Biting the Bullet

War has always been good for business, and the war on terrorism is no exception, especially for Alliant Techsystems, the company that manufactures more than 90 percent of the small-caliber ammunition used by the U.S. military. In 2000, ATK, as the company is known, was producing about 350 million rounds a year at the Lake City Army Ammunition Plant, a government-owned facility operated by the company on the outskirts of Independence, Mo. Today, ATK is producing 1.2 billion rounds annually, and it is retooling the 60-year-old Lake City plant to produce even more.

"We're shooting it almost as fast as they can produce it," says Maj. Gen. Buford Blount III, an assistant deputy chief of staff for the Army, which is responsible for supplying small-caliber ammunition for all the military services. The challenge is not an academic one for Blount. He commanded the Army's 3rd Infantry Division during the invasion of Iraq, the unit that led the assault on Baghdad in April 2003. Maintaining production is vital to U.S. troops in Iraq, who are expending nearly 6 million rounds a month from the rifles and machine guns that rely on the small-caliber ammunition.

Karen Davies, president of ATK's Lake City operation, has a personal stake in the operation as well. Her son, a soldier in the 25th Infantry Division, will deploy to Iraq this summer. "It's not just me. A lot of our employees have sons and daughters serving in the military. This hits home for a lot of us," she says.

U.S. troops are burning through more rifle and machine-gun ammunition than they have since the Vietnam War. Ongoing operations in Iraq and Afghanistan and stepped-up training requirements for troops deploying overseas are straining the industrial base, Blount says.

The Army is able to supply enough ammunition to meet current needs "without seriously impacting either training or contingency operations," Blount says, but the use of ammunition for training would almost certainly have to be curtailed if the military becomes involved in additional combat operations. "The demands of current operations and the possibility of another major combat operation will cause the Army to make trade-offs between supporting full training requirements and meeting the contingency needs," says Blount.

'A Perfect Storm'

Post-Cold War military planning, specifically the decision to deplete ammunition stockpiles without replenishing them, and current hot wars in Afghanistan and Iraq have combined to dramatically increase demand for these rounds since late 2001. The war in Iraq triggered not only an urgent need for small-caliber ammunition on the battlefield, but an even greater requirement for ammunition to be used in training troops mobilized for war. The war has proved as deadly for troops in support roles as for those in traditional combat positions, causing the Army to redouble its rifleman-skills training for all troops headed for Iraq.

In addition, defense consolidation throughout the 1990s greatly diminished the U.S. industrial base capable of producing ammunition required by the military, says Richard Palaschak, director of operations for the Munitions Industrial Base Task Force, an industry group. "You have, in effect, a perfect storm of demand coming together," says Bryce Hallowell, a spokesman for ATK.

To meet the increased demand, the Army last December let contracts worth $70 million each with two firms, Winchester Ammunition in East Alton, Ill., and Israel Military Industries Ltd., for each firm to produce 300 million rounds of small-caliber ammunition, supplementing the production from the Lake City plant. The firms were the only ones able to meet the military's requirements, says Brig. Gen. Paul Izzo, the Army's program executive officer for ammunition.

The decision to contract with an Israeli firm to provide military ammunition for use in Iraq sparked outrage from Hawaii Rep. Neil Abercrombie, the ranking Democrat on the House Armed Services Committee's panel overseeing land forces. At a June hearing, Abercrombie asked Izzo and Blount to reconsider the decision.

"Can you tell me whose idea it was to contract with a firm in Israel to provide ammunition to kill Muslims? I've never heard of anything so goddamned stupid," Abercrombie said. Panel chairman Rep. Curt Weldon, R-Pa., said the Army shouldn't have to worry about "political correctness" in contracting, but that Abercrombie had a "valid point."

Izzo responded by telling the panel that his job was to fulfill a battlefield requirement, which he did following federal procurement laws. At Abercrombie's urging, Izzo and Blount said the bullets supplied by Israel would be reserved for training and that only American-produced bullets would be used on the battlefield, a distinction that likely has more resonance among lawmakers than among those on the receiving end of the ammunition.

Palaschak, who also testified at the hearing, said that while the Army's decision to outsource ammunition production to a close ally was perhaps regrettable, it was necessary, as there is currently not enough capacity among American companies to meet the demand. U.S. companies would need financial incentives to make the investments in facilities and equipment required for meeting the military's needs, he said.

Booming Business

*Four-year average, with annual peak exceeding 2 billion rounds

Sources: Munitions Industrial Base Task Force; Alliant Techsystems