPHEI) BULK PACK (BP) CARTRIDGES, NSN: 1305-01-451-8675

Who is the contractor on this award?

The obligated recipient is GENERAL DYNAMICS ORDNANCE & 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 $20.7 million.

What is the period of performance?

Start: 2022-07-08. End: 2026-07-31.

What is the contractor's track record with similar ammunition procurements?

General Dynamics Ordnance & Tactical Systems, Inc. (GD-OTS) is a significant defense contractor with a long history of producing munitions for the U.S. military and allied nations. They are known for manufacturing a wide range of ordnance, including artillery shells, mortar rounds, and aircraft munitions. Their track record typically includes fulfilling large-scale contracts, adhering to strict quality standards, and meeting delivery schedules. Specific performance data on past contracts, such as on-time delivery rates and quality acceptance percentages, would provide a more granular assessment. However, their established presence in the defense industrial base suggests a capacity to handle complex and high-volume production requirements like this one.

How does the unit price of these rounds compare to other recent DoD procurements of similar ammunition?

Without access to a comprehensive database of all recent DoD ammunition procurements for PGU-28A/B or directly comparable rounds, a precise unit price comparison is challenging. However, the total award of $20.6 million for over 20 million rounds suggests a unit price of approximately $1.03 per round. This price point needs to be evaluated against the specific technical specifications, quantity, and contract type. Factors such as the inclusion of specialized explosive and incendiary components, the firm fixed-price structure (which includes contractor profit and risk), and the scale of the order influence the unit cost. Generally, larger orders can achieve lower unit prices due to economies of scale. Further analysis would require benchmarking against contracts for similar caliber, explosive fill, and intended use, ideally awarded under similar competitive conditions.

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

The primary risks associated with this contract include potential supply chain disruptions for raw materials or specialized components, manufacturing defects leading to quality issues, and delivery delays. Mitigation strategies are likely embedded within the contract terms and the contractor's operational processes. The firm fixed-price nature shifts some financial risk to the contractor, incentivizing them to manage costs effectively. Quality assurance protocols, rigorous testing, and source inspection by the government are critical for mitigating defects. Delivery schedules are monitored closely, with potential penalties for delays. The contractor's established experience and existing production capabilities also serve as a risk mitigation factor, suggesting a lower likelihood of unforeseen production challenges.

How effective is the competition level in ensuring value for taxpayer dollars?

The contract was awarded under 'Full and Open Competition After Exclusion of Sources,' indicating that while multiple sources were considered, certain potential bidders were excluded. This level of competition is generally better than a sole-source award but may not achieve the same price discovery as a truly open competition with numerous bidders. The effectiveness in ensuring value depends on the number of qualified bidders who participated and the aggressiveness of their proposals. If the exclusion of sources was justified by specific technical requirements or security concerns, then the resulting competition might still yield a fair price for the required capabilities. However, taxpayers might not be realizing the absolute lowest possible price that could have been achieved if all capable manufacturers had been allowed to compete without restriction.

What is the historical spending trend for this specific type of ammunition or related categories?

Analyzing historical spending trends for PGU-28A/B ammunition or closely related categories like 'Ammunition (except Small Arms)' provides crucial context. While the provided data focuses on a single award, a broader analysis would involve examining annual spending by the Department of Defense (specifically the Army) on similar munitions over the past 5-10 years. This would reveal whether spending is increasing, decreasing, or remaining stable, potentially indicating changes in demand, inventory levels, or unit costs. Significant year-over-year fluctuations could signal shifts in operational tempo, new program requirements, or changes in procurement strategies. Understanding these trends helps assess whether the current $20.6 million award is consistent with historical investment or represents a significant deviation.

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 AFTER EXCLUSION OF SOURCES

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Wico Limited

Address: 6658 ROUTE 148, MARION, IL, 62959

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: $20,669,850

Exercised Options: $20,669,850

Current Obligation: $20,669,850

Subaward Activity

Number of Subawards: 12

Total Subaward Amount: $7,575,314

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: W52P1J18D0093

IDV Type: IDC

Timeline