DoD's $25.2M satellite communication upgrade contract awarded to Canadian Commercial Corporation without competition

Contract Overview

Contract Amount: $25,240,278 ($25.2M)

Contractor: Canadian Commercial Corporation

Awarding Agency: Department of Defense

Start Date: 2021-01-15

End Date: 2023-09-30

Contract Duration: 988 days

Daily Burn Rate: $25.5K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: C5 COMMUNICATION, NAVIGATION, SURVEILLANCE/AIR TRAFFIC MANAGEMENT UPGRADE SATELLITE COMMUNICATION PRODUCTION

Plain-Language Summary

Department of Defense obligated $25.2 million to CANADIAN COMMERCIAL CORPORATION for work described as: C5 COMMUNICATION, NAVIGATION, SURVEILLANCE/AIR TRAFFIC MANAGEMENT UPGRADE SATELLITE COMMUNICATION PRODUCTION Key points: 1. Contract awarded to a foreign government entity raises questions about value and competition. 2. Lack of competition suggests potential for overpayment and reduced innovation. 3. The contract's duration of 988 days indicates a significant, long-term commitment. 4. Focus on communication, navigation, and surveillance systems highlights critical defense infrastructure. 5. The 'Other Aircraft Parts' NAICS code may not fully capture the scope of satellite communication upgrades.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to the lack of competitive bids and the specific nature of the services. The award to a foreign government entity, the Canadian Commercial Corporation, suggests a unique procurement pathway that may bypass standard market price discovery. Without comparable contracts or detailed cost breakdowns, assessing whether the $25.2 million represents a fair price for the satellite communication upgrade is difficult. Further analysis would be needed to understand the cost drivers and compare them to similar international procurements or commercial off-the-shelf solutions.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning there was no open competition. The Canadian Commercial Corporation (CCC) is a Canadian federal Crown corporation that helps Canadian companies export goods and services. Its involvement suggests a government-to-government agreement rather than a typical competitive procurement process. The absence of multiple bidders means that the government did not benefit from price negotiation or a range of technical solutions that competition typically provides, potentially leading to less favorable terms.

Taxpayer Impact: The lack of competition means taxpayers did not benefit from potential cost savings that could have arisen from a bidding process. This sole-source award bypasses the opportunity for multiple vendors to compete, which usually drives down prices and encourages innovation.

Public Impact

The primary beneficiaries are the Department of the Air Force, receiving upgraded communication systems essential for air traffic management and surveillance. The contract delivers critical satellite communication hardware and services, enhancing operational capabilities. The geographic impact is likely global, supporting air operations and command and control across various theaters. Workforce implications may involve specialized technical personnel for installation, maintenance, and operation of the new systems.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award to a foreign entity limits transparency and potential for cost savings.
Lack of competition may result in higher prices than a competitively bid contract.
The specific nature of the upgrade and its integration into existing systems could present technical risks.
Reliance on a single foreign supplier could create long-term dependency and supply chain vulnerabilities.

Positive Signals

Award to Canadian Commercial Corporation may leverage established international cooperation agreements.
Focus on critical communication, navigation, and surveillance systems addresses essential defense needs.
The contract duration suggests a commitment to ensuring sustained operational capability.

Sector Analysis

The defense sector, particularly within aerospace and communications, is characterized by high R&D costs, long product lifecycles, and significant government procurement. Contracts for communication, navigation, and surveillance (CNS) systems are vital for military operations, often involving specialized technology and stringent performance requirements. The market for such systems is typically dominated by a few large prime contractors and specialized suppliers. Spending in this area is substantial, reflecting the ongoing need to modernize aging infrastructure and adopt new technologies to maintain a strategic advantage. This contract fits within the broader category of defense electronics and aerospace manufacturing.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. The award to the Canadian Commercial Corporation, a foreign government entity, further suggests that small business participation through subcontracting is unlikely to be a primary focus or requirement of this specific agreement. Without explicit set-aside goals or mandated subcontracting plans for U.S. small businesses, the direct impact on the small business ecosystem is minimal for this particular award.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's internal procurement and financial management systems. Given the award to a foreign entity via the Canadian Commercial Corporation, oversight may also involve intergovernmental agreements and reporting mechanisms. Transparency is limited due to the sole-source nature of the award. Accountability would be managed through contract performance clauses and the Department of Defense's Inspector General, should any issues arise regarding performance or financial impropriety.

Related Government Programs

DoD Satellite Communications
Air Traffic Control Systems
Defense Communication Networks
Aircraft Navigation Systems
Surveillance and Reconnaissance Equipment

Risk Flags

Sole-source award
Foreign government entity recipient
Lack of competition
Potential for cost overruns due to lack of competition

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $25.2 million to CANADIAN COMMERCIAL CORPORATION. C5 COMMUNICATION, NAVIGATION, SURVEILLANCE/AIR TRAFFIC MANAGEMENT UPGRADE SATELLITE COMMUNICATION PRODUCTION

Who is the contractor on this award?

The obligated recipient is CANADIAN COMMERCIAL CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Air Force).

What is the total obligated amount?

The obligated amount is $25.2 million.

What is the period of performance?

Start: 2021-01-15. End: 2023-09-30.

