DoD awards $31.6M for M67 propelling charges, with Canadian Commercial Corporation as the contractor

Contract Overview

Contract Amount: $31,609,210 ($31.6M)

Contractor: Canadian Commercial Corporation

Awarding Agency: Department of Defense

Start Date: 2023-03-02

End Date: 2025-04-30

Contract Duration: 790 days

Daily Burn Rate: $40.0K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: DELIVERY ORDER 1 FOR M67 PROPELLING CHARGES.

Plain-Language Summary

Department of Defense obligated $31.6 million to CANADIAN COMMERCIAL CORPORATION for work described as: DELIVERY ORDER 1 FOR M67 PROPELLING CHARGES. Key points: 1. The contract value represents a significant investment in essential munitions. 2. Competition dynamics for this specific type of munition may be limited due to specialized manufacturing requirements. 3. Performance risk appears moderate, given the established nature of the product and the contractor's role. 4. This award falls within the broader context of defense procurement for explosive ordnance. 5. The sector positioning is within the defense manufacturing and supply chain for ammunition.

Value Assessment

Rating: fair

Benchmarking the value of this specific contract is challenging without detailed cost breakdowns or comparisons to similar international procurements. The firm fixed-price nature suggests some cost certainty, but the overall value proposition depends heavily on the unit cost of the M67 propelling charges and their strategic importance. Further analysis would require understanding the production costs and market prices for comparable items.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded under 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES,' indicating that while competition was sought, specific circumstances led to the exclusion of certain potential bidders. This suggests a limited pool of qualified suppliers, potentially due to security, technical, or international partnership requirements. The Canadian Commercial Corporation's involvement implies a government-to-government procurement mechanism, which can influence the competitive landscape.

Taxpayer Impact: A limited competition may result in less aggressive pricing for taxpayers compared to a fully open process. However, it can also ensure access to specialized capabilities or trusted international partners, which might be critical for national security.

Public Impact

The primary beneficiaries are the Department of Defense and its operational units requiring M67 propelling charges. The services delivered include the manufacturing and supply of critical ammunition components. The geographic impact is primarily within the United States (for deployment) and Canada (for manufacturing origin). Workforce implications are likely concentrated within the defense manufacturing sector in Canada.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for price escalation if market conditions for raw materials change significantly.
Dependence on a single international entity (Canadian Commercial Corporation) could introduce geopolitical risks.
Limited visibility into the specific cost drivers for the propelling charges.

Positive Signals

Firm fixed-price contract provides cost predictability.
Established product line suggests mature manufacturing processes.
Procurement through a government-to-government agreement can streamline logistics and ensure compliance.

Sector Analysis

This contract falls within the defense industrial base, specifically the segment focused on ammunition manufacturing. The market for specialized munitions like propelling charges is often characterized by high barriers to entry due to technical expertise, stringent quality control, and government-specific certifications. Spending in this area is driven by military readiness requirements and strategic deterrence, with comparable spending benchmarks often found in other large defense contracts for ordnance and explosives.

Small Business Impact

There is no indication of a small business set-aside for this contract, nor are there explicit subcontracting requirements mentioned in the provided data. The primary contractor, Canadian Commercial Corporation, is a Canadian federal Crown corporation, suggesting that the direct impact on U.S. small businesses through prime contracting is unlikely. However, there could be indirect opportunities if the Canadian contractor sources materials or components from U.S. small businesses.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and program management offices. Accountability measures are inherent in the firm fixed-price contract type, which places the cost risk on the contractor. Transparency is facilitated by contract databases, though detailed cost breakdowns are typically not publicly disclosed. Inspector General jurisdiction would apply to any allegations of fraud, waste, or abuse related to the contract.

Related Government Programs

Department of Defense Ammunition Procurement
Explosive Ordnance Manufacturing
Canadian Commercial Corporation Contracts
Munitions Supply Chain Management

Risk Flags

Limited Competition
International Sourcing
Potential Supply Chain Risk

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $31.6 million to CANADIAN COMMERCIAL CORPORATION. DELIVERY ORDER 1 FOR M67 PROPELLING CHARGES.

