DoD's $99.5M ammunition contract awarded to Canadian Commercial Corporation shows fair value with 3 bidders

Contract Overview

Contract Amount: $99,478,504 ($99.5M)

Contractor: Canadian Commercial Corporation

Awarding Agency: Department of Defense

Start Date: 2007-05-14

End Date: 2015-06-30

Contract Duration: 2,969 days

Daily Burn Rate: $33.5K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 60MM & 81MM HE LAP

Plain-Language Summary

Department of Defense obligated $99.5 million to CANADIAN COMMERCIAL CORPORATION for work described as: 60MM & 81MM HE LAP Key points: 1. Contract awarded through full and open competition, indicating a competitive marketplace for ammunition. 2. The contract value of $99.5M over 8 years suggests a significant but potentially reasonable annual spend. 3. The presence of 3 bidders points to a healthy level of competition, which typically drives better pricing. 4. The firm-fixed-price contract type shifts risk to the contractor, potentially leading to more predictable costs. 5. The specific North American Industry Classification System (NAICS) code 332993 covers ammunition manufacturing. 6. The contract was awarded to the Canadian Commercial Corporation, highlighting international participation in US defense procurement.

Value Assessment

Rating: good

The total contract value of $99.5M over approximately 8 years averages to about $12.4M annually. Without specific per-unit cost data or comparable contracts for similar ammunition types, a precise value-for-money assessment is challenging. However, the presence of three bidders in a full and open competition suggests that the pricing achieved was likely competitive. The firm-fixed-price nature of the contract also indicates that the government secured predictable costs, which is a positive indicator of value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, meaning all responsible sources were permitted to submit offers. The solicitation resulted in three bids, indicating a moderate level of competition for this specific requirement. While three bidders are better than one or two, a higher number could potentially drive prices down further. However, the competition level was sufficient to allow for price discovery and selection of the best value.

Taxpayer Impact: The full and open competition with three bidders suggests that taxpayers likely received a fair price for the ammunition procured. The competitive process helps prevent overpayment and ensures that the contract award was based on merit and cost-effectiveness.

Public Impact

This contract directly benefits the Department of Defense by ensuring a supply of ammunition for military operations. The services delivered include the manufacturing of ammunition (except small arms), crucial for various defense applications. The geographic impact is primarily on the operational readiness of US military forces, wherever they are deployed. Workforce implications include jobs in the ammunition manufacturing sector, potentially both in the US and Canada through the awarded contractor.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Reliance on a single foreign entity for a critical defense supply chain component could pose geopolitical risks.
Limited transparency into the specific cost breakdown of the ammunition could obscure potential areas for savings.
The long duration of the contract (over 8 years) might reduce flexibility to adapt to changing technological needs or market prices.

Positive Signals

The firm-fixed-price contract structure provides cost certainty for the Department of Defense.
Awarding through full and open competition suggests a robust process for selecting the most capable and cost-effective supplier.
The Canadian Commercial Corporation's involvement may indicate established quality control and manufacturing standards.

Sector Analysis

The defense sector relies heavily on a consistent and high-quality supply of ammunition. This contract falls under the broader defense manufacturing industry, specifically focusing on 'Ammunition (except Small Arms) Manufacturing' (NAICS 332993). The global defense market for ammunition is substantial, with significant spending by nations worldwide. Comparable spending benchmarks would typically involve analyzing other large-scale ammunition procurement contracts awarded by various defense agencies, considering factors like type of ammunition, quantity, and contract duration.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. There is no information provided regarding subcontracting plans or their impact on the small business ecosystem. Therefore, the direct benefit to small businesses from this specific contract award is likely minimal, unless the prime contractor voluntarily engages small businesses for subcontracting opportunities.

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 obligates the contractor to deliver specified goods at an agreed-upon price. Transparency is generally facilitated through contract award databases, though detailed cost breakdowns may not always be publicly available. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse related to the contract.

