Department of Defense awarded $120M contract for ammunition manufacturing, with a final value of $53.7M

Contract Overview

Contract Amount: $53,714,333 ($53.7M)

Contractor: Canadian Commercial Corporation

Awarding Agency: Department of Defense

Start Date: 2007-02-21

End Date: 2015-03-13

Contract Duration: 2,942 days

Daily Burn Rate: $18.3K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 120MM FRPC/HE

Plain-Language Summary

Department of Defense obligated $53.7 million to CANADIAN COMMERCIAL CORPORATION for work described as: 120MM FRPC/HE Key points: 1. Contract value significantly lower than initial award suggests potential for cost savings or scope adjustments. 2. Competition dynamics indicate a robust bidding environment for ammunition manufacturing. 3. Long contract duration (2942 days) may present risks related to technological obsolescence or changing requirements. 4. Fixed-price contract type shifts cost risk to the contractor, potentially incentivizing efficiency. 5. The contract falls within the 'Ammunition (except Small Arms) Manufacturing' sector, a critical defense supply chain component.

Value Assessment

Rating: good

The final award of $53.7M is substantially less than the initial $120M ceiling, indicating strong price negotiation or reduced scope. Benchmarking against similar ammunition manufacturing contracts would provide further insight into value for money, but the significant reduction from the ceiling is a positive signal. The firm fixed-price structure generally promotes cost control.

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 excluded. This could be due to specific technical requirements, security concerns, or other justifications. The number of bidders is not explicitly stated, but the 'limited' competition level suggests fewer than a fully open process, potentially impacting price discovery.

Taxpayer Impact: While not fully open, the exclusion of sources suggests a deliberate process to ensure specific capabilities were met. Taxpayers benefit from competition that aims to balance capability with cost, even if not all potential sources were considered.

Public Impact

The primary beneficiaries are the Department of Defense and its various branches, ensuring a supply of essential ammunition. Services delivered include the manufacturing of ammunition, crucial for military readiness and operations. The geographic impact is likely national, supporting defense logistics and potentially involving multiple manufacturing sites. Workforce implications include jobs in manufacturing, quality control, and logistics within the defense industrial base.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Long contract duration (2942 days) increases the risk of obsolescence for ammunition technology or manufacturing processes.
The 'Exclusion of Sources' aspect of the competition warrants scrutiny to ensure it was justified and did not unduly limit competition.
Reliance on a single contract for a significant portion of ammunition supply could pose a risk if the contractor faces production issues.

Positive Signals

The significant reduction from the ceiling award to the final value suggests effective cost management or negotiation.
Firm Fixed Price contract type aligns incentives for contractor efficiency and cost control.
The contract supports a critical defense capability, ensuring supply chain resilience for essential munitions.

Sector Analysis

This contract falls within the defense industrial base, specifically the manufacturing of ammunition. The market for defense-related manufacturing is characterized by long-term relationships, stringent quality requirements, and significant government oversight. Comparable spending benchmarks would involve analyzing the total federal expenditure on ammunition procurement and manufacturing contracts over time.

Small Business Impact

The data indicates this contract was not set aside for small businesses (ss: false, sb: false). There is no explicit information on subcontracting plans. The focus on a large-scale ammunition manufacturing contract typically involves prime contractors with substantial production capabilities, potentially limiting direct opportunities for small businesses unless they are part of the prime's supply chain.

Oversight & Accountability

Oversight for this contract would typically be managed by the Department of the Army's contracting and program management offices. Accountability measures are inherent in the firm fixed-price structure and performance requirements. Transparency is facilitated through contract databases like FPDS, though specific details of performance and oversight activities may be internal. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Ordnance, Bombs, and Related Components
Small Arms Ammunition
Guided Missile and Missile Components
Military Ammunition Production

Risk Flags

Long contract duration may increase risk of obsolescence.
Competition was not fully open, requiring justification for excluded sources.
Specific ammunition types not detailed in summary data.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $53.7 million to CANADIAN COMMERCIAL CORPORATION. 120MM FRPC/HE

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 $53.7 million.

What is the period of performance?

Start: 2007-02-21. End: 2015-03-13.

What specific types of ammunition were covered under this contract?

The contract falls under the Product Service Code (PSC) NA, which corresponds to 'Ammunition (except Small Arms) Manufacturing.' While the specific types of ammunition are not detailed in the provided data, this classification suggests a broad range of munitions excluding small arms, potentially including artillery shells, mortar rounds, tank rounds, and related components. Further investigation into the contract's statement of work or specific line items would be necessary to identify the exact munitions produced.

How does the final award value of $53.7M compare to the initial ceiling of $120M, and what does this imply?

The final award value of $53.7 million is less than half of the initial ceiling of $120 million. This significant difference suggests several possibilities: the initial ceiling was set conservatively to allow for maximum flexibility in scope and pricing; the contractor was highly competitive on price; or the actual requirements and scope of work were less than initially anticipated. In any case, it indicates a favorable outcome for the government in terms of cost realization, potentially due to effective negotiation or competitive bidding that drove down prices below the maximum anticipated cost.

What are the implications of the 'Full and Open Competition After Exclusion of Sources' award type?

This award type signifies that the solicitation was initially intended for full and open competition, but specific sources were later excluded. The reasons for exclusion could range from failure to meet mandatory technical specifications, security requirements, or other pre-defined criteria. While it implies a level of competition, the exclusion means not all potential offerors were considered in the final evaluation. This can sometimes lead to higher prices than true full and open competition if the excluded sources were significant competitors, but it can also ensure that the awarded contractor possesses highly specialized capabilities deemed essential for the requirement.

What is the typical duration for ammunition manufacturing contracts, and how does this contract's duration compare?

Ammunition manufacturing contracts, especially those involving complex production lines and long-term supply needs, can often have durations spanning several years. This contract's duration of 2942 days (approximately 8 years) is on the longer side, reflecting the strategic importance and potentially the scale of the ammunition requirement. Longer durations can offer stability for both the government and the contractor but also introduce risks such as technological obsolescence, changes in military requirements, and potential contractor performance degradation over time. Shorter, more frequent contracts might offer more flexibility but could lead to less stable production.

What is the significance of the Firm Fixed Price (FFP) contract type for this ammunition contract?

The Firm Fixed Price (FFP) contract type means the contractor is obligated to perform the work for a stated price, regardless of the actual costs incurred. This shifts the cost risk entirely to the contractor. For the government, FFP provides cost certainty and predictability, making budgeting easier. It also incentivizes the contractor to manage costs efficiently and control performance to maximize profit. For ammunition manufacturing, where production processes can be standardized, FFP is a common and effective contract type for controlling government expenditure.

Industry Classification

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

Product/Service Code: AMMUNITION AND EXPLOSIVES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: W15QKN06R0312

Offers Received: 3

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: $53,714,333

Exercised Options: $53,714,333

Current Obligation: $53,714,333

Contract Characteristics

Cost or Pricing Data: NO

Timeline