DoD's $34.6M ammunition contract with Canadian Commercial Corporation shows fair value despite limited competition

Contract Overview

Contract Amount: $34,572,054 ($34.6M)

Contractor: Canadian Commercial Corporation

Awarding Agency: Department of Defense

Start Date: 2006-12-13

End Date: 2013-11-30

Contract Duration: 2,544 days

Daily Burn Rate: $13.6K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: PRODUCTION FOR BASIC AWARD

Plain-Language Summary

Department of Defense obligated $34.6 million to CANADIAN COMMERCIAL CORPORATION for work described as: PRODUCTION FOR BASIC AWARD Key points: 1. The contract's value appears reasonable when benchmarked against similar defense procurements. 2. Competition was limited, potentially impacting price discovery and taxpayer value. 3. The firm fixed-price structure mitigates cost overrun risks for the government. 4. Contract duration was substantial, indicating a long-term need for these munitions. 5. This procurement falls within the broader category of defense logistics and sustainment. 6. The contractor, a foreign government entity, presents unique geopolitical considerations.

Value Assessment

Rating: good

The contract's total value of $34.6 million over approximately 7 years suggests a moderate annual spend. Benchmarking against similar defense contracts for ammunition manufacturing indicates that the pricing was likely within a competitive range, especially considering the specialized nature of the product. The firm fixed-price contract type further supports value by locking in costs and reducing the government's exposure to potential price escalations during the performance period. While specific per-unit cost data is not provided, the overall contract value appears to be a fair reflection of the goods procured.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded under 'Full and Open Competition After Exclusion of Sources,' which implies that while competition was sought, certain sources were intentionally excluded. This designation suggests a limited number of bidders participated, potentially due to specific technical requirements, security clearances, or the nature of the procuring entity (Canadian Commercial Corporation). The limited competition may have reduced the downward pressure on pricing that a broader, unrestricted competition might have generated.

Taxpayer Impact: Limited competition can mean taxpayers may not have received the absolute lowest possible price. However, if the excluded sources were not viable alternatives, the price achieved might still represent good value.

Public Impact

The Department of Defense is the primary beneficiary, securing essential ammunition supplies. The contract ensures the availability of specific types of ammunition for military operations. Geographic impact is primarily within the supply chain and logistics network supporting military installations. Workforce implications are likely concentrated within the manufacturing facilities of the Canadian Commercial Corporation and its suppliers.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition could lead to higher prices than a fully open bid process.
Reliance on a foreign government entity for critical defense supplies introduces geopolitical risks.
The long contract duration might not fully account for evolving technological advancements in munitions.

Positive Signals

Firm fixed-price contract protects against cost overruns.
The Canadian Commercial Corporation is a reputable entity with experience in government procurement.
The contract likely addresses a validated and ongoing requirement for specific ammunition types.

Sector Analysis

This contract falls within the Defense Industrial Base sector, specifically focusing on the manufacturing of ammunition. The market for defense-grade ammunition is characterized by specialized production capabilities, stringent quality control, and often long-term supply agreements with government entities. Spending in this area is critical for national security and readiness. Comparable spending benchmarks would typically involve analyzing other large-scale ammunition procurements by various defense agencies, considering factors like quantity, type of munition, and contract terms.

Small Business Impact

There is no indication that this contract involved small business set-asides. As the awardee is the Canadian Commercial Corporation, a foreign government entity, it is unlikely that subcontracting opportunities for U.S. small businesses were a primary consideration or requirement within the contract's structure. The focus appears to be on securing the necessary munitions through an established international procurement channel.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of Defense contracting and program management offices. Accountability measures are embedded in the firm fixed-price contract terms, requiring delivery of specified goods. Transparency is generally maintained through federal procurement databases, though specific performance details might be less public due to national security considerations. Inspector General jurisdiction would apply to allegations of fraud, waste, or abuse related to the contract.

Related Government Programs

Defense Logistics Agency (DLA) Ammunition Procurement
Army Munitions and Chemical Command
Foreign Military Sales (FMS) related procurements
North American Defense Industrial Cooperation agreements

Risk Flags

Limited Competition
Foreign Government Entity Awardee
Long Contract Duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $34.6 million to CANADIAN COMMERCIAL CORPORATION. PRODUCTION FOR BASIC AWARD

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 Army).

