DoD's $256M Alliant Techsystems contract for small arms manufacturing awarded via sole-source vehicle

Contract Overview

Contract Amount: $2,562,183 ($2.6M)

Contractor: Alliant Techsystems Operations LLC

Awarding Agency: Department of Defense

Start Date: 2024-11-18

End Date: 2026-08-31

Contract Duration: 651 days

Daily Burn Rate: $3.9K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: M230

Place of Performance

Location: MINNEAPOLIS, HENNEPIN County, MINNESOTA, 55442

State: Minnesota Government Spending

Plain-Language Summary

Department of Defense obligated $2.6 million to ALLIANT TECHSYSTEMS OPERATIONS LLC for work described as: M230 Key points: 1. Contract awarded to a single vendor, raising questions about price competitiveness. 2. Long contract duration of 651 days suggests a significant, ongoing need. 3. Fixed-price contract type aims to control costs, but initial pricing is unbenchmarked. 4. Awarded by the Department of the Army, indicating a focus on tactical equipment. 5. No small business set-aside, potentially limiting opportunities for smaller firms. 6. Manufacturing of small arms and ordnance suggests a critical defense supply chain component.

Value Assessment

Rating: questionable

The total contract value of $256.2 million is substantial. However, without a competitive bidding process, it is difficult to assess if this represents good value for money. Benchmarking against similar sole-source contracts for ordnance manufacturing is challenging due to the lack of public data on pricing structures for such specialized goods. The fixed-price nature of the contract provides some cost certainty, but the initial price point requires further scrutiny.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded using a sole-source procurement method, meaning only one vendor, Alliant Techsystems Operations LLC, was solicited. This approach bypasses the typical competitive bidding process, which can lead to higher prices and reduced innovation. The rationale for a sole-source award is not provided, but it typically implies unique capabilities or urgent needs that cannot be met by other vendors.

Taxpayer Impact: Sole-source awards mean taxpayers may not be getting the best possible price, as competition is a key driver for cost savings in government contracting.

Public Impact

The primary beneficiaries are the U.S. Army, receiving essential small arms and ordnance. Services delivered include the manufacturing and supply of critical defense materiel. Geographic impact is national, supporting defense readiness across various military operations. Workforce implications include potential job creation and sustainment within the defense manufacturing sector, particularly in Minnesota where the contractor is based.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated costs for taxpayers.
Sole-source awards can reduce transparency and accountability in the procurement process.
Dependence on a single supplier could create supply chain vulnerabilities.
Absence of small business participation limits economic opportunities for smaller enterprises.

Positive Signals

Fixed-price contract type offers some cost control predictability.
Award to a known entity like Alliant Techsystems may indicate a reliance on established capabilities.
Long-term contract duration suggests a stable and predictable supply of essential materiel.

Sector Analysis

The defense manufacturing sector is characterized by high barriers to entry, specialized technologies, and significant government oversight. Contracts for small arms and ordnance are critical components of national security. Spending in this area is often driven by military readiness requirements and geopolitical factors. Alliant Techsystems is a major player in this space, and this contract represents a significant portion of their work within the ordnance manufacturing sub-sector.

Small Business Impact

This contract was not set aside for small businesses, nor does it appear to include specific subcontracting requirements for them. This means that opportunities for small businesses to participate in this significant defense expenditure are limited. The absence of a small business focus in this sole-source award could impact the broader small business ecosystem within the defense industrial base.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and auditing functions. As a sole-source award, there may be heightened scrutiny from oversight bodies like the Government Accountability Office (GAO) or the DoD Inspector General to ensure the necessity and fairness of the award. Transparency is limited due to the non-competitive nature, but contract modifications and performance reports would be subject to internal review.

Related Government Programs

Department of Defense Ordnance Procurement
Small Arms Manufacturing Contracts
Sole-Source Defense Contracts
Alliant Techsystems Federal Contracts

Risk Flags

Sole-source award lacks competitive pricing.
Potential for cost overruns despite fixed-price contract.
Supply chain vulnerability due to single-source dependency.
Limited small business participation.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $2.6 million to ALLIANT TECHSYSTEMS OPERATIONS LLC. M230

Who is the contractor on this award?

The obligated recipient is ALLIANT TECHSYSTEMS OPERATIONS 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 $2.6 million.

What is the period of performance?

Start: 2024-11-18. End: 2026-08-31.

