Army awards $176M contract for 75mm-125mm ammunition, highlighting potential value concerns

Contract Overview

Contract Amount: $17,592,302 ($17.6M)

Contractor: Canadian Commercial Corporation

Awarding Agency: Department of Defense

Start Date: 2006-02-13

End Date: 2010-02-26

Contract Duration: 1,474 days

Daily Burn Rate: $11.9K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 200605!000639!2100!W52P1J!U.S. ARMY INDUSTRIAL OPERATIONS !W52P1J06C0012 !A!N! !N! ! !20060213!20070830!207884594!207884594!241015486!N!CANADIAN COMMERCIAL CORPORATIO!50 O CONNOR ST STE 1100 !OTTAWA !CA! !00000! !CA! ! !CANADA !+000003369773!N!N!000000000000!1315!AMMUNITION, 75 MM THROUGH 125 MM !A6 !AMMUNITION !000 !NOT DISCERNABLE !332993!E! !3! ! ! ! ! !99990909!B! ! !A! !A!N!J!2!002!N!3A!Z!N!Z!B!CA!N!L!N! ! ! ! ! !A!A!000!A!B!N! ! ! ! ! ! !0001! !

Plain-Language Summary

Department of Defense obligated $17.6 million to CANADIAN COMMERCIAL CORPORATION for work described as: 200605!000639!2100!W52P1J!U.S. ARMY INDUSTRIAL OPERATIONS !W52P1J06C0012 !A!N! !N! ! !20060213!20070830!207884594!207884594!241015486!N!CANADIAN COMMERCIAL CORPORATIO!50 O CONNOR ST STE 1100 !OTTAWA !CA! !00000! !CA! ! … Key points: 1. Contract value of $175,923,022.38 for ammunition manufacturing. 2. Awarded to Canadian Commercial Corporation, raising questions about domestic sourcing. 3. Contract duration of 1474 days suggests a long-term need for these munitions. 4. The contract was competed, but the specific competition type warrants further review. 5. Ammunition type specified is 75mm through 125mm, indicating a specific military application. 6. The North American Industry Classification System (NAICS) code 332993 points to a specialized manufacturing sector.

Value Assessment

Rating: fair

The contract value of approximately $176 million for ammunition is substantial. Benchmarking this against similar contracts for this specific caliber range is crucial. Without direct comparisons, it's difficult to definitively assess if the pricing represents excellent value. The duration of the contract (over four years) suggests a significant commitment, and the final cost should be evaluated against performance and any potential cost overruns. The lack of detailed cost breakdowns in the provided data limits a deeper value-for-money assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded under 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES.' This designation indicates that while the competition was intended to be open, certain sources were excluded, potentially limiting the breadth of competition. The number of bidders is noted as 2, which is a relatively low number for a contract of this magnitude. This limited competition could impact price discovery and potentially lead to higher costs for the government compared to a scenario with more robust bidding.

Taxpayer Impact: A limited number of bidders means taxpayers may not have benefited from the most competitive pricing achievable through broader market engagement. The exclusion of certain sources further reduces the potential for cost savings.

Public Impact

The U.S. Army is the primary beneficiary, receiving critical ammunition supplies. The contract supports the manufacturing of 75mm through 125mm ammunition, essential for certain armored vehicles and artillery systems. The geographic impact is primarily within the defense industrial base, potentially involving manufacturing facilities in Canada. Workforce implications could include employment in specialized manufacturing roles related to ordnance production.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition (2 bidders) may have resulted in suboptimal pricing for taxpayers.
Award to a Canadian entity raises questions about maximizing domestic industrial capacity and potential geopolitical considerations.
The specific reasons for excluding other sources in the 'full and open competition after exclusion of sources' are not detailed, posing a transparency concern.

Positive Signals

The contract was competed, indicating an effort to solicit offers rather than a sole-source award.
The contract specifies a firm fixed price, which generally provides cost certainty for the government.
The duration of the contract suggests a stable, long-term supply chain for essential munitions.

Sector Analysis

This contract falls within the Defense Industrial Base sector, specifically focusing on the manufacturing of ordnance and ammunition. The market for large-caliber ammunition is specialized, often dominated by a few key manufacturers due to high barriers to entry, including technological expertise, safety regulations, and capital investment. Spending in this area is directly tied to military readiness requirements and geopolitical events. Comparable spending benchmarks would typically be found within the Department of Defense's overall procurement of artillery and vehicle-mounted munitions.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (sb: false). There is no explicit information regarding subcontracting plans for small businesses. Therefore, the direct impact on the small business ecosystem is likely minimal unless the prime contractor voluntarily engages small businesses in its supply chain.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Army's contracting and program management offices. Accountability measures are typically embedded in the contract terms, including performance standards and delivery schedules. Transparency is facilitated through contract databases like FPDS, although detailed justifications for competition exclusions are not always publicly available. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Department of Defense Ammunition Procurement
Army Artillery Systems Procurement
Ordnance Manufacturing Contracts
North American Defense Industrial Cooperation

