Tuesday, March 12, 2013

1.6 Billion rounds of nonsense

The current "big story": the Department of Homeland Security has supposedly ordered 1.6 billion rounds of ammunition, much of it of the hollow point variety. Here's an article at Forbes, of all places, talking about the order. Here's the cited source for the Forbes piece, the Denver Post.

But this is actually not a new story, it "broke" last year, though then it was 450 million round of ammo, not the current 1.6 billion:
The Department of Homeland Security (DHS) and its Immigration and Customs Enforcement (ICE) office is getting an "indefinite delivery" of an "indefinite quantity" of .40 caliber ammunition from defense contractor ATK.  
U.S. agents will receive a maximum of 450 million rounds over five years, according to a press release on the deal.
Here is the press release--from ATK--that was the basis for this story last year. It was issued on March 12th--exactly a year ago--and it says:
ATK (NYSE: ATK) announced that it is being awarded an Indefinite Delivery/Indefinite Quantity (IDIQ) agreement from the Department of Homeland Security, U.S. Immigration and Customs Enforcement (DHS, ICE) for .40 caliber ammunition. This contract features a base of 12 months, includes four option years, and will have a maximum volume of 450 million rounds.
For those unfamiliar with government contract language, this is a standard IDIQ contract, common for government suppliers of all sorts. It means that the government is not actually ordering a specific quantity for a delivery at a specific time, Rather, it's a contract for whatever amount the government desires within a specific time frame. In this case, the maximum number of rounds that the government is allowed to buy under this contract is 450 million. Why is the contract structured in this manner? First, because the high maximum gives the government the best price and allows the company to trumpet the contract with a press release like the one above. Second, because it allows the government to receive the order in batches, as opposed to getting it all at once. Thus, it doesn't have to commit additional resources to store whatever goods are being ordered.

IDIQ contracts are not always done in terms of a maximum quantity, however. They can also be structured with a maximum value, instead. For instance, here is another ATK press release trumpeting a contract with the FBI and Department of Justice from the end of last year. Look how it is worded:
ATK (NYSE: ATK) announced that it is being awarded a Fixed Price Indefinite Delivery/Indefinite Quantity (IDIQ) agreement from the Department of Justice (DOJ) and Federal Bureau of Investigation (FBI) for .40 caliber ammunition. This contract to provide duty and training ammunition features a base of 12 months, includes four option years and has a maximum value of $75 million over the life of the contract.
See the difference? It has a maximum value of $75 million (and it also has a "fixed price" stipulation). How many rounds might this one be? Well, .40 caliber ammunition can be had for a price of around 75 cents per round. I'm sure the price is much lower when buying huge quantities, so let's go with 50 cents per round. That means the above contract would have a maximum volume of around 150 million rounds. Hardly 1.6 billion, but nothing to sneeze at. Still, that's a maximum across five years. The quantity actually delivered? Well, I guess we'd have to ask the FBI in 2018.

But none of this indicates where the figure of 1.6 billion came from. It's given in the Denver Post story with no source. As near as I can tell, this AP story by someone named Alicia Caldwell is the source. There's no citations to speak of in the story, just a quote by someone at a Federal training facility noting how many rounds are used every year in that regard. And look how the piece completely misrepresents the 450 million round IDIQ contract from last year:
ICE's ammunition requests in the last year included:  
_450 million rounds of .40-caliber duty ammunition
The author is clearly clueless. The order was for both DHS and ICE and--as I have shown--wasn't really for 450 million rounds.

This story has serious legs, though. Conspiracy-minded folks are jumping all over it, as are many hard-core conservative people, from Mark Levin to Glenn Beck, along with far left progressives as well. They imagine that the Federal Government is gearing up for some sort of domestic war, that it's buying up ammo so there's none available for citizens, or both.

And they're all wrong. Their lack of understanding with regard to what is actually happening with these contracts is, well, a little scary. Hopefully, they'll get clued in, sooner rather than later.

Cheers, all.