DoD's $25.7M purchase of search and navigation systems lacked competition, raising value concerns

Contract Overview

Contract Amount: $25,731,798 ($25.7M)

Contractor: Canadian Commercial Corporation

Awarding Agency: Department of Defense

Start Date: 2018-12-20

End Date: 2020-02-28

Contract Duration: 435 days

Daily Burn Rate: $59.2K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: LARGE GIMBAL SYSTEM

Plain-Language Summary

Department of Defense obligated $25.7 million to CANADIAN COMMERCIAL CORPORATION for work described as: LARGE GIMBAL SYSTEM Key points: 1. The contract was awarded on a sole-source basis, limiting price discovery and potentially increasing costs. 2. The fixed-price contract type offers some cost certainty but doesn't mitigate the risk of overpayment due to lack of competition. 3. The duration of the contract (435 days) is moderate, but the absence of competition is a persistent risk indicator. 4. Performance context is limited due to the sole-source nature, making it difficult to benchmark against other similar systems. 5. The procurement falls within the defense sector's broader spending on advanced navigation and guidance systems.

Value Assessment

Rating: questionable

Benchmarking the value of this $25.7 million contract is challenging due to its sole-source award. Without competitive bids, it's difficult to ascertain if the price reflects fair market value. The fixed-price nature provides some cost control, but the lack of competition means the government may have paid a premium compared to a competed procurement. Further analysis would require access to internal cost estimates or comparable sole-source awards for similar systems.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor was solicited. The Canadian Commercial Corporation was the awardee, suggesting a specific international agreement or unique capability. The lack of open competition means there was no opportunity for multiple bidders to offer their solutions, which typically drives down prices and encourages innovation.

Taxpayer Impact: Sole-source awards limit the government's ability to secure the best possible price through market forces. Taxpayers may bear a higher cost when competition is absent, as the awarded price is not tested against alternative offers.

Public Impact

The Department of Defense is the primary beneficiary, receiving advanced search, detection, navigation, guidance, and control systems. These systems are critical for military operations, enhancing situational awareness and operational effectiveness. The geographic impact is primarily within defense installations and operational theaters where the Navy deploys these systems. The contract supports specialized manufacturing and technical expertise within the defense industrial base.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated pricing.
Sole-source awards can reduce transparency in pricing.
Dependence on a single supplier could create future supply chain risks.

Positive Signals

Fixed-price contract provides cost certainty for the awarded scope.
Award to a trusted international partner (Canadian Commercial Corporation) may indicate strategic alignment.

Sector Analysis

This contract falls within the defense sector's significant investment in advanced electronic systems, specifically those related to navigation and detection. The market for such specialized equipment is often characterized by high barriers to entry due to technological complexity and stringent performance requirements. Comparable spending benchmarks are difficult to establish without knowing the specific system's capabilities, but the overall defense electronics market is substantial, with billions allocated annually to similar technologies.

Small Business Impact

There is no indication that this contract involved small business set-asides or subcontracting opportunities. The sole-source nature and the award to a foreign commercial corporation suggest that small business participation was likely minimal or non-existent.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Navy's contracting and program management offices. Transparency is limited due to the sole-source award, making public scrutiny of the pricing and justification more difficult. Inspector General jurisdiction would apply if any fraud or mismanagement were suspected.

Related Government Programs

Defense Advanced Research Projects Agency (DARPA) programs
Naval Air Systems Command (NAVAIR) procurements
Intelligence, Surveillance, and Reconnaissance (ISR) systems
Guidance, Navigation, and Control (GNC) systems

Risk Flags

Sole-source award
Lack of competition
Potential for overpricing
Limited transparency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $25.7 million to CANADIAN COMMERCIAL CORPORATION. LARGE GIMBAL SYSTEM

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 Navy).

What is the total obligated amount?

The obligated amount is $25.7 million.

What is the period of performance?

Start: 2018-12-20. End: 2020-02-28.

What specific capabilities does the 'LARGE GIMBAL SYSTEM' provide to the Department of the Navy?

