Notes from HJL:

Ammunition and Government Contracts

Much ado has been made over government contracts for ammunition in the last two years (or since the ammunition shortages began). I really think the excitement stems from not understanding how government contracts work, so I’d like to explain to our readers how this process actually saves them money (tax dollars) and does not mean that the government is buying all of the product that has been reported as under contract.

I work in a small volunteer fire department. While we have excellent quality fire gear, it does eventually wear out and must be replaced. It is expensive– about $3500 to outfit a fireman in standard gear (not including breathing gear). Because of past concerns with “under the table” bids, no-bid contracts, and possible corruption, the government has established procedures for the purchase of any items of significant value. Normally, this is a three bid process. Our fire department must submit a Request for Quote (RFQ) publicly. At least three companies must bid on supplying the high value items, and the fire department is required to accept the lowest bid. During the bidding process, if any person or company believes they can provide the equipment, they have a right to submit a bid. With budget challenges and the fact that each individual fire set is relatively expensive, the most we can purchase is 12 units at a time. If our department attempts to purchase more, we have to justify it to the county. Just obtaining spares isn’t good enough, because each set is tailored specifically for the fire fighter wearing it. There is no guarantee that the spare jacket would even fit a new person.

It’s a real pain to go through this bidding process, which can take months to complete. The department may be willing to put the manpower in if it’s for the whole department, but if we are replacing just one set because of damage, it may not be worth the effort. That particular fire fighter may be sidelined unless he/she is willing to put the time in themselves to replace the damaged equipment. However, there is an answer for this problem.

The state itself has multiple fire departments that they run. Every year, they have to replace damaged equipment on a much larger scale than what our county needs. When the state puts out the RFQ, they will specify the equipment needed, estimate the needed amount of equipment (based upon the needs of the previous year), and then increase that number by a significant amount. If they are pretty sure they will need to replace 100 sets of gear for their own departments, they may place the RFQ for up to 1000 sets of gear. Notice that the RFQ does not specify they will actually buy that many; the RFQ indicates only that whatever they do buy, the bidder agrees to supply them at the bid price. Once the bid is accepted, it becomes a contract. Now, if my local fire department needs to replace only one set of gear, they no longer have to go through the entire bid process themselves. They can piggyback on this state contract to obtain the gear they need at the contracted volume pricing. Rather than go through that cumbersome process of getting a minimum of three bids and so forth, they simply need to ask the contracted company to supply them with the gear at the bid price under the state’s contract. Now they can easily and quickly purchase the same gear the state obtained. Rather than a multi-month process to obtain the replacement gear, we can now get it in just a few weeks.

What if the county doesn’t like the gear that is under contract with that bidder? No problem. Most states have a wide base of contracts. One large fire company may prefer gear from Company A and another may prefer gear from Company B. It’s a pretty good bet that both companies have contracts with the state. In fact, the state may pursue contracts with both companies because they know the individual fire departments may prefer different gear. If relatively similar contracts are procured between both companies, it saves the taxpayer money and the fire departments get their equipment easily and quickly. On paper, it looks like the state is getting ready to purchase 2000 sets of gear, but the reality is that only the gear necessary for the job will get purchased over the course of a year.

This same process works well and is in place at a national level. When the FBI needs to purchase ammunition, whether for practice, range qualification, or duty, they issue an RFQ for a much larger amount than what they need. They get a better price from the manufacturer because of the high quantity and the expectation is that other agencies will piggyback on their contract to fulfill the order. The bidding company under contract and the FBI (or other agency) are well aware that the maximum number specified in the contract may never be purchased. In fact, it probably won’t. When another agency gets ready to purchase ammo, they may not even like the particular ammo under contract by the FBI. They will then pursue an additional contract with another company or possibly a different ammo line with the same company. We may even see contracts with the same company and the same ammo line because the first agency to issue the RFQ may not have specified a number large enough to obtain the desired discounted price. On a state level, the process can be convoluted, but that complexity is magnified on a national level because of all the different companies, all the different agencies, and all the different product lines in the system. If you simply add up all the numbers expecting that a contract will be completely fulfilled, you end up with astronomical numbers of rounds of ammunition. That is an incredibly irresponsible way to report those numbers, because it puts a very positive, money-saving process in a very negative light. A much better reporting process would be to report the actual number of rounds delivered from the manufacturing companies.

So if the the ammunition manufacturing companies are running at capacity and the government isn’t actually buying all those rounds, who is responsible for the ammunition shortages? The answer is simple; you are, and I am. In days past, many gun owners only had a box or two of ammunition at home. If we were going to the range, we might stop off at the local sports store to get what we thought we would burn up on the way. Only those who were “radical” or shot competitively (or reloaded their own) dealt with bulk quantities of ammunition. Then along come the reports that ammunition may be scarce, and we all run out to the stores and buy a large supply. There is a small amount of buffer in the supply lines, but with everyone purchasing anything they can get their hands on for fear of it being unavailable, that supply is quickly depleted. It becomes a self-fulfilling prophecy. You are afraid there soon may not be any ammunition, so you buy more ammunition than you normally would, thus making it scarce.

It is probably also true that Reid, Schumer, Feinstien, Obama, and others are the finest gun and ammunition salesmen that have ever lived. They have managed to motivate us to purchase weapons and ammunition that we simply wouldn’t purchase before. We moved on purchases that we had been questioning or in quantities that we never dreamed we would. Thus, the supply couldn’t keep up with the average gunowner’s extraordinary demand, rather than the government’s extraordinary demand.

The Practicality of Bartering Ammunition, from JWR

Some folks have suggested that in a post-collapse environment, bartering your extra ammunition, telegraphs that you have a stash of stuff that is worth looting. I disagree! I would not barter ammo if I lived somewhere like downtown Indianapolis or greater Dallas, but the benefits outweigh the risks for those of us who live out in the boonies. I will feel safer knowing that my neighbors have a couple of thousand rounds of ammo on hand.