DoD awards $45.6M for XM1113/XM1210 production line, with potential for significant future investment

Contract Overview

Contract Amount: $45,600,000 ($45.6M)

Contractor: General Dynamics OTS (wilkes Barre), LLC

Awarding Agency: Department of Defense

Start Date: 2022-09-08

End Date: 2026-03-31

Contract Duration: 1,300 days

Daily Burn Rate: $35.1K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: XM1113/XM1210 PRODUCTION LINE PROJECT

Place of Performance

Location: WILKES BARRE, LUZERNE County, PENNSYLVANIA, 18702

State: Pennsylvania Government Spending

Plain-Language Summary

Department of Defense obligated $45.6 million to GENERAL DYNAMICS OTS (WILKES BARRE), LLC for work described as: XM1113/XM1210 PRODUCTION LINE PROJECT Key points: 1. Contract value represents initial investment for production line setup, with potential for follow-on orders. 2. Competition was conducted after exclusion of sources, suggesting specific capabilities were required. 3. Risk indicators include the long duration of the contract and the firm-fixed-price nature. 4. Performance context is tied to the critical need for advanced munitions production. 5. Sector positioning is within defense manufacturing, a key area for national security. 6. The contract's success hinges on the contractor's ability to establish and maintain a robust production capability.

Value Assessment

Rating: good

The awarded amount of $45.6 million for establishing a production line appears reasonable given the specialized nature of defense manufacturing and the critical XM1113/XM1210 munitions. Benchmarking against similar defense production line setup contracts is challenging due to proprietary information and unique requirements. However, the firm-fixed-price structure suggests a defined scope, which can help control costs if managed effectively. The long-term potential for follow-on production orders indicates a strategic investment by the Department of the Army.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

This contract was awarded under 'Full and Open Competition After Exclusion of Sources.' This indicates that while a competitive process was intended, specific criteria or circumstances led to the exclusion of certain potential bidders. The exact reasons for exclusion are not detailed but could relate to proprietary technology, existing partnerships, or specific facility requirements. The limited competition may have implications for price discovery, potentially leading to higher costs than a truly open competition.

Taxpayer Impact: Taxpayers may face higher costs due to the limited competitive landscape. However, the exclusion of sources might be justified if it ensures the use of specialized, essential technology or expertise critical for national security objectives.

Public Impact

The primary beneficiaries are the Department of Defense and potentially U.S. military personnel who will be equipped with advanced munitions. The contract delivers the capability to produce XM1113/XM1210 munitions, crucial for modern warfare. Geographic impact is centered in Wilkes-Barre, Pennsylvania, where General Dynamics OTS operates. Workforce implications include job creation and skill development within the defense manufacturing sector in Pennsylvania.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if production challenges arise beyond the initial setup phase.
Dependence on a single contractor for a critical munitions production line could pose supply chain risks.
The 'after exclusion of sources' competition method warrants scrutiny to ensure fairness and optimal value.
Long contract duration (over 5 years) increases exposure to changing technological requirements and economic conditions.

Positive Signals

Award to an established defense contractor with existing manufacturing capabilities.
Firm-fixed-price contract provides cost certainty for the initial production line setup.
Strategic investment in domestic production capacity for critical munitions.
Potential for significant follow-on production orders, indicating long-term program viability.

Sector Analysis

This contract falls within the defense manufacturing sector, specifically focusing on the production of advanced munitions. The defense industrial base is a critical component of national security, with significant government investment. The market for munitions production is often characterized by specialized requirements, long lead times, and a limited number of qualified contractors. Comparable spending benchmarks are difficult to ascertain due to the proprietary nature of munitions technology and production processes, but investments in production line capabilities are substantial.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. General Dynamics OTS is a large business. There is no explicit mention of subcontracting goals for small businesses within the provided data. The focus is on establishing a production line for a major defense system, which typically involves large prime contractors. The impact on the small business ecosystem would likely be indirect, through potential subcontracting opportunities if General Dynamics OTS chooses to engage small businesses for specific components or services.

Oversight & Accountability

Oversight for this contract will primarily be conducted by the Department of the Army, likely through contracting officers and program management offices. Accountability measures are embedded in the firm-fixed-price contract structure, which incentivizes the contractor to meet cost and schedule targets. Transparency is generally limited in defense contracting due to national security concerns, but contract awards and basic details are publicly available. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

XM1113 Insensitive High Explosive Projectile
XM1210 Advanced Multi-Purpose Munition
Department of the Army Munitions Procurement
Defense Production Act Investments
Advanced Manufacturing Initiatives

Risk Flags

Limited competition may impact price.
Long contract duration increases exposure to market changes.
Dependence on a single source for production line setup.
Potential for unforeseen technical challenges in scaling production.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $45.6 million to GENERAL DYNAMICS OTS (WILKES BARRE), LLC. XM1113/XM1210 PRODUCTION LINE PROJECT

Who is the contractor on this award?

