Velo3D, Inc. (NASDAQ: VELO) shares advanced roughly 10% on Monday after the company announced it had secured a $9.8 million contract with the Defense Logistics Agency (DLA). The agreement runs for five years and is structured as an Indefinite Delivery Indefinite Quantity - or IDIQ - contract to support the DLA's Joint Additive Manufacturing Acceptability Pilot Parts Program.
Under the terms outlined by Velo3D, the company will apply its Laser Powder Bed Fusion manufacturing capability in concert with its Rapid Production Solution framework to produce complex metal components for military sustainment needs. The contract covers parts intended for the Army, Navy, Air Force, Marine Corps, and Space Force, with a focus on items that have historically experienced long lead times, reduced numbers of manufacturing sources, or constrained availability among domestic suppliers.
The JAMA Pilot Parts Program aims to create repeatable technical qualifications and procurement pathways for additively manufactured spare and replacement parts. According to the announcement, the program's objectives include strengthening supply chain resilience for Department of Defense sustainment operations and addressing obsolescence challenges in legacy systems by establishing clearer qualification and procurement processes for additive parts.
Velo3D highlighted the technical scope of work it will provide under the contract. The company's Sapphire printers, which are assembled in the United States, are capable of printing parts up to 600 mm in diameter and up to one meter in height. The Rapid Production Solution pairs advanced additive systems with application engineering expertise and distributed production capacity, designed to support needs from initial part qualification through sustained production and potential surge demand scenarios.
The IDIQ contract structure signals that ordering volumes and delivery timing will be determined through task orders issued over the contract term. The announced value of $9.8 million is tied to the five-year contract window and the programmatic scope defined by the DLA's pilot initiative.
Market reaction to the contract was immediate, with the company's shares climbing on the announcement. The agreement positions Velo3D to participate in a Department of Defense effort to expand the use of additive manufacturing for sustainment, while addressing known supply chain and obsolescence issues for certain spare and replacement components.