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## Tuesday, March 20, 2012

### DHS Buys 450 Million Rounds of .40 Ammo

So here's the scoop:

The DHS is buying 450 million rounds of .40 ammo (pistol ammo which is largely used by cops)
This ammo is hollow point (self defense as opposed to practice ammo).
There's around 300 million Americans, so that's enough to shoot everyone 1.5 times. But this contract is also indefinite and infinite, in the long run.

They are also buying 175 million rounds of .223 rifle ammo.

This is on the heels of a whole slew of restrictive laws and surveillance announcements.  I hope that all it is is that they were offered a volume discount and thought it was good cheap ammo.  Since the cops are now under DHS, it's only natural that they would use their purchasing power to get a discount. I don't think it's anything sinister that they're buying cop ammo. What worries me is, I don't know if this is normal, or if this is a huge jump in the amount of ammo, like they're expecting something to happen.

On some forum I found an allegation that the ammo was going to be made by a Chinese company, whose controlling stock was owned by high-up government officials.

I checked on this and found that the manufacturer of the ammo is actually Alliant Techsystems Inc. or ATK. (www.atk.com) headquartered in Arlington, VA.  They also make Federal brand ammo (made in the US) and Blackhawk! holsters (I looked at one and it says "USA" on it).  Stock symbol is ATK.  Here is the announcement of the contract on Yahoo News: http://finance.yahoo.com/news/atk-secures-40-caliber-ammunition-123000062.html

ATK also makes missiles and solar power systems for space and stuff.  They say they have 22 locations in the US and some "international" but nowhere on their website can I find which other countries they are also in.

Despite ATK's coyness about their foreign locations, the Chinese will not be making this ammo.  The ammo will be made at Federal Cartridge in Anoka, Minn.  Here is a press release on Business Week:
Alliant Techsystems Inc. Secures .40 Caliber Ammunition Contract with Department of Homeland Security, U.S. Immigration and Customs Enforcement
Alliant Techsystems Inc. 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. ATK was the incumbent and won the contract with its HST bullet, which has proven itself in the field. The special hollow point effectively passes through a variety of barriers and holds its jacket in the toughest conditions. HST is engineered for 100% weight retention, limits collateral damage, and avoids over-penetration. ATK will produce the ammunition at the Federal Cartridge Company facility in Anoka, Minn. Deliveries are expected to begin in June.

Here is what ATK's website had to say about the director of the division that sells this ammo:
Mark H. Ronald
Mr. Ronald served as the chairman of the board of BAE Systems Inc., the wholly-owned U.S. subsidiary of BAE Systems plc, a British aerospace and defense company, during 2007. He served as Chief Operating Officer and a member of the board of directors of BAE Systems plc and President and Chief Executive Officer of BAE Systems Inc. from 2003 to 2006. He is also a director of Aeroflex Incorporated and Cobham plc. From 2007 to 2010, he was a director of DynCorp International Inc.  (emphasis mine)
Here's the whole board of directors http://www.atk.com/CorporateGovernance/corpgov_boardofdirect.asp
I don't see anyone with a current important government job there.  But we're looking for controlling stockholders.

OK, here are the biggest stockholders listed on their 2011 Proxy Statement

Name of Beneficial Owner Ownership(1)(2)(3) Outstanding(4)
First Eagle Investment Management, LLC (5) . . . . . . . . . . . . . . . . . . 3,358,417 10.0%
BlackRock, Inc. (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,120,372 9.3%
FMR LLC (7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,508,262 7.4%
Neuberger Berman Group LLC (8) . . . . . . . . . . . . . . . . . . . . . . . . . 1,772,719 5.3%
Steven J. Cortese . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,323 *
Roxanne J. Decyk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,261 *
Mark W. DeYoung . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26,074 *
Martin C. Faga . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,558 *
Ronald R. Fogleman . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0(9) *
April H. Foley . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,261 *
Tig H. Krekel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,054 *
Blake E. Larson . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39,140 *
Douglas L. Maine . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,081 *
Roman Martinez IV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,000(10) *
Mark H. Ronald . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,857 *
Keith D. Ross . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,657 *
John L. Shroyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,624 *
William G. Van Dyke . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,783 *
All directors and executive officers as a group (19 persons) . . . . . . . . 206,157 *

I still don't see any government people, so I also looked at the proxy statements of First Eagle, FMR and BlackRock.  Hey!  I personally know two of the directors of First Eagle!  Weird. (I guess I get around)

I just don't see any high-up government folks, but if I've missed anything, it would kinda remind me of the naked body scanners.  Michael Chertoff, the DHS secretary under Bush the younger, went shilling for Rapiscan in late 2009, right after the underwear bomber thing.  Rapiscan, which makes the scanners, was paying him to go around promoting them.  Likewise George Soros owned some 11,300 shares, but he sold them in 2010.

(What a name for a naked body scanner company.  Sounds like RAPEscan.  But I think I'm not the first to notice that.)

Well, in a way it's comforting that these bullets will be made in the US, and that two people I know will be making money off it... well, not really.  I just hope these bullets aren't destined to be shot into anyone I know.