The obligated recipient is GENERAL DYNAMICS OTS (WILKES BARRE), 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 $45.6 million.

What is the period of performance?

Start: 2022-09-08. End: 2026-03-31.

What is the track record of General Dynamics OTS in establishing and managing defense production lines?

General Dynamics Ordnance and Tactical Systems (OTS) has a long-standing history and significant experience in defense manufacturing, including the production of various munitions and weapon systems. They are known for their capabilities in metalworking, energetic materials, and complex assembly. While specific details on past production line establishment projects are often proprietary, their role as a major defense contractor suggests a proven ability to manage large-scale manufacturing operations. Their existing infrastructure and expertise in related programs provide a strong foundation for successfully setting up the XM1113/XM1210 production line. However, thorough due diligence by the Army would have assessed their specific qualifications for this particular program before award.

How does the $45.6 million investment compare to the total lifecycle cost of the XM1113/XM1210 munitions program?

The $45.6 million awarded for the production line project represents an initial capital investment for establishing the manufacturing capability. This figure is likely a fraction of the total lifecycle cost of the XM1113/XM1210 munitions program, which would encompass research and development, procurement of raw materials, ongoing production, sustainment, and eventual disposal. The total lifecycle cost is highly dependent on the quantity of munitions to be produced, their unit cost, and the program's operational lifespan. Future delivery orders for the actual munitions will represent the bulk of the program's expenditure. This initial investment is crucial for enabling the large-scale, cost-effective production required to meet military demand over the coming years.

What are the primary risks associated with establishing a new production line for advanced munitions?

Establishing a new production line for advanced munitions carries several inherent risks. These include technical challenges in scaling up from prototype to mass production, potential delays in equipment procurement and installation, and the need for specialized workforce training. Ensuring the quality and reliability of the munitions produced is paramount, requiring rigorous testing and quality control processes. Furthermore, fluctuations in raw material costs and availability can impact production schedules and budgets. The 'after exclusion of sources' competition method, while potentially necessary, also introduces a risk if the chosen contractor faces unforeseen difficulties, as alternative options may be limited. Finally, evolving threat landscapes or budget constraints could alter future demand for these specific munitions.

What is the expected impact of this production line on the overall readiness and capability of the U.S. Army?

The establishment of a dedicated production line for the XM1113 and XM1210 munitions is expected to significantly enhance the overall readiness and capability of the U.S. Army. These munitions are designed to provide improved performance, safety, and effectiveness compared to legacy systems. By investing in domestic production capacity, the Army ensures a more reliable and potentially faster supply chain for these critical assets, reducing dependence on foreign sources or limited existing stockpiles. This capability is vital for maintaining a strategic advantage, supporting ongoing operations, and preparing for potential future conflicts. Increased availability of these advanced munitions directly translates to enhanced firepower and mission effectiveness for ground forces.

How does this contract align with broader trends in defense spending and industrial base modernization?

This contract aligns with broader trends in defense spending focused on modernizing the U.S. industrial base to meet evolving national security challenges. There is a recognized need to recapitalize and expand domestic manufacturing capabilities for critical defense systems, including munitions. This investment reflects a strategic priority to ensure the U.S. maintains a technological edge and resilient supply chains. It also supports efforts to onshore production and reduce reliance on international partners for key defense articles. The emphasis on advanced capabilities like the XM1113/XM1210 munitions underscores the military's focus on equipping forces with next-generation technology, requiring significant investment in production infrastructure.

Industry Classification

NAICS: Administrative and Support and Waste Management and Remediation Services › Facilities Support Services › Facilities Support Services

Product/Service Code: OPERATION OF GOVT OWNED FACILITY › OPERATE GOVT OWNED BUILDINGS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Wico Limited

Address: 1500 HIGHWAY 315 BLVD, WILKES BARRE, PA, 18702

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Limited Liability Corporation, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $45,600,000

Exercised Options: $45,600,000

Current Obligation: $45,600,000

Subaward Activity

Number of Subawards: 5

Total Subaward Amount: $1,350,977

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: W52P1J19D0075

IDV Type: IDC

Timeline