Department of Defense awards $34.5M for naval systems, with limited competition and a long performance period

Contract Overview

Contract Amount: $34,503,777 ($34.5M)

Contractor: Canadian Commercial Corporation

Awarding Agency: Department of Defense

Start Date: 2021-06-30

End Date: 2025-04-30

Contract Duration: 1,400 days

Daily Burn Rate: $24.6K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: TURRET P/N 45000-49 - SOUTH KOREA

Plain-Language Summary

Department of Defense obligated $34.5 million to CANADIAN COMMERCIAL CORPORATION for work described as: TURRET P/N 45000-49 - SOUTH KOREA Key points: 1. The contract value of $34.5 million represents a significant investment in naval systems. 2. Competition was limited, raising questions about potential price efficiencies. 3. The contract duration of 1400 days suggests a long-term need for these systems. 4. The prime contractor, Canadian Commercial Corporation, is a foreign entity, which may have implications for domestic industry. 5. The specific nature of the 'TURRET P/N 45000-49' indicates a specialized component within a larger system. 6. The absence of small business set-aside flags suggests this contract was not specifically targeted for small business participation.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without more specific details on the 'TURRET P/N 45000-49' and its components. The $34.5 million award over approximately 3.8 years (1400 days) suggests a substantial per-year investment. However, the lack of competitive bidding makes it difficult to assess if this price represents optimal value for money compared to potential market alternatives. Further analysis would require understanding the unique specifications and the availability of alternative suppliers.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

This contract was awarded under a 'NOT COMPETED' status, indicating that a full and open competition was not conducted. The specific reasons for this limited competition are not detailed in the provided data. Typically, limited competition can arise from factors such as urgent needs, the unavailability of multiple responsible sources, or specific national security requirements. The lack of multiple bidders means that the government did not benefit from the price discovery mechanisms inherent in a competitive bidding process.

Taxpayer Impact: Limited competition can potentially lead to higher costs for taxpayers as the government may not secure the most favorable pricing available in a more open market. It also reduces the opportunity for a wider range of businesses to compete for government contracts.

Public Impact

The primary beneficiaries are likely the Department of the Navy and its operational readiness, through the acquisition of critical naval systems. The services delivered involve the provision of specialized turret components, essential for the functioning of naval vessels. The geographic impact is primarily within the operational theaters of the U.S. Navy, with the components likely integrated into vessels deployed globally. Workforce implications may include specialized manufacturing and integration roles, potentially involving both domestic and international labor depending on the supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition may result in suboptimal pricing for taxpayers.
Reliance on a single source or limited sources can create supply chain vulnerabilities.
The foreign prime contractor raises questions about domestic industrial base support and potential geopolitical risks.

Positive Signals

The contract addresses a specific and likely critical need for naval systems.
The firm fixed price contract type provides cost certainty for the government.
The long duration suggests a stable and predictable supply of essential components.

Sector Analysis

This contract falls within the 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' sector, which is a specialized segment of the broader defense industrial base. This sector is characterized by high technological barriers to entry, significant R&D investment, and often involves complex, custom-engineered solutions. Spending in this area is critical for maintaining national security and technological superiority in defense systems. Comparable spending benchmarks would typically be found within other major defense procurements for similar complex systems.

Small Business Impact

The provided data indicates that this contract was not subject to small business set-aside provisions (ss: false, sb: false). This suggests that the procurement was not specifically designed to encourage participation from small businesses. Consequently, there are no direct subcontracting implications for small businesses mandated by this award. The absence of set-asides means that opportunities for small businesses to participate in this specific contract are likely limited to the general supply chain, rather than through direct contractual relationships.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and procurement regulations. The specific agency, the Department of the Navy, would have its own internal oversight mechanisms to monitor performance, quality, and delivery. As a firm fixed-price contract, there is a degree of cost control built-in. Transparency regarding the limited competition and the specific justification for it would be subject to federal procurement transparency rules, though detailed justifications for sole-source or limited-source awards are not always publicly disseminated. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Naval Vessel Component Procurement
Defense System Manufacturing
Search and Navigation Equipment
Guidance System Manufacturing
Aeronautical and Nautical Instruments

Risk Flags

Limited Competition
Foreign Prime Contractor
Long Performance Period

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $34.5 million to CANADIAN COMMERCIAL CORPORATION. TURRET P/N 45000-49 - SOUTH KOREA

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 $34.5 million.