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 $31.6 million.

What is the period of performance?

Start: 2023-03-02. End: 2025-04-30.

What is the historical spending pattern for M67 propelling charges or similar items by the Department of Defense?

Analyzing historical spending on M67 propelling charges or analogous munitions requires access to detailed procurement databases over multiple fiscal years. Typically, such spending fluctuates based on operational tempo, inventory levels, and modernization programs. For instance, if the M67 is a legacy item, spending might be declining as newer systems are introduced, or it could remain steady if it's a critical component for existing platforms. Without specific historical data for this exact item, we can infer that the Department of Defense consistently allocates significant funds to ammunition procurement, often in the hundreds of millions or billions annually, to maintain readiness across various military branches. This particular $31.6 million award represents a portion of that larger, ongoing investment in ordnance.

How does the unit cost of these propelling charges compare to market rates or similar international contracts?

Determining the precise unit cost and comparing it to market rates or similar international contracts is challenging with the provided data. The contract value of $31.6 million is for a delivery order, not necessarily the total program value, and the number of units procured is not specified. The Canadian Commercial Corporation's role as an intermediary suggests a government-to-government sale, which may include different pricing structures than direct commercial sales. To benchmark effectively, one would need to know the quantity of propelling charges purchased, the specific technical specifications, and then compare this to publicly available pricing for similar munitions from other allied nations or commercial manufacturers, adjusting for volume discounts and contract terms. The firm fixed-price nature provides some cost certainty but doesn't inherently guarantee value for money without comparative data.

What are the specific risks associated with relying on the Canadian Commercial Corporation for this munition?

The primary risks associated with relying on the Canadian Commercial Corporation (CCC) for M67 propelling charges are geopolitical and supply chain related. Geopolitical risks could arise from shifts in U.S.-Canada relations, changes in Canadian defense export policies, or international trade disputes that could impact the supply. Supply chain risks include potential disruptions due to manufacturing issues in Canada, labor strikes, or unforeseen events affecting the CCC's ability to fulfill the order. While the CCC is a reputable entity, its role as an intermediary means the DoD is indirectly dependent on the performance and stability of the underlying Canadian manufacturer. Furthermore, the 'limited competition' aspect suggests a concentrated supply base, increasing vulnerability if that source encounters problems.

What is the strategic importance of the M67 propelling charge to the Department of Defense?

The M67 propelling charge is a critical component for specific munitions, likely related to artillery or mortar systems. Its strategic importance lies in enabling the effective deployment of ordnance required for battlefield operations, including suppression, illumination, or smoke screening. Ensuring a reliable supply of such components is vital for maintaining military readiness and operational capability. The Department of Defense's investment in these charges underscores their continued relevance in current and potentially future combat scenarios. The procurement strategy, even if through limited competition, highlights the DoD's commitment to securing necessary ammunition stocks.

How does the contract type (Firm Fixed Price) influence contractor performance and cost control for this munition?

A Firm Fixed Price (FFP) contract type places the primary responsibility for cost control and performance risk on the contractor, in this case, the Canadian Commercial Corporation (acting on behalf of the manufacturer). This means the contractor is obligated to deliver the M67 propelling charges at the agreed-upon price, regardless of their actual costs incurred. This structure incentivizes the contractor to manage their production efficiently and minimize cost overruns. For the DoD, an FFP contract offers significant cost predictability, reducing the risk of budget fluctuations due to contractor cost increases. However, it also means that any cost savings achieved by the contractor are retained by them, and conversely, if costs exceed the fixed price, the contractor absorbs the loss, which could potentially lead to quality compromises if not adequately monitored.

Industry Classification

NAICS: Manufacturing › Other Fabricated Metal Product Manufacturing › Ammunition (except Small Arms) Manufacturing

Product/Service Code: AMMUNITION AND EXPLOSIVES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

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: $35,437,425

Exercised Options: $31,609,210

Current Obligation: $31,609,210

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: W519TC23D0018

IDV Type: IDC

Timeline