Department of the Army awards $21.8M contract for 13 armored vehicles to Canadian Commercial Corporation

Contract Overview

Contract Amount: $21,770,833 ($21.8M)

Contractor: Canadian Commercial Corporation

Awarding Agency: Department of Defense

Start Date: 2009-06-29

End Date: 2012-12-21

Contract Duration: 1,271 days

Daily Burn Rate: $17.1K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: ACQUISITION OF 11 EACH LAV-25 A2 AND 2 EACH LAV-CC A2 VEHICLES.

Plain-Language Summary

Department of Defense obligated $21.8 million to CANADIAN COMMERCIAL CORPORATION for work described as: ACQUISITION OF 