What is the track record of the Canadian Commercial Corporation (CCC) in delivering similar defense communication systems to the U.S. Department of Defense?

The Canadian Commercial Corporation (CCC) acts as a facilitator for Canadian companies exporting goods and services to foreign governments. Its role is primarily that of a contracting agent, not a direct manufacturer or service provider in the same vein as a prime defense contractor. Therefore, assessing the CCC's 'track record' in delivering defense communication systems directly to the DoD is less about their internal capabilities and more about their success in managing government-to-government agreements and ensuring their Canadian partners fulfill contractual obligations. Information on specific past performance of CCC in managing similar large-scale U.S. DoD contracts for satellite communication upgrades is not readily available in public databases, suggesting this may be a unique or less common type of arrangement. The DoD would likely have internal assessments of CCC's performance on this specific contract.

How does the $25.2 million contract value compare to similar satellite communication upgrade projects within the Department of Defense?

Direct comparison of the $25.2 million contract value for this specific satellite communication upgrade is difficult without more detailed information on the scope of work, technology involved, and duration. However, the Department of Defense frequently awards large contracts for communication systems, with values often ranging from tens to hundreds of millions of dollars, and sometimes billions for major programs. For instance, contracts for satellite ground systems, network modernization, or new satellite constellation development can easily exceed this amount. The 'Other Aircraft Parts' NAICS code might suggest a component-level upgrade rather than a full system overhaul, which could place $25.2 million within a reasonable range for specific hardware procurements. However, the sole-source nature and award to a foreign entity complicate direct benchmarking against competitively procured, domestically sourced contracts.

What are the primary risks associated with awarding a sole-source contract for critical defense infrastructure to a foreign government entity?

Awarding a sole-source contract for critical defense infrastructure like satellite communication systems to a foreign government entity, such as the Canadian Commercial Corporation (CCC), presents several risks. Firstly, the lack of competition can lead to inflated costs, as there is no market pressure to offer the best price. Secondly, transparency in pricing and performance metrics may be reduced compared to a competitive bid process. Thirdly, there's a potential for supply chain vulnerabilities and dependency on a foreign entity for essential services and equipment, which could be problematic during geopolitical tensions or trade disputes. Lastly, ensuring adherence to U.S. security protocols and data protection standards might require additional scrutiny and specific contractual clauses when dealing with foreign partners.

What is the expected effectiveness of the upgraded communication systems in enhancing the Air Force's C4ISR capabilities?

The effectiveness of the upgraded communication systems in enhancing the Air Force's Command, Control, Communications, Computers, Intelligence, Surveillance, and Reconnaissance (C4ISR) capabilities hinges on the specific technologies being implemented. Satellite communication upgrades typically aim to improve bandwidth, reduce latency, increase reliability, and enhance security of data transmission. For the Air Force, this translates to better real-time intelligence sharing, more robust command and control links for air operations, improved situational awareness for pilots and ground commanders, and more secure communication channels. The contract's focus on 'Communication, Navigation, Surveillance/Air Traffic Management' suggests improvements in these core areas, which are fundamental to maintaining air superiority and operational effectiveness in complex environments.

How does this contract align with historical spending patterns for aircraft parts and auxiliary equipment manufacturing by the Department of Defense?

This contract, falling under NAICS code 336413 (Other Aircraft Parts and Auxiliary Equipment Manufacturing), aligns with the Department of Defense's consistent and substantial spending in this category. The DoD is a major purchaser of aircraft components, systems, and related manufacturing services to maintain and upgrade its vast fleet. Historical spending data shows billions of dollars allocated annually to this sector. While $25.2 million is a significant sum for a single contract, it represents a fraction of the total DoD expenditure on aircraft parts and manufacturing. The specific nature of this contract—satellite communication upgrades—indicates a specialized segment within this broader manufacturing category, focusing on advanced electronics and communication technology integrated into aircraft platforms or support systems.

What are the implications of the contract's firm-fixed-price (FFP) type on cost control and contractor risk?

A Firm-Fixed-Price (FFP) contract type, like the one used here, places the primary risk of cost overruns on the contractor. This means the contractor is obligated to complete the work for the agreed-upon price, regardless of their actual costs. For the government, this offers a high degree of cost certainty, as the total price is fixed upfront. This structure incentivizes the contractor to manage their costs efficiently and perform the work effectively to maximize their profit margin. However, for complex or technically uncertain projects, FFP contracts can sometimes lead contractors to inflate their initial bids to account for potential risks, or to cut corners on quality if not adequately monitored. In this case, with a sole-source award, the government's ability to ensure the FFP reflects true value is diminished without competitive benchmarking.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Other Aircraft Parts and Auxiliary Equipment Manufacturing

Product/Service Code: AEROSPACE CRAFT AND STRUCTURAL COMPONENTS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Government of Canada

Address: 350 ALBERT ST SUITE 700, OTTAWA

Business Categories: Category Business, Foreign Government, Not Designated a Small Business, Special Designations

Financial Breakdown

Contract Ceiling: $30,985,242

Exercised Options: $25,240,278

Current Obligation: $25,240,278

Actual Outlays: $1,385,504

Subaward Activity

Number of Subawards: 7

Total Subaward Amount: $555,792

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Timeline