Risk Flags

Limited competition
Foreign sourcing
Lack of detailed cost transparency
Potential impact on domestic industrial base

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $17.6 million to CANADIAN COMMERCIAL CORPORATION. 200605!000639!2100!W52P1J!U.S. ARMY INDUSTRIAL OPERATIONS !W52P1J06C0012 !A!N! !N! ! !20060213!20070830!207884594!207884594!241015486!N!CANADIAN COMMERCIAL CORPORATIO!50 O CONNOR ST STE 1100 !OTTAWA !CA! !00000! !CA! ! !CANADA !+000003369773!N!N!000000000000!1315!AMMUNITION, 75 MM THROUGH 125 MM !A6 !AMMUNITION !000 !NOT DISCERNABLE !332993!E! !3! ! ! ! ! !999

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 $17.6 million.

What is the period of performance?

Start: 2006-02-13. End: 2010-02-26.

What is the track record of Canadian Commercial Corporation in fulfilling U.S. Department of Defense contracts, particularly for ammunition?

Canadian Commercial Corporation (CCC) acts as a government-to-government contracting agency for Canadian businesses. While CCC itself is a federal Crown corporation, its performance on U.S. DoD contracts is dependent on the capabilities and performance of the underlying Canadian suppliers it represents. CCC has a history of facilitating international defense procurements. However, specific performance metrics for this particular ammunition contract, or detailed historical data on CCC's success rate with similar U.S. Army munitions contracts, would require deeper investigation into CCC's project portfolio and past performance reviews. It's essential to differentiate between CCC's role as a facilitator and the actual manufacturing performance of the end supplier.

How does the awarded price compare to market rates for similar ammunition types and calibers?

Determining precise market rates for specialized ammunition like 75mm-125mm rounds is challenging due to the sensitive nature of defense procurement and the limited number of suppliers. Publicly available data often lacks the granularity needed for direct comparison. However, factors such as the number of bidders (two), the contract type (firm fixed price), and the duration (over four years) suggest that the government sought price stability. A comprehensive benchmark would involve analyzing historical contract awards for similar munitions, considering inflation, and assessing the technological sophistication of the required ammunition. Without access to classified pricing data or detailed cost breakdowns, a definitive comparison to 'market rates' is difficult, but the limited competition raises a flag for potential price inflation.

What are the specific risks associated with awarding a significant ammunition contract to a foreign entity?

Awarding a significant ammunition contract to a foreign entity like Canadian Commercial Corporation introduces several risks. Firstly, there are potential supply chain vulnerabilities related to geopolitical tensions, trade disputes, or differing regulatory environments that could disrupt delivery. Secondly, it may impact the readiness and capacity of the U.S. domestic defense industrial base, potentially leading to a reliance on foreign sources for critical munitions. Thirdly, there could be challenges in oversight, quality assurance, and intellectual property protection compared to domestic contracts. While Canada is a close ally, these factors warrant careful consideration and robust contractual safeguards to ensure consistent supply and national security.

What is the strategic importance of 75mm through 125mm ammunition for the U.S. Army?

Ammunition in the 75mm through 125mm range is critical for various U.S. Army platforms, primarily serving as main gun ammunition for armored fighting vehicles (like tanks and infantry fighting vehicles) and potentially for certain types of artillery systems. These calibers are essential for engaging enemy armor, providing direct fire support, and fulfilling key combat roles. Ensuring a consistent and adequate supply of this ammunition is vital for maintaining combat readiness, supporting ongoing operations, and deterring potential adversaries. The strategic importance lies in its direct contribution to the Army's offensive and defensive capabilities on the battlefield.

How has U.S. Army spending on ammunition manufacturing evolved over the past decade?

U.S. Army spending on ammunition manufacturing has fluctuated significantly over the past decade, influenced by factors such as global security environments, operational tempo, and budget allocations. Following periods of high operational tempo in Iraq and Afghanistan, spending patterns shifted towards modernization and readiness sustainment. There has been a continuous focus on ensuring adequate stockpiles of various munitions, including those in the 75mm-125mm range, while also investing in next-generation ammunition technologies. Budgetary constraints and strategic priorities often dictate the volume and type of ammunition procured, leading to cyclical patterns in contract awards and overall spending within this sector.

What does the 'after exclusion of sources' clause imply for the competition process?

The 'after exclusion of sources' clause in a 'full and open competition' context signifies that the solicitation was initially intended to be open to all responsible sources. However, specific sources were subsequently excluded from consideration. The reasons for such exclusions can vary, potentially including national security concerns, inability to meet specific technical requirements, past performance issues, or other pre-defined criteria outlined in the solicitation. This process aims to balance broad competition with the need to ensure that only qualified and appropriate entities participate, but it inherently limits the pool of potential offerors and requires clear justification for the exclusions to ensure fairness and transparency.

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: ONLY ONE SOURCE

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Government of Canada (UEI: 241015486)

Address: 50 O'CONNOR ST STE 1100, OTTAWA

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Cost or Pricing Data: NO

Timeline