Navy awards $12.15M contract for explosives manufacturing, highlighting potential value and competition

Contract Overview

Contract Amount: $12,152,000 ($12.2M)

Contractor: Canadian Commercial Corporation

Awarding Agency: Department of Defense

Start Date: 2023-05-23

End Date: 2026-09-30

Contract Duration: 1,226 days

Daily Burn Rate: $9.9K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: PRODUCTION

Plain-Language Summary

Department of Defense obligated $12.2 million to CANADIAN COMMERCIAL CORPORATION for work described as: PRODUCTION Key points: 1. Contract value appears reasonable given the specialized nature of explosives manufacturing. 2. Full and open competition suggests a healthy market for these services. 3. Contract duration of over three years indicates a need for sustained supply. 4. Fixed-price contract type shifts risk to the contractor. 5. The award to a Canadian entity warrants attention regarding supply chain security. 6. No small business set-aside was utilized, suggesting large prime contractor involvement.

Value Assessment

Rating: good

The contract value of $12.15 million for explosives manufacturing over approximately three years seems within a reasonable range for specialized defense materials. Benchmarking against similar contracts is challenging without more specific details on the type and quantity of explosives. However, the fixed-price nature of the contract suggests that the government has negotiated a price upfront, which can be advantageous if the contractor can deliver efficiently. The award to a Canadian Commercial Corporation entity may indicate a strategic sourcing decision or a lack of domestic capacity for specific items.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple bidders were likely solicited and considered. This approach generally fosters a competitive environment, driving down prices and encouraging innovation. The specific number of bidders is not provided, but the 'full and open' designation suggests a robust bidding process. This level of competition is ideal for ensuring the government receives the best value for its investment in critical defense supplies.

Taxpayer Impact: Full and open competition is beneficial for taxpayers as it increases the likelihood of obtaining competitive pricing and prevents potential price gouging. It ensures that the government is not locked into a single supplier, promoting market efficiency.

Public Impact

The Department of the Navy benefits from a secured supply of essential explosives for its operations. This contract supports the readiness and operational capabilities of naval forces. The geographic impact is primarily on the supply chain and logistics for defense materials. Workforce implications may include specialized manufacturing roles within the contractor's organization.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Award to a foreign entity (Canadian Commercial Corporation) raises questions about domestic industrial base support and potential supply chain vulnerabilities.
Lack of specific details on the type and quantity of explosives makes a precise value assessment difficult.
The absence of small business subcontracting requirements could limit opportunities for smaller domestic firms.

Positive Signals

Full and open competition suggests a competitive market and potential for good value.
Fixed-price contract type transfers cost overrun risk to the contractor.
Contract duration of over three years provides supply chain stability for critical materials.

Sector Analysis

The defense sector relies heavily on specialized manufacturing for a wide array of materials, including explosives. This contract falls within the broader chemical and allied products manufacturing industry, a critical component of the defense industrial base. The market for defense-related explosives is often characterized by stringent quality control, security requirements, and a limited number of qualified suppliers due to the inherent risks and specialized knowledge involved. Spending in this area is directly tied to national security needs and military readiness.

Small Business Impact

This contract does not appear to have a small business set-aside, nor are there explicit indications of subcontracting goals for small businesses. This suggests that the prime contractor, the Canadian Commercial Corporation, is expected to fulfill the requirement directly or through its own established supply chains. The lack of a small business focus in the prime contract could mean fewer direct opportunities for small businesses in this specific award, though they might be involved further down the supply chain.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. The fixed-price nature of the contract simplifies some aspects of financial oversight by setting the cost upfront. Accountability measures would involve ensuring the contractor meets delivery schedules, quality standards, and security protocols. Transparency is generally maintained through contract award databases, though specific performance details may be sensitive.

Related Government Programs

Ordnance and Ammunition Manufacturing
Chemical Manufacturing
Defense Industrial Base Support
Naval Supply Chain Management

Risk Flags

Foreign Sourcing
Supply Chain Risk
Lack of Specific Item Detail

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $12.2 million to CANADIAN COMMERCIAL CORPORATION. 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 Navy).

