I've been patiently trying to explain this to no effect, but here's another try.
DHS IS NOT BUYING 1.6 BILLION ROUNDS IN 2013. DHS IS NOT BUYING 1.6 BILLION ROUNDS OVER THE NEXT FIVE YEARS. PERIOD.
It's an IDIQ (Indefinite Delivery, Indefinite Quantity) contract. It's also a FIVE YEAR contract.
For these contracts, you put a "not to exceed" or an "up to" number that is ridiculously and unrealistically high to make sure you have NO chance to go over it. For EACH type of round, some low-level contract flunky at DHS put a ridiculously high number in the contract, at least 2, or even 3 or 4 times more rounds than they expect to buy; when you ADD all of those numbers up, you get an even more ridiculously high number.
Those "up to" numbers haven't been purchased and aren't required to be purchased. The ACTUAL purchases are individual purchase orders under the overarching IDIQ.
Here's an example of one of these contracts (military); the DHS ammo contract is exactly like this:
Those deals list the maximum values of awards over multiyear periods, rather than guaranteed funding, and there is little chance the companies will receive the announced contract values.
In some cases, the Defense Department announces contracts with unrealistically high ceilings to avoid the inconvenience of altering agreements later to meet unexpected needs, said Friel of Bloomberg Industries.
For example, Tactical & Survival Specialties Inc. won the department’s biggest award last month, with a potential maximum value of $5.6 billion. The closely held Harrisonburg, Virginia-based company sells gear such as body armor, flashlights and pocket knives.
It has supplied the Pentagon under the tactical equipment program since 2009 and received just $29 million in orders in fiscal 2012, according to data compiled by Bloomberg.