Army Awards $48.3M for M31A2 Propellant, Lacking Competition

Contract Overview

Contract Amount: $48,310,810 ($48.3M)

Contractor: Canadian Commercial Corporation

Awarding Agency: Department of Defense

Start Date: 2024-07-23

End Date: 2028-01-31

Contract Duration: 1,287 days

Daily Burn Rate: $37.5K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: DELIVERY ORDER FOR THE MANUFACTURE AND DELIVERY OF M31A2 PROPELLANT FOR THE 155MM MODULAR ARTILLERY CHARGES SYSTEM (MACS) M23A2 PROPELLING CHARGE.

Plain-Language Summary

Department of Defense obligated $48.3 million to CANADIAN COMMERCIAL CORPORATION for work described as: DELIVERY ORDER FOR THE MANUFACTURE AND DELIVERY OF M31A2 PROPELLANT FOR THE 155MM MODULAR ARTILLERY CHARGES SYSTEM (MACS) M23A2 PROPELLING CHARGE. Key points: 1. Significant award for critical M31A2 propellant for 155mm artillery. 2. Sole-source award to Canadian Commercial Corporation raises competition concerns. 3. Long contract duration (2028) may limit future price adjustments. 4. Explosives Manufacturing sector is highly specialized and consolidated.

Value Assessment

Rating: fair

The $48.3M award for M31A2 propellant appears to be a sole-source contract. Without competitive bidding, it's difficult to assess if the price is optimal compared to potential market rates for similar specialized explosives.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award to the Canadian Commercial Corporation. This lack of competition limits price discovery and may result in a higher cost to taxpayers than if multiple vendors had bid.

Taxpayer Impact: The absence of competition for this critical defense material could lead to inflated costs, directly impacting taxpayer funds allocated for military readiness.

Public Impact

Ensures supply of essential propellant for 155mm artillery systems. Potential for higher costs due to lack of competitive bidding. Reliance on a single foreign supplier for a critical defense component. Long-term contract may not reflect evolving market prices.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award
Long contract duration
Foreign supplier reliance

Positive Signals

Ensures critical supply chain
Firm fixed price contract

Sector Analysis

This award falls within the Explosives Manufacturing sector, a niche area critical for defense. Spending benchmarks are difficult to establish due to the specialized nature and limited number of suppliers, especially for advanced propellants like M31A2.

Small Business Impact

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

Oversight & Accountability

The sole-source nature of this award warrants scrutiny. Further oversight is needed to ensure the Department of the Army adequately justified the lack of competition and is monitoring contract performance closely.

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
Long contract duration limits flexibility
Reliance on foreign supplier
Limited transparency on justification

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $48.3 million to CANADIAN COMMERCIAL CORPORATION. DELIVERY ORDER FOR THE MANUFACTURE AND DELIVERY OF M31A2 PROPELLANT FOR THE 155MM MODULAR ARTILLERY CHARGES SYSTEM (MACS) M23A2 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 $48.3 million.

What is the period of performance?

Start: 2024-07-23. End: 2028-01-31.

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 unique capabilities, lack of alternatives, or urgent needs. For this contract, the specific reason for not competing needs to be thoroughly documented by the Department of the Army. To ensure fair pricing, the agency should conduct robust market research and potentially engage in negotiation with the sole provider, referencing any available cost data or benchmarks for similar specialized materials.

What are the long-term risks associated with relying on a single, foreign supplier for a critical defense component like M31A2 propellant?

Relying on a single, foreign supplier for critical defense components introduces significant risks. These include potential supply chain disruptions due to geopolitical events, trade disputes, or the supplier's own production issues. Furthermore, it can lead to price escalation over time as competition is absent, and it may hinder the development of domestic industrial capacity for such essential materials, impacting national security resilience.

How does the firm fixed price contract structure impact the government's ability to manage costs over the contract's duration?

A firm fixed price (FFP) contract shifts the risk of cost overruns to the contractor. While this provides cost certainty for the government upfront, it can also mean the government misses out on potential savings if the contractor's actual costs are lower than anticipated. For a long-duration contract like this, the FFP structure might lock in a price that becomes unfavorable if market conditions or production efficiencies change significantly over 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

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: $48,310,810

Exercised Options: $48,310,810

Current Obligation: $48,310,810

Subaward Activity

Number of Subawards: 2

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