Army awards $110.6M contract for 4.4M lbs of M31A2 propellant for 155mm artillery charges

Contract Overview

Contract Amount: $110,553,051 ($110.6M)

Contractor: Canadian Commercial Corporation

Awarding Agency: Department of Defense

Start Date: 2022-09-23

End Date: 2025-04-30

Contract Duration: 950 days

Daily Burn Rate: $116.4K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: PROCUREMENT OF 4,407,427 POUNDS OF THE M31A2 PROPELLANT FOR THE 155MM MODULAR ARTILLERY CHARGES SYSTEM (MACS) M232A2 PROPELLING CHARGE.

Plain-Language Summary

Department of Defense obligated $110.6 million to CANADIAN COMMERCIAL CORPORATION for work described as: PROCUREMENT OF 4,407,427 POUNDS OF THE M31A2 PROPELLANT FOR THE 155MM MODULAR ARTILLERY CHARGES SYSTEM (MACS) M232A2 PROPELLING CHARGE. Key points: 1. Contract awarded to Canadian Commercial Corporation for a significant quantity of artillery propellant. 2. The procurement is for the 155mm Modular Artillery Charges System (MACS). 3. This is a sole-source procurement, raising questions about price discovery. 4. The explosives manufacturing sector is critical for defense readiness.

Value Assessment

Rating: fair

The contract's price of $110.6 million for 4.4 million pounds of propellant equates to approximately $25 per pound. Benchmarking against similar defense-grade propellants is difficult without more specific data, but this price appears within a reasonable range for specialized military-grade explosives, though the lack of competition limits definitive assessment.

Cost Per Unit: $25.00

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award. This method bypasses competitive bidding, potentially leading to higher prices and reduced innovation. The government relies on the contractor's pricing without market validation.

Taxpayer Impact: The lack of competition may result in taxpayers paying more than necessary for this critical defense material.

Public Impact

Ensures continued supply of essential ammunition components for the U.S. Army. Supports the operational readiness of artillery units. Highlights reliance on foreign sources (Canada) for critical defense materials. Potential for price increases due to non-competitive award.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition.
Potential for overpayment due to lack of competitive bidding.
Reliance on a single supplier for critical material.

Positive Signals

Ensures supply of essential defense material.
Supports critical military operational needs.

Sector Analysis

The explosives manufacturing sector is vital for national defense, providing essential components for munitions. Spending in this sector is often characterized by high barriers to entry, specialized production capabilities, and significant government oversight due to the sensitive nature of the products. Benchmarks are difficult to establish due to proprietary information and the specialized nature of military-grade explosives.

Small Business Impact

This contract was awarded to the Canadian Commercial Corporation, a foreign entity, and does not appear to involve any small business participation. The nature of explosives manufacturing often requires large-scale, specialized facilities that are typically operated by larger, established companies.

Oversight & Accountability

The sole-source nature of this award warrants close oversight to ensure fair pricing and prevent potential waste. The Department of Defense should conduct thorough price analyses and explore competitive options for future procurements to ensure accountability and maximize taxpayer value.

Related Government Programs

Explosives Manufacturing
Department of Defense Contracting
Department of the Army Programs

Risk Flags

Sole-source award
Potential for price inflation
Supply chain vulnerability
Lack of small business participation

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $110.6 million to CANADIAN COMMERCIAL CORPORATION. PROCUREMENT OF 4,407,427 POUNDS OF THE M31A2 PROPELLANT FOR THE 155MM MODULAR ARTILLERY CHARGES SYSTEM (MACS) M232A2 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 $110.6 million.

What is the period of performance?

Start: 2022-09-23. End: 2025-04-30.

What is the justification for awarding this contract on a sole-source basis, and what steps are being taken to ensure fair pricing?

The justification for a sole-source award typically involves factors such as unique capabilities, urgent need, or lack of viable alternatives. For this contract, the specific reason for not competing it needs to be clearly documented. To ensure fair pricing, the Department of Defense should conduct a robust price analysis, potentially using historical data, cost breakdowns from the contractor, and market research on similar items, even if not directly competitive.

What are the long-term risks associated with relying on a sole-source supplier for critical M31A2 propellant?

Long-term reliance on a sole-source supplier for critical M31A2 propellant poses several risks. It can lead to price escalation over time as the supplier faces no competitive pressure. It also creates a vulnerability in the supply chain; any disruption at the supplier's facility could significantly impact military readiness. Furthermore, it discourages potential new entrants into the market, limiting future options and potentially hindering technological advancements.

How does this procurement contribute to the overall effectiveness and readiness of the U.S. Army's artillery capabilities?

This procurement is directly linked to the effectiveness and readiness of the U.S. Army's artillery capabilities by ensuring a sufficient supply of M31A2 propellant. This specific propellant is a key component for the 155mm Modular Artillery Charges System (MACS), which is a standard for modern artillery. Having an adequate stock of this propellant allows artillery units to maintain training standards and be prepared for operational deployment, directly supporting combat readiness.

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

Address: 350 ALBERT ST SUITE 700, OTTAWA

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

Financial Breakdown

Contract Ceiling: $110,553,051

Exercised Options: $110,553,051

Current Obligation: $110,553,051

Actual Outlays: $21,362,689

Subaward Activity

Number of Subawards: 1

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