What is the period of performance?

Start: 2021-06-30. End: 2025-04-30.

What is the specific function and criticality of 'TURRET P/N 45000-49' within the naval systems it supports?

The provided data identifies 'TURRET P/N 45000-49' as a component for naval systems, falling under the North American Industry Classification System (NAICS) code 334511 for Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing. While the exact function is not detailed, 'turret' typically implies a rotating mount for weaponry, sensors, or other equipment. Its criticality is suggested by the substantial contract value of $34.5 million and a long performance period of 1400 days (approximately 3.8 years), indicating it is a vital and long-term requirement for the Department of the Navy. The limited competition further underscores its specialized nature or the perceived lack of alternative suppliers, implying a high degree of importance for specific naval platforms.

How does the pricing of this contract compare to similar naval system components or industry benchmarks?

Direct price comparison for 'TURRET P/N 45000-49' is difficult without detailed specifications and market data for comparable components. The contract is a Firm Fixed Price (FFP) award valued at $34.5 million over 1400 days. The NAICS code 334511 covers a broad range of systems, making direct benchmarking challenging. However, the 'NOT COMPETED' status raises a red flag regarding potential value for money. In a competitive environment, FFP contracts often reflect negotiated prices based on multiple bids. The absence of competition here means the government did not leverage market forces to ensure the lowest possible price. Without access to cost breakdowns or data on similar turret systems procured competitively, it's impossible to definitively state if $34.5 million is high or low, but the procurement method suggests a risk of suboptimal pricing.

What are the primary risks associated with awarding this contract to a foreign entity (Canadian Commercial Corporation)?

Awarding this contract to the Canadian Commercial Corporation (CCC), a foreign entity, presents several potential risks. Firstly, there are geopolitical considerations; reliance on foreign suppliers for critical defense components can be a strategic vulnerability, especially during international tensions. Secondly, there may be implications for the U.S. domestic industrial base, potentially hindering the growth or maintenance of domestic capabilities in specialized manufacturing. Thirdly, supply chain management and oversight can be more complex with international partners, potentially leading to longer lead times or difficulties in addressing quality control issues promptly. Finally, intellectual property protection and export control regulations become more intricate when dealing with foreign entities for sensitive defense technology.

What is the historical spending pattern for similar naval system components by the Department of the Navy?

Historical spending data for 'TURRET P/N 45000-49' specifically is not available in the provided snippet. However, the Department of the Navy consistently invests heavily in naval systems, including sensors, navigation equipment, and weapon platforms, which fall under NAICS 334511. Annual budgets for shipbuilding and systems procurement run into billions of dollars. Contracts for complex systems like turrets, especially those requiring specialized manufacturing and integration, often represent significant individual awards. The $34.5 million for this specific component, while substantial, is likely part of a larger, ongoing investment strategy by the Navy to modernize its fleet and maintain operational readiness. Analyzing broader spending trends within defense procurement databases would reveal patterns of investment in similar technological areas.

What are the implications of the long contract duration (1400 days) for program management and potential obsolescence?

A contract duration of 1400 days (approximately 3.8 years) for the delivery of naval system components implies a long-term requirement and a phased delivery schedule. For program management, this extended period necessitates robust oversight to ensure milestones are met, quality is maintained, and costs remain controlled. It allows for integration into larger platform development or upgrade cycles. However, a significant risk associated with such long durations is technological obsolescence. The defense technology landscape evolves rapidly; components developed and delivered over nearly four years could potentially be outdated by the time they are fully integrated or operational, or by the end of their service life. This requires careful planning, potential technology refresh strategies, and ensuring the chosen technology has a viable upgrade path.

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

Offers Received: 1

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: $34,694,666

Exercised Options: $34,503,777

Current Obligation: $34,503,777

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N6833518G0029

IDV Type: BOA

Timeline