Evaluation of the Need for and Cost of the Proposed New Army Ammunition Plant in Mississippi

As a result of comparative studies of sites for a new ammunition manufacturing complex, the Army concluded that the site at Bay St. Louis, Mississippi, showed an economic advantage over other sites and recommended the construction of the Mississippi Army Ammunition Plant (MAAP). The Army justified the need to expand the production capacity for the 155-mm, M483 artillery round on the basis that the present mobilization production rate, 120,000 rounds a month, was significantly less than its projected requirement of 438,000 rounds a month. The proposed new facility was designed to provide an additional mobilization production capacity of 120,000 rounds a month, assuring a total combined capacity of 240,000 rounds a month or 55% of the projected requirement.

The projected requirement was computed on the basis of a November 1975 study, but a January 1977 study showed that the requirement was about 10% less. However, the Army did not revise its official requirement. The latest study tended to overstate requirements, but this would not preclude the need for additional production capacity planned for MAAP. The Army's 1976 revalidation study concluded that constructing a new M483 complex at Bay St. Louis was the lowest cost alternative at both peacetime and mobilization rates, followed by the modernization and expansion of the existing Louisiana Army Ammunition Plant. The Army understated the estimated labor and transportation operating costs for Mississippi and labor costs for three other locations. When costs were discounted to consider the time value of money, it was found that Mississippi was $2.6 million more than Louisiana at peacetime production rates and $4.7 million less than Louisiana at mobilization production rates. The differences in cost are relatively insignificant, and estimates could be off by millions because of uncertainty in assumptions. Changing sites would delay the project and affect readiness.