DoD Awards $96.6M for Artillery Propellant to Canadian Firm for Ukraine Support

Contract Overview

Contract Amount: $96,599,988 ($96.6M)

Contractor: Canadian Commercial Corporation

Awarding Agency: Department of Defense

Start Date: 2023-06-28

End Date: 2027-05-30

Contract Duration: 1,432 days

Daily Burn Rate: $67.5K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: DELIVERY ORDER FOR M31A2 PROPELLANT FOR THE 155MM MODULAR ARTILLERY CHARGES SYSTEM (MACS) M232A2 PROPELLING CHARGE FOR DOD STOCKPILE REPLENISHMENT IN SUPPORT OF UKRAINE.

Plain-Language Summary

Department of Defense obligated $96.6 million to CANADIAN COMMERCIAL CORPORATION for work described as: DELIVERY ORDER FOR M31A2 PROPELLANT FOR THE 155MM MODULAR ARTILLERY CHARGES SYSTEM (MACS) M232A2 PROPELLING CHARGE FOR DOD STOCKPILE REPLENISHMENT IN SUPPORT OF UKRAINE. Key points: 1. Significant award for critical munitions components supporting international allies. 2. Sole-source procurement raises questions about price discovery and competition. 3. High-value contract for specialized explosives manufacturing, a niche sector. 4. Long-term delivery order indicates sustained demand for artillery systems.

Value Assessment

Rating: fair

The contract value of $96.6 million for propellant is substantial. Without comparable US contracts or detailed cost breakdowns, assessing its value against similar procurements is difficult. The firm fixed-price structure provides cost certainty but may not reflect optimal pricing if competition was limited.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was sole-sourced, awarded through the Canadian Commercial Corporation. This method bypasses competitive bidding processes, potentially leading to higher prices than if multiple vendors had competed. The lack of competition limits the government's ability to ensure the best possible price.

Taxpayer Impact: The sole-source nature of this award means taxpayers may not be receiving the most cost-effective solution, as competitive pressures that drive down prices were absent.

Public Impact

Ensures continued supply of essential artillery ammunition for US and allied forces. Supports ongoing military aid to Ukraine, impacting geopolitical stability. Funds a critical defense industrial base capability, albeit through a foreign entity. Highlights reliance on international partners for specialized defense components.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source procurement
Lack of price competition
Reliance on foreign supplier

Positive Signals

Supports critical defense needs
Ensures supply chain continuity for allies

Sector Analysis

This contract falls within the Explosives Manufacturing sector, a specialized area of defense industrial production. Spending benchmarks are difficult to establish due to the niche nature and international sourcing, but large-scale propellant orders are typically multi-million dollar affairs.

Small Business Impact

The contract was awarded to the Canadian Commercial Corporation, a foreign government agency, not a small business. There is no indication of subcontracting opportunities for small businesses within this award.

Oversight & Accountability

The Department of the Army awarded this contract. Oversight would focus on contract performance, delivery schedules, and adherence to the firm fixed-price terms, especially given the sole-source nature and international partner.

Related Government Programs

Explosives Manufacturing
Department of Defense Contracting
Department of the Army Programs

Risk Flags

Sole-source procurement
Potential for inflated pricing
Reliance on foreign supply chain
Limited transparency in cost structure
Geopolitical risks impacting delivery

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $96.6 million to CANADIAN COMMERCIAL CORPORATION. DELIVERY ORDER FOR M31A2 PROPELLANT FOR THE 155MM MODULAR ARTILLERY CHARGES SYSTEM (MACS) M232A2 PROPELLING CHARGE FOR DOD STOCKPILE REPLENISHMENT IN SUPPORT OF UKRAINE.

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 $96.6 million.

What is the period of performance?

Start: 2023-06-28. End: 2027-05-30.

What is the justification for sole-sourcing this critical propellant to a Canadian entity, and what steps were taken to ensure fair pricing?

The justification for sole-sourcing likely stems from established intergovernmental agreements or specific capabilities possessed by the Canadian Commercial Corporation. While a firm fixed-price contract was used, the absence of competition means price discovery was limited. Further justification would detail the specific national security or logistical reasons necessitating this approach over a competitive bid.

How does the cost of this propellant compare to domestically produced alternatives, considering the sole-source award?

Direct cost comparison is challenging due to the sole-source nature and the involvement of a foreign commercial corporation. Typically, sole-source contracts can be more expensive than competitively bid ones. Without access to the Canadian Commercial Corporation's cost structure or alternative US bids, it's difficult to definitively state if this price is higher or lower than potential domestic options.

What is the long-term strategic risk associated with relying on a sole-source foreign supplier for such a critical defense component?

The long-term strategic risk includes potential supply chain disruptions due to geopolitical events, changes in the supplier's national policies, or future pricing escalations without competitive leverage. It also raises questions about the resilience of the US defense industrial base if critical components are primarily sourced internationally, potentially impacting readiness during prolonged conflicts.

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

Solicitation ID: W15QKN19R0016

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: $96,599,988

Exercised Options: $96,599,988

Current Obligation: $96,599,988

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