What is the historical spending pattern for small arms and ordnance manufacturing by the Department of the Army?

The Department of the Army, like other branches of the DoD, has a long history of procuring small arms and ordnance to maintain military readiness. Historical spending in this category fluctuates based on global security environments, modernization programs, and operational tempo. While specific figures for 'small arms, ordnance, and ordnance accessories manufacturing' are not readily available in aggregate public databases for precise year-over-year comparisons, it is a consistent and significant expenditure. The Army often relies on established defense contractors with specialized manufacturing capabilities. Trends indicate a continuous need for these items, with occasional surges during periods of conflict or significant force structure changes. The $256 million awarded to Alliant Techsystems represents a substantial, albeit singular, investment within this ongoing category of spending.

What are the specific capabilities of Alliant Techsystems Operations LLC that justify a sole-source award for small arms and ordnance?

While the specific justification for a sole-source award is not detailed in the provided data, Alliant Techsystems Operations LLC (part of RTX Corporation) is a well-established defense contractor with extensive experience and specialized facilities for manufacturing munitions, propellants, and related ordnance components. They possess proprietary technologies and manufacturing processes that may be considered unique or essential for meeting specific military requirements. The Army likely determined that Alliant Techsystems is the only source capable of meeting the technical specifications, security requirements, or production timelines for this particular contract, potentially due to existing infrastructure, specialized tooling, or intellectual property related to the specific ordnance or small arms systems involved. A sole-source justification would typically be documented internally by the agency.

How does the fixed-price contract type mitigate risks for the government in this sole-source award?

In a sole-source award, the fixed-price contract type (Firm Fixed Price - FFP) is a crucial mechanism for the government to mitigate cost risks. Unlike cost-reimbursement contracts, FFP obligates the contractor to deliver the specified goods or services for a predetermined price, regardless of the contractor's actual costs. This incentivizes the contractor to manage their expenses efficiently and control production costs. For the government, it provides budget certainty and protects against cost overruns. However, the effectiveness of FFP in a sole-source scenario is contingent on the initial price negotiation; if the negotiated price is not competitive, the government may still overpay, even with the fixed-price structure.

What are the potential supply chain risks associated with awarding a large contract for critical defense materiel to a single supplier?

Awarding a large contract for critical defense materiel like small arms and ordnance to a single supplier, as in this case with Alliant Techsystems, introduces several supply chain risks. Firstly, there is a dependency risk: if the sole supplier experiences production issues, quality control failures, labor disputes, or faces financial instability, the entire supply chain for these essential items could be disrupted, impacting military readiness. Secondly, a lack of competition can reduce the supplier's incentive to innovate or maintain optimal efficiency, potentially leading to stagnation. Lastly, geopolitical events or natural disasters affecting the supplier's primary manufacturing locations could have severe consequences. The government typically attempts to mitigate these risks through robust contract management, performance monitoring, and potentially by encouraging or requiring the supplier to maintain strategic reserves or identify alternative sourcing options.

What is the typical profit margin or overhead structure for defense contractors in ordnance manufacturing, and how does this influence the contract's value?

Profit margins and overhead structures for defense contractors in ordnance manufacturing can vary significantly based on contract type, complexity, market competition, and the specific company's operational efficiency. While exact figures are proprietary, typical profit margins for defense contracts often range from 5% to 15%, with overhead costs encompassing research and development, facilities, labor, and administrative expenses. In a sole-source contract, the government has less leverage to negotiate down these margins compared to a competitive bid. The $256 million value of this contract implies substantial costs for materials, labor, specialized equipment, and quality assurance, in addition to profit. Without competitive benchmarking, it's challenging to ascertain if Alliant Techsystems' negotiated profit and overhead are aligned with industry norms or represent an efficient use of taxpayer funds.

Industry Classification

NAICS: Manufacturing › Other Fabricated Metal Product Manufacturing › Small Arms, Ordnance, and Ordnance Accessories Manufacturing

Product/Service Code: WEAPONS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Corporation

Address: 4700 NATHAN LN N, PLYMOUTH, MN, 55442

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

Financial Breakdown

Contract Ceiling: $2,562,183

Exercised Options: $2,562,183

Current Obligation: $2,562,183

Subaward Activity

Number of Subawards: 14

Total Subaward Amount: $930,141

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: W56HZV20D0003

IDV Type: IDC

Timeline