What is the total obligated amount?

The obligated amount is $12.2 million.

What is the period of performance?

Start: 2023-05-23. End: 2026-09-30.

What is the specific type and quantity of explosives being procured under this contract?

The provided data indicates the North American Industry Classification System (NAICS) code is 325920, which covers 'Explosives Manufacturing.' However, the specific type and precise quantity of explosives are not detailed in the summary data. This information is crucial for a granular assessment of value for money and for comparing this contract to historical or similar procurements. Without these specifics, the analysis relies on broader industry benchmarks and the general nature of explosives manufacturing, which can range from propellants to demolition charges.

How does the unit cost, if determinable, compare to market rates for similar explosives?

Determining a precise unit cost is not possible with the current data, as the total contract value and duration are provided, but not the quantity of items to be delivered. To assess unit cost, one would need to divide the total contract value ($12.15 million) by the number of units procured. Market rates for explosives vary significantly based on type, purity, quantity, and supplier. A thorough comparison would require access to market research reports, industry price lists, or data from previously awarded, comparable contracts. The 'N/A' for CPU reflects this data limitation.

What is the track record of the Canadian Commercial Corporation (CCC) in fulfilling defense manufacturing contracts?

The Canadian Commercial Corporation (CCC) is a Canadian Crown corporation that facilitates international trade for Canadian companies. While CCC itself is not a manufacturer, it acts as a contracting agent, often for defense procurements. Its track record involves successfully facilitating contracts for Canadian goods and services to foreign governments, including defense-related items. Assessing its performance on this specific contract would involve reviewing delivery performance, quality compliance, and adherence to terms. CCC's role is primarily as an intermediary, so the performance of the actual manufacturer it represents is key.

Are there any known risks associated with sourcing explosives from Canada for the U.S. Department of Defense?

Sourcing explosives from Canada generally carries manageable risks, given the close security and trade relationship between the two countries. Potential risks could include longer lead times compared to domestic sourcing, potential disruptions in cross-border logistics, and ensuring compliance with both U.S. and Canadian regulations regarding the transport and handling of explosive materials. However, Canada has robust safety and security standards. The primary concern would be ensuring the reliability and security of the supply chain, especially during geopolitical instability or unforeseen border issues.

What is the historical spending pattern for explosives manufacturing by the Department of the Navy?

Historical spending data for explosives manufacturing by the Department of the Navy would reveal trends in demand, supplier base, and average contract values over time. Analyzing this would require accessing historical contract databases (like FPDS or SAM.gov) and filtering for relevant NAICS codes (e.g., 325920) and agencies. Such analysis could show if this $12.15 million award is consistent with past spending levels, if there has been an increase or decrease in demand, and whether the Navy typically uses full and open competition or other methods for these procurements. It would also highlight key contractors historically.

Does the fixed-price contract type adequately account for potential fluctuations in raw material costs for explosives?

A Firm Fixed Price (FFP) contract, as indicated, means the price is set regardless of the contractor's actual costs. While this shifts cost risk to the contractor, it relies on the contractor's accurate estimation of all potential costs, including raw materials, labor, and overhead, at the time of bidding. If raw material costs for explosives fluctuate significantly and unpredictably after the contract is awarded, the contractor might face reduced profit margins or, in extreme cases, financial distress. However, experienced contractors typically build contingency into their FFP bids to account for such market volatility.

Industry Classification

NAICS: Manufacturing › Other Chemical Product and Preparation Manufacturing › Explosives Manufacturing

Product/Service Code: AMMUNITION AND EXPLOSIVES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: N0017419R0149

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 350 ALBERT ST SUITE 700, OTTAWA

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

Financial Breakdown

Contract Ceiling: $12,152,000

Exercised Options: $12,152,000

Current Obligation: $12,152,000

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0017420D0037

IDV Type: IDC

Timeline