DoD's $65.5M contract for modular artillery charge systems awarded to Canadian Commercial Corporation

Contract Overview

Contract Amount: $65,498,972 ($65.5M)

Contractor: Canadian Commercial Corporation

Awarding Agency: Department of Defense

Start Date: 2012-09-25

End Date: 2016-08-08

Contract Duration: 1,413 days

Daily Burn Rate: $46.4K/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: MANUFACTURE, PRODUCTION, AND DELIVERY OF MODULAR ARTILLERY CHARGE SYSTEMS (MACS) M31A2 PROPELLANT

Plain-Language Summary

Department of Defense obligated $65.5 million to CANADIAN COMMERCIAL CORPORATION for work described as: MANUFACTURE, PRODUCTION, AND DELIVERY OF MODULAR ARTILLERY CHARGE SYSTEMS (MACS) M31A2 PROPELLANT Key points: 1. Contract awarded for ammunition manufacturing, specifically modular artillery charge systems. 2. The contract value is substantial, indicating significant demand for these specialized components. 3. Awarded through full and open competition after exclusion of sources, suggesting a deliberate procurement strategy. 4. The duration of the contract (1413 days) points to a long-term need for the supplied goods. 5. The firm fixed-price contract type aims to provide cost certainty for the government. 6. The North American Industry Classification System (NAICS) code 332993 relates to ammunition manufacturing.

Value Assessment

Rating: good

The contract value of $65.5 million for modular artillery charge systems appears reasonable given the specialized nature of ammunition production. Benchmarking against similar contracts for military ordnance is challenging due to the specific nature of the M31A2 propellant system. However, the firm fixed-price structure suggests that the contractor assumed the majority of the cost risk, which is generally favorable for the government. The Canadian Commercial Corporation's role as an intermediary may introduce some overhead, but it can also facilitate international procurement.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

This contract was awarded under 'Full and Open Competition After Exclusion of Sources.' This indicates that while the competition was intended to be open, specific sources were excluded, possibly due to security, technical, or international partnership reasons. The exact number of bidders is not specified, but the exclusion of sources suggests a potentially narrower competitive pool than a purely open solicitation. This procurement approach requires justification to ensure fair pricing and prevent undue limitations on competition.

Taxpayer Impact: The exclusion of certain sources, even within an open competition framework, warrants scrutiny to ensure that taxpayers are not disadvantaged by a reduced competitive landscape. Transparency regarding the reasons for exclusion is crucial for accountability.

Public Impact

The primary beneficiaries are the U.S. Army units requiring advanced artillery propellant systems for operational readiness. The contract delivers critical components for the M31A2 Modular Artillery Charge System, enhancing artillery effectiveness. The geographic impact is primarily within the defense supply chain, supporting U.S. military operations. Workforce implications are likely concentrated within specialized manufacturing facilities capable of producing ordnance components.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for limited competition due to exclusion of sources.
Reliance on a single intermediary (Canadian Commercial Corporation) could introduce supply chain complexities.
The specific nature of the product may limit the number of qualified manufacturers.

Positive Signals

Firm fixed-price contract provides cost predictability.
Awarded by the Department of Defense, indicating a critical national security need.
The contract duration suggests a stable, long-term supply relationship.

Sector Analysis

This contract falls within the defense manufacturing sector, specifically focusing on ammunition and ordnance. The market for such specialized military components is typically characterized by high barriers to entry, stringent quality control, and long procurement cycles. Spending in this area is driven by defense budgets and geopolitical requirements. Comparable spending benchmarks are difficult to ascertain publicly due to the classified or sensitive nature of many defense contracts, but the scale of this award suggests it is a significant procurement for the U.S. Army's artillery capabilities.

Small Business Impact

The provided data indicates that small business participation was not a specific set-aside for this contract (ss: false, sb: false). The prime contractor, Canadian Commercial Corporation, is an international entity. Therefore, the direct impact on U.S. small businesses as prime contractors is unlikely. However, there may be opportunities for U.S. small businesses to participate as subcontractors to the prime or its direct suppliers, depending on the supply chain structure and any subcontracting plans that may have been implemented.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and program management offices. Accountability measures are embedded within the contract terms, including performance requirements and payment schedules tied to delivery. Transparency is generally limited for defense procurements of this nature, though contract awards are publicly reported. Inspector General jurisdiction would apply to investigations of fraud, waste, or abuse related to the contract.

Related Government Programs

Artillery Systems Procurement
Ammunition Manufacturing Contracts
Department of Defense Ordnance Spending
Canadian Commercial Corporation Contracts
Modular Charge Systems

Risk Flags

Limited Competition Potential
International Supply Chain Risk
Specialized Manufacturing Dependency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $65.5 million to CANADIAN COMMERCIAL CORPORATION. MANUFACTURE, PRODUCTION, AND DELIVERY OF MODULAR ARTILLERY CHARGE SYSTEMS (MACS) M31A2 PROPELLANT

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 $65.5 million.

What is the period of performance?

Start: 2012-09-25. End: 2016-08-08.

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

The Canadian Commercial Corporation (CCC) acts as a government-to-government contracting agency for Canada, facilitating international trade for Canadian companies. While CCC itself does not manufacture goods, it has a history of supporting Canadian defense exports to the U.S. DoD. Its track record is generally considered reliable in managing complex international procurements. For this specific contract, CCC would have managed the process for a Canadian manufacturer. Assessing CCC's 'track record' involves evaluating its success in managing contracts, ensuring compliance, and facilitating timely delivery on behalf of its clients. Publicly available data on CCC's specific performance metrics for individual U.S. DoD contracts is limited, but its continued role in facilitating such agreements suggests a level of trust and capability recognized by the DoD.

How does the unit cost of the M31A2 propellant compare to similar artillery charge systems, if data were available?

Direct comparison of the unit cost for the M31A2 propellant is challenging without access to detailed pricing breakdowns and specific contract data for comparable systems. The M31A2 is a specialized component for modular artillery charge systems, implying unique manufacturing processes, material requirements, and performance specifications. Factors such as the scale of production, technological sophistication, and the specific competitive environment at the time of award significantly influence unit costs. Generally, advanced military ordnance components command higher prices due to rigorous testing, quality assurance, and the specialized expertise required for their production. Without specific benchmark data or a detailed cost analysis of alternative systems, a precise comparison is not feasible.

What are the primary risks associated with this contract, considering it involves international procurement and specialized ordnance?

Several risks are associated with this contract. Firstly, international procurement can introduce complexities related to differing regulatory environments, export controls, and logistical challenges, potentially impacting delivery timelines and costs. Secondly, the specialized nature of ordnance manufacturing means reliance on a limited number of qualified suppliers, which can create supply chain vulnerabilities. Geopolitical factors could also influence the stability of the supply chain or the availability of raw materials. Furthermore, ensuring consistent quality and adherence to stringent U.S. military specifications over the contract's duration requires robust oversight. Finally, the 'exclusion of sources' clause, while potentially justified, inherently carries a risk of limiting competition and potentially increasing costs if not managed carefully.

What is the strategic importance of the M31A2 propellant system to the U.S. Army's artillery capabilities?

The M31A2 propellant system is strategically important as it is a key component for modern modular artillery charge systems (MACS). MACS allows artillery crews to tailor the propellant charge based on the desired range and performance, offering greater flexibility and efficiency compared to traditional fixed-charge artillery. The M31A2 specifically contributes to achieving optimal ballistics and range for various artillery pieces. Ensuring a reliable supply of these advanced propellant systems is crucial for maintaining the U.S. Army's fire support capabilities, enabling them to engage targets effectively at different distances and under varying operational conditions. This contract directly supports the readiness and modernization of the Army's artillery assets.

How has U.S. Department of Defense spending on ammunition manufacturing, particularly for artillery, trended over the past decade?

U.S. Department of Defense spending on ammunition manufacturing, including artillery components, has historically fluctuated based on global security environments, ongoing military operations, and strategic modernization priorities. Following periods of intense conflict, such as those in Iraq and Afghanistan, spending often remained high to replenish stocks. In more recent years, there has been a strategic shift towards modernizing munitions, investing in advanced capabilities, and ensuring readiness for potential high-intensity conflicts. This has led to sustained or increased investment in the production of sophisticated ammunition types, including modular charge systems, to maintain a technological edge and meet evolving battlefield requirements. Specific figures for artillery ammunition vary annually but represent a significant portion of the DoD's overall procurement budget.

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: W15QKN12RA019

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 SUITE 1100, OTTAWA

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

Financial Breakdown

Contract Ceiling: $65,498,972

Exercised Options: $65,498,972

Current Obligation: $65,498,972

Subaward Activity

Number of Subawards: 2

Total Subaward Amount: $130,650,342

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NOT OBTAINED - WAIVED

Timeline