The 'LARGE GIMBAL SYSTEM' is categorized under NAICS code 334511, which pertains to Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing. This suggests the system is likely a sophisticated piece of equipment designed to enhance the Navy's capabilities in areas such as radar, sonar, or optical surveillance, potentially involving stabilized platforms (gimbals) for precise aiming or tracking of targets. Its application could range from maritime surveillance and anti-submarine warfare to aerial reconnaissance and missile guidance systems, directly supporting the Navy's operational readiness and mission effectiveness in complex environments.

Why was this contract awarded on a sole-source basis instead of being competed?

The provided data indicates the contract was awarded as 'NOT COMPETED,' signifying a sole-source procurement. Specific justifications for sole-sourcing are not detailed in the data but typically fall under categories such as the existence of only one responsible source, urgent and compelling needs, or specific international agreements. Given the awardee is the Canadian Commercial Corporation, it's plausible that this procurement was facilitated through a government-to-government agreement or involved a unique, proprietary technology exclusively available from a Canadian entity, making full and open competition impractical or impossible under the Federal Acquisition Regulation (FAR) exceptions.

How does the $25.7 million contract value compare to similar procurements for navigation systems?

Direct comparison of the $25.7 million contract value is difficult without knowing the precise specifications and capabilities of the 'LARGE GIMBAL SYSTEM.' However, the Department of Defense frequently procures advanced navigation, guidance, and search systems, with individual contract values ranging from a few million to hundreds of millions of dollars, depending on complexity and quantity. The sole-source nature of this award raises concerns about whether this price represents optimal value compared to what might have been achieved through a competitive process. Benchmarking would ideally involve comparing it to other sole-source awards for highly specialized, non-commercial items or, more effectively, to prices achieved in competed contracts for systems with similar performance characteristics.

What are the potential risks associated with awarding a $25.7 million contract without competition?

The primary risk associated with awarding a $25.7 million contract without competition is the potential for paying a higher price than necessary. Without the pressure of competing bids, the sole-source provider may not have the same incentive to offer the lowest possible price. Other risks include a lack of transparency in the pricing structure, potentially limited innovation if the contractor is not pushed by market demands, and a reduced ability to benchmark the value against industry standards. Furthermore, reliance on a single source can create vulnerabilities in the supply chain and long-term support if that source faces difficulties.

What is the track record of the Canadian Commercial Corporation as a federal contractor?

The Canadian Commercial Corporation (CCC) acts as a government-to-government contracting agency for international trade. Its track record as a federal contractor for the U.S. Department of Defense involves facilitating the procurement of Canadian goods and services. CCC has been involved in numerous transactions, often for complex defense equipment and systems, leveraging its status to streamline cross-border acquisitions. While specific performance metrics for individual contracts are not publicly detailed in aggregate, CCC's role is generally to ensure reliable access to Canadian defense capabilities for allied nations, implying a focus on meeting contractual obligations and facilitating government-to-government procurement processes.

How does this contract fit into the broader spending patterns for defense navigation and detection systems?

This $25.7 million contract for a 'LARGE GIMBAL SYSTEM' fits within the substantial and ongoing U.S. Department of Defense investment in advanced technologies for situational awareness, navigation, and detection. The defense sector consistently allocates significant portions of its budget to acquiring sophisticated electronic systems, including radar, sonar, electro-optical sensors, and navigation aids, which are crucial for maintaining military superiority. While this specific contract represents a fraction of the total defense budget, it is indicative of the demand for specialized, high-performance equipment that supports a wide range of naval and potentially aerial operations. Broader spending patterns show a continuous need for upgrades and new systems in this category to counter evolving threats and enhance operational capabilities.

Industry Classification

NAICS: Manufacturing › Navigational, Measuring, Electromedical, and Control Instruments Manufacturing › Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing

Product/Service Code: COMM/DETECT/COHERENT RADIATION

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0016417RJQ35

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Government of Canada (UEI: 241015486)

Address: 350 ALBERT ST SUITE 700, OTTAWA

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

Financial Breakdown

Contract Ceiling: $25,731,798

Exercised Options: $25,731,798

Current Obligation: $25,731,798

Subaward Activity

Number of Subawards: 1

Total Subaward Amount: $25,731,798

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0016418GJQ35

IDV Type: BOA

Timeline