In this case, DHS entered into a contract that allows them to purchase up to 450 million rounds of 40 caliber ammunition over the next five years. They cannot exceed 450 million rounds and are not required to purchase 450 million rounds. Basically, they have a tab with a manufacturer to order more rounds as they are needed over the next five years – not a onetime ammunition order.
Setting up contracts in this manner allows for a cheaper purchase price, saving money over the long-term. In fact, contracts like this one saved taxpayers $336 million in FY2011 alone. Additionally, purchasing in bulk like this helps DHS headquarter conduct better oversight over its agencies and ensures consistency among all the agencies under DHS. So, in this case CPB, Immigration and Customs Enforcement (ICE), the U.S. Secret Service, and other DHS agencies will all use the same 40 caliber round so these rounds can move between agencies if need be – another way to potentially save money down the road.
To put this more concisely, just like you and your family take that monthly trip to Sam’s Club or Costco to get your bulk needs cheaply, DHS also buys in bulk because it saves the American taxpayers money.