DoD Awards $44.7M for 1.8M lbs of M31A2 Propellant to Canadian Commercial Corporation

Contract Overview

Contract Amount: $44,764,160 ($44.8M)

Contractor: Canadian Commercial Corporation

Awarding Agency: Department of Defense

Start Date: 2020-12-15

End Date: 2024-02-29

Contract Duration: 1,171 days

Daily Burn Rate: $38.2K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: THE PURPOSE OF W15QKN21F0038 IS TO PROCURE 1,836,000 LBS OF M31A2 PROPELLANT.

Plain-Language Summary

Department of Defense obligated $44.8 million to CANADIAN COMMERCIAL CORPORATION for work described as: THE PURPOSE OF W15QKN21F0038 IS TO PROCURE 1,836,000 LBS OF M31A2 PROPELLANT. Key points: 1. The contract is for a significant quantity of propellant, indicating a substantial defense need. 2. Sole-source procurement raises questions about price discovery and potential cost savings. 3. The long duration suggests a sustained requirement for this specific propellant. 4. The award value of $44.7M for 1.8M lbs provides a benchmark for propellant costs.

Value Assessment

Rating: fair

The contract value of $44.7M for 1.8M lbs of propellant equates to approximately $24.59 per pound. Without specific benchmarks for M31A2 propellant, it's difficult to definitively assess if this price is competitive. However, given the sole-source nature, further investigation into pricing is warranted.

Cost Per Unit: $24.59/lb

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award. This limits opportunities for price competition and may result in higher costs for taxpayers. The rationale for sole-sourcing should be clearly documented to ensure necessity.

Taxpayer Impact: The lack of competition in this sole-source award may lead to higher prices than could be achieved through a competitive bidding process, potentially increasing taxpayer burden.

Public Impact

Ensures supply of critical propellant for defense applications. Potential for higher costs due to lack of competitive bidding. Long-term contract may impact budget planning for the Department of Defense.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source procurement
Lack of competition
Potential for overpayment

Positive Signals

Ensures supply of critical defense material
Firm fixed price contract limits cost overrun risk

Sector Analysis

The procurement falls under the Explosives Manufacturing sector, specifically for military-grade propellant. Spending in this niche sector is often driven by defense requirements and can be subject to limited competition due to specialized production needs and national security considerations.

Small Business Impact

There is no indication that small businesses were involved in this contract, either as prime contractors or subcontractors. The award was made to the Canadian Commercial Corporation, suggesting a focus on international or large-scale industrial suppliers rather than small business participation.

Oversight & Accountability

The sole-source nature of this award warrants careful oversight to ensure the price is fair and reasonable and that the procurement method was justified. Transparency in the justification for not competing the award is crucial for accountability.

Related Government Programs

Explosives Manufacturing
Department of Defense Contracting
Department of the Army Programs

Risk Flags

Sole-source award lacks competition
Potential for inflated pricing
Limited transparency on justification for sole-sourcing
Reliance on a single supplier for critical material

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $44.8 million to CANADIAN COMMERCIAL CORPORATION. THE PURPOSE OF W15QKN21F0038 IS TO PROCURE 1,836,000 LBS OF 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 $44.8 million.

What is the period of performance?

Start: 2020-12-15. End: 2024-02-29.

What is the justification for awarding this contract on a sole-source basis, and what steps were taken to ensure the price is fair and reasonable?

The justification for sole-source procurement is critical for understanding why competition was bypassed. Agencies must demonstrate that only one responsible source can satisfy the agency's needs. For this contract, the agency should provide documentation detailing the specific reasons, such as unique capabilities or urgent needs. Furthermore, a thorough price analysis, comparing the proposed price to historical prices, other government contracts, or commercial prices, should have been conducted to ensure the $44.7M award represents a fair and reasonable cost to the taxpayer.

What are the risks associated with relying on a single supplier, particularly an international one, for a critical defense component like M31A2 propellant?

Relying on a single supplier, especially an international one like the Canadian Commercial Corporation, for critical defense components introduces several risks. These include potential supply chain disruptions due to geopolitical events, trade disputes, or logistical challenges. There's also a risk of price escalation over time without competitive pressure. Furthermore, dependence on a foreign entity could raise national security concerns if the supply is ever jeopardized, impacting readiness and operational capabilities.

How does the unit cost of $24.59 per pound for M31A2 propellant compare to similar defense-grade propellants, and what is the potential taxpayer impact of this pricing?

Benchmarking the $24.59 per pound unit cost against similar defense-grade propellants is essential for assessing value. If comparable propellants are procured at significantly lower prices through competitive means, this sole-source contract could represent a substantial financial inefficiency for taxpayers. The lack of competition inherently limits the government's ability to negotiate the best possible price, potentially leading to millions of dollars in additional costs over the life of the contract compared to a fully competed award.

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: $44,764,160

Exercised Options: $44,764,160

Current Obligation: $44,764,160

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NOT OBTAINED - WAIVED

Parent Contract

Parent Award PIID: W15QKN19D0072

IDV Type: IDC

Timeline