Related Government Programs

Department of Defense Ammunition Procurement
Defense Industrial Base
North American Defense Cooperation
Foreign Military Sales (potential indirect link)

Risk Flags

Potential supply chain risk due to foreign sourcing
Limited competition may impact price optimization
Long contract duration could reduce flexibility

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $99.5 million to CANADIAN COMMERCIAL CORPORATION. 60MM & 81MM HE LAP

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 $99.5 million.

What is the period of performance?

Start: 2007-05-14. End: 2015-06-30.

What is the specific type of 60MM & 81MM HE LAP ammunition procured under this contract, and what are its primary military applications?

The '60MM & 81MM HE LAP' likely refers to High Explosive (HE) rounds for 60mm and 81mm mortars, featuring a Low Altitude Penetrator (LAP) capability. These rounds are designed for indirect fire support, capable of engaging enemy personnel, light armored vehicles, and fortifications. The HE component ensures destructive blast effects, while the LAP feature suggests an enhanced ability to penetrate hardened targets or structures upon impact. Their primary applications include battlefield suppression, counter-battery fire, and direct support to ground troops during offensive and defensive operations.

How does the average annual value of this contract ($12.4M) compare to typical annual spending on similar ammunition types by the Department of the Army?

Assessing the average annual value of $12.4M requires comparison against historical spending patterns for 60mm and 81mm mortar ammunition. Without access to specific historical procurement data for these exact calibers and types, a direct comparison is difficult. However, the Department of the Army procures vast quantities of ammunition annually. If this contract represents a significant portion of the total requirement for these specific mortar rounds, it suggests a substantial ongoing need. Conversely, if it's a smaller slice of a larger overall ammunition budget, the annual value might be considered moderate. Further analysis would involve benchmarking against publicly available defense spending reports and contract award databases for similar items.

What are the potential risks associated with awarding a significant ammunition contract to a Canadian entity, particularly concerning supply chain security and geopolitical factors?

Awarding a significant ammunition contract to a Canadian entity, while often beneficial due to close allied relations, does introduce specific risks. Supply chain security could be a concern if disruptions occur in Canada, whether due to labor disputes, natural disasters, or policy changes. Geopolitically, while Canada is a strong ally, shifts in political relations or differing foreign policy stances could theoretically impact the reliability of supply. Furthermore, reliance on a foreign supplier for critical munitions might be scrutinized during times of heightened international tension, potentially affecting the speed of delivery or availability compared to domestic sources. However, the long-standing defense cooperation between the US and Canada generally mitigates many of these concerns.

Given the firm-fixed-price contract type, what mechanisms are in place to ensure the contractor maintains quality standards throughout the contract's duration?

Even with a firm-fixed-price contract, quality assurance is paramount. The Department of Defense typically implements stringent quality assurance surveillance plans (QASPs) or performance specifications. These plans outline the government's methods for monitoring the contractor's performance and ensuring that the delivered ammunition meets all technical specifications and quality standards. This can include government inspections at the contractor's facility, testing of samples from delivered lots, and review of the contractor's own quality control processes. Failure to meet these standards can result in rejection of goods, contract penalties, or termination, thereby incentivizing the contractor to maintain high quality.

How does the number of bidders (3) in this 'full and open competition' reflect the overall competitiveness of the market for this specific type of ammunition?

Three bidders in a full and open competition for specialized ammunition like 60mm and 81mm HE LAP rounds suggests a moderately competitive market. It indicates that there are at least a few capable manufacturers willing and able to bid on such requirements. However, it also implies that the market may not be saturated with suppliers, or that barriers to entry (e.g., specialized manufacturing capabilities, security clearances, existing production backlogs) might limit the number of potential bidders. A higher number of bidders (e.g., 5+) would typically signal a more robustly competitive environment, potentially leading to even more favorable pricing for the government. Conversely, only one or two bidders might indicate a less competitive scenario.

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

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: W52P1J05R0235

Offers Received: 3

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

Financial Breakdown

Contract Ceiling: $99,478,504

Exercised Options: $99,478,504

Current Obligation: $99,478,504

Contract Characteristics

Consolidated Contract: Yes

Cost or Pricing Data: NO

Timeline