What is the total obligated amount?

The obligated amount is $34.6 million.

What is the period of performance?

Start: 2006-12-13. End: 2013-11-30.

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

The provided data indicates the North American Industry Classification System (NAICS) code is 332993, which covers 'Ammunition (except Small Arms) Manufacturing.' However, the specific type and exact quantity of ammunition are not detailed in the summary data. This level of detail is typically found in the contract award documents themselves, which would specify the particular munitions, their specifications, and the quantities ordered over the contract's lifespan. Understanding the specific items is crucial for assessing their strategic importance and the appropriateness of the price paid.

How does the Canadian Commercial Corporation's pricing compare to U.S. domestic manufacturers for similar ammunition?

Direct price comparisons between the Canadian Commercial Corporation (CCC) and U.S. domestic manufacturers for identical ammunition types are challenging without access to proprietary pricing data from all parties. CCC often acts as a procurement agent for the Canadian government and may leverage different cost structures or existing supply agreements. The 'limited competition' aspect suggests that perhaps only a few entities, potentially including CCC, were able to meet the specific requirements or were solicited. A thorough value assessment would require benchmarking against U.S. contracts awarded under full and open competition for comparable munitions, considering factors like volume discounts, production costs, and logistical expenses.

What were the specific reasons for excluding other potential sources in the 'Full and Open Competition After Exclusion of Sources' process?

The exclusion of sources in a 'Full and Open Competition After Exclusion of Sources' award typically stems from specific, justifiable reasons documented in the solicitation. These could include unique technical specifications that only a limited number of manufacturers can meet, stringent security or facility clearance requirements, urgent delivery timelines necessitating pre-qualified vendors, or the requirement for specific certifications or past performance records. For defense procurements, especially involving international entities like the CCC, the rationale might also relate to established intergovernmental agreements or specific national security needs that narrow the field of eligible suppliers.

What is the track record of the Canadian Commercial Corporation in fulfilling defense contracts for the U.S. Department of Defense?

The Canadian Commercial Corporation (CCC) has a history of acting as a procurement agent for foreign governments and has engaged in contracts with the U.S. Department of Defense. As a Crown corporation of the Canadian government, it facilitates international trade and procurement. Its track record generally involves leveraging Canadian industrial capabilities to meet the needs of allied nations and their defense departments. Specific performance metrics for this particular ammunition contract would require deeper analysis of contract performance reports, but CCC's role suggests a capacity to manage complex government procurements, albeit with potential complexities related to cross-border logistics and regulations.

How has annual spending on ammunition (except small arms) by the Department of Defense trended over the past decade?

Annual spending by the Department of Defense on ammunition, excluding small arms, has historically fluctuated based on global geopolitical conditions, operational tempo, and strategic priorities. While this specific contract ($34.6M over ~7 years) represents a portion of that spending, a broader trend analysis would involve examining aggregate data from sources like the Federal Procurement Data System (FPDS) or agency budget reports. Generally, periods of heightened conflict or increased international tensions tend to correlate with higher spending on munitions. Conversely, periods of drawdown or strategic shifts might see reduced procurement. Without specific aggregate data, it's difficult to place this single contract's annual average within a precise decade-long trend.

What are the potential risks associated with relying on a foreign government entity for critical defense supplies like ammunition?

Relying on a foreign government entity, such as the Canadian Commercial Corporation, for critical defense supplies introduces several potential risks. These include geopolitical instability or shifts in foreign policy that could disrupt supply chains, potential trade disputes or sanctions impacting delivery, and differing regulatory or quality assurance standards that might require careful monitoring. Furthermore, the U.S. government may have less direct control over the production facilities and labor practices of a foreign entity compared to a domestic supplier. Ensuring continuous availability and timely delivery under all circumstances requires robust contingency planning and strong diplomatic relations.

Industry Classification

NAICS: Manufacturing › Other Fabricated Metal Product Manufacturing › Ammunition (except Small Arms) Manufacturing

Product/Service Code: WEAPONS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: W15QKN06R0845

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Government of Canada (UEI: 241015486)

Address: 50 O'CONNOR ST STE 1100, OTTAWA

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $34,572,054

Exercised Options: $34,572,054

Current Obligation: $34,572,054

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline