DoD Awards $47.6M for M31 Propellant, Lacking Competition

Contract Overview

Contract Amount: $47,632,530 ($47.6M)

Contractor: Canadian Commercial Corporation

Awarding Agency: Department of Defense

Start Date: 2019-07-26

End Date: 2022-06-30

Contract Duration: 1,070 days

Daily Burn Rate: $44.5K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: THE PURPOSE OF THIS FIRST DELIVERY ORDER W15QKN-19-F-0484 UNDER MACS CONTRACT W15QKN-19-D-0072 TO PURCHASE AN INITIAL FIRST ARTICLE TEST AND PRODUCTION QUANTITY OF 2,406,000(LBS) OF THE M31-TYPE PROPELLANT FOR THE 155MM M232 SERIES PROPELLING CHARGE.

Plain-Language Summary

Department of Defense obligated $47.6 million to CANADIAN COMMERCIAL CORPORATION for work described as: THE PURPOSE OF THIS FIRST DELIVERY ORDER W15QKN-19-F-0484 UNDER MACS CONTRACT W15QKN-19-D-0072 TO PURCHASE AN INITIAL FIRST ARTICLE TEST AND PRODUCTION QUANTITY OF 2,406,000(LBS) OF THE M31-TYPE PROPELLANT FOR THE 155MM M232 SERIES PROPELLING CHARGE. Key points: 1. Significant award for essential military propellant. 2. Sole-sourced award raises questions about price discovery. 3. Long-term contract duration may impact cost-effectiveness. 4. Defense sector reliance on specialized manufacturing.

Value Assessment

Rating: questionable

The award amount of $47.6M for 2.4M lbs of propellant is difficult to benchmark without specific unit cost data. The lack of competition suggests potential for overpricing compared to a competitive environment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This delivery order was not competed, indicating a sole-source or limited competition procurement. This significantly reduces the opportunity for price discovery and potentially leads to higher costs for taxpayers.

Taxpayer Impact: The absence of competition may result in the government paying a premium for this critical propellant, impacting overall defense budget efficiency.

Public Impact

Ensures supply of critical M31 propellant for 155mm artillery. Supports Department of the Army's operational readiness. Canadian Commercial Corporation is the contracting entity. Contract spans over two years for delivery.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition
Sole-source award
Potential for overpricing

Positive Signals

Ensures supply of critical defense material
Long-term contract provides stability

Sector Analysis

This award falls within the explosives manufacturing sector, a critical component of the defense industrial base. Spending in this niche area is often characterized by specialized production capabilities and limited supplier options.

Small Business Impact

The data indicates that small business participation was not a factor in this specific award, as it was awarded to the Canadian Commercial Corporation and was not competed.

Oversight & Accountability

The 'NOT COMPETED' status warrants further review to understand the justification for bypassing competitive procedures and ensure appropriate oversight was applied.

Related Government Programs

Explosives Manufacturing
Department of Defense Contracting
Department of the Army Programs

Risk Flags

Lack of competition
Sole-source award
Potential for inflated pricing
Long contract duration risks
No small business participation noted

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $47.6 million to CANADIAN COMMERCIAL CORPORATION. THE PURPOSE OF THIS FIRST DELIVERY ORDER W15QKN-19-F-0484 UNDER MACS CONTRACT W15QKN-19-D-0072 TO PURCHASE AN INITIAL FIRST ARTICLE TEST AND PRODUCTION QUANTITY OF 2,406,000(LBS) OF THE M31-TYPE PROPELLANT FOR THE 155MM M232 SERIES PROPELLING CHARGE.

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 $47.6 million.

What is the period of performance?

Start: 2019-07-26. End: 2022-06-30.

What is the specific unit cost of the M31 propellant under this contract, and how does it compare to historical or industry benchmarks?

The provided data does not include the specific unit cost for the 2,406,000 lbs of M31 propellant. To assess value, this unit cost would need to be compared against similar government contracts or commercial market prices for comparable propellants, considering factors like quantity, quality specifications, and delivery terms.

What is the justification for the sole-source award, and what steps were taken to mitigate potential risks associated with non-competitive procurement?

The justification for this sole-source award is not detailed in the provided data. Typically, sole-source procurements require a documented justification, such as a lack of available sources or urgent need. Mitigation strategies might include negotiating the best possible price, imposing strict performance standards, and conducting thorough market research to ensure no viable alternatives exist.

How does the long contract duration (1070 days) impact the overall cost-effectiveness and potential for technological obsolescence of the M31 propellant?

A long contract duration can offer cost savings through economies of scale and stable production planning. However, it also carries risks of price escalation, potential for the technology to become outdated, and reduced flexibility to adopt newer, potentially more effective or cheaper alternatives that may emerge during the contract period.

Industry Classification

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

Product/Service Code: AMMUNITION AND EXPLOSIVES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Government of Canada

Address: 350 ALBERT ST SUITE 700, OTTAWA

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

Financial Breakdown

Contract Ceiling: $47,632,530

Exercised Options: $47,632,530

Current Obligation: $47,632,530

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NOT OBTAINED - WAIVED

Parent Contract

Parent Award PIID: W15QKN19D0072

IDV Type: IDC

Timeline