US Army’s $533M Texas Plant Fails to Produce 155mm Artillery Shells for Ukraine

The Mesquite project was born out of a genuine strategic emergency. The 155 mm shell has become one of the defining munitions of the war in Ukraine, while the US military also needs to replenish its own stocks. Washington set a target of eventually producing 100,000 rounds a month domestically.

The existing American production system was never designed for that scale. Before 2022, shell manufacturing depended heavily on Korean War-era forging techniques concentrated at a single facility in Scranton, Pennsylvania.

Russia’s invasion changed the calculation almost overnight. In December 2022, Congress gave the Department of Defense expanded authority to bypass standard competitive-bidding requirements and use Undefinitized Contracting Actions, or UCAs, in an effort to accelerate production.

UCAs are designed for circumstances in which work needs to begin before all contractual details have been settled. In a war-driven procurement environment, that can be valuable. But the Mesquite project illustrates the other side of the bargain: speed can become a substitute for verification.

Between late 2022 and mid-2025, the Army awarded General Dynamics nearly $600 million in no-bid contracts and UCAs for the facility. General Dynamics selected Turkish machinery supplier Repkon to equip its three production lines with flow-forming technology.

The crucial weakness was that the technology had never been tested or verified on the steel specified for modern US 155 mm shells before it was deployed at scale.

That is the point at which an emergency procurement decision became an industrial gamble.

A factory that could not make its product

The plant opened ceremonially in May 2024. Its subsequent performance was considerably less impressive.

Machines repeatedly failed. Robotic arms handling steel heated to about 1,800°F became soaked in oil, caught fire and swung into other equipment. Presses required workers to use sledgehammers on machinery that was supposed to manufacture shell casings. Repkon components deformed when Chinese steel was used.

Inside the facility, control cabinets reached temperatures of 140°F. Smoke became sufficiently persistent to prompt an OSHA inspection in October 2024, although the inspection resulted in no penalties.

The operational problems were not isolated mishaps. General Dynamics missed eight contractual deadlines and failed multiple First Article Tests, the stage at which production is supposed to demonstrate that a manufacturing process can reliably deliver an item meeting military specifications.

Yet public assurances from General Dynamics chief executive Phebe Novakovic and Army acquisition chief Doug Bush maintained that production was progressing.

By August 2025, the Army had ordered work stopped on two of the three production lines.

A July report by the Department of Defence Inspector General subsequently confirmed the central fact: $533 million had been spent on the facility without producing a single usable artillery shell.

For a programme intended to expand wartime ammunition capacity, the gap between declared readiness and physical output could hardly be more stark.

The contractor did not carry the full cost of failure

The more consequential question is what happened after the failure became impossible to ignore.

The Army did not terminate the contract for default or seek direct financial recovery from General Dynamics. Instead, the government issued the company $26.3 million in progress payments in December 2025, after production lines had already been halted.

The Army says it intends to recover funds through future volume discounts.

That approach matters because it changes the economics of failure. If a contractor knows that a failed strategic programme does not necessarily result in termination, repayment or exclusion from future work, the government is carrying much of the downside risk.

General Dynamics remained in control of the Mesquite facility. Its Ordnance and Tactical Systems division subsequently received another $2.5 billion in defence contracts.

The juxtaposition is difficult to ignore: a facility financed with more than half a billion dollars produced nothing, while the company responsible for it continued to receive major government business.

This does not necessarily mean that every subsequent contract was connected to the Mesquite failure. It does, however, expose a structural problem in a defence market where the government depends on a small number of large contractors for critical capabilities.

The monopoly problem

General Dynamics' position in the artillery-shell market did not emerge with Mesquite.

The company acquired its only domestic competitor in 2020, establishing a virtual monopoly over US 155 mm shell-body production. That concentration matters when the Pentagon is trying to expand output quickly.

Competition is not merely an economic preference in such circumstances. It is also a mechanism for accountability.

When several capable suppliers can compete for a programme, failure by one contractor can create an opportunity for another to take over. When industrial capacity is concentrated in a handful of firms, the government has fewer credible alternatives.

The result is a difficult asymmetry. The Pentagon can impose contractual requirements on a prime contractor, but the practical consequences of enforcing them may be constrained by the government's own dependence on that contractor's industrial base.

Mesquite therefore exposes a paradox at the heart of America's effort to rebuild its defence manufacturing capacity. Washington wants more private-sector capacity, but the urgency of the task is simultaneously strengthening the position of the firms already capable of supplying it.

The Ukraine deadline is also an industrial deadline

The consequences extend beyond one factory in Texas.

The Mesquite lines were supposed to become a central component of the effort to reach 100,000 domestically produced 155 mm shells per month. Every production line that fails to deliver leaves the military with a larger gap between planned capacity and actual capacity.

That gap affects two priorities at once: replenishing US stockpiles and sustaining supplies for Ukraine.

The strategic lesson is uncomfortable. A government can announce a production target, allocate hundreds of millions of dollars and open a factory, yet none of those steps constitute military readiness unless the production process works.

The Mesquite experience also complicates the argument for simply spending more. The administration is proposing to expand the US defence budget from roughly $1 trillion to $1.5 trillion, alongside additional spending connected to military operations in the Middle East.

More money can increase capacity. But if procurement systems allow unverified technology to move directly into critical programmes, larger budgets can also magnify the cost of failure.

A new role for AI cannot fix an old procurement problem

General Dynamics has recently announced plans to bring artificial intelligence technology from startup Deterrence into the facility in an effort to resolve its operational problems.

That may eventually help the machinery work more reliably. But it does not answer the question that came first: why was an unverified manufacturing process allowed to become the foundation of a critical military production programme in the first place?

AI can potentially improve an industrial process after the fact. It cannot retroactively create competitive bidding, technical validation or contractual leverage.

The deeper issue is therefore not whether Mesquite can eventually be made functional. It is whether the procurement model that produced the failure is becoming normal.

Emergency contracting powers were created because Ukraine demonstrated how quickly modern war can consume ammunition. The danger is that emergency rules become permanent habits: competitive safeguards are treated as obstacles, technical verification as something that can happen later, and contractor dependence as an unavoidable feature of the defence industrial base.

The Inspector General's findings established that the factory delivered zero usable shells. Yet the institutional response did not centre on forcing the contractor to absorb the full financial consequences of that outcome.

That is the more important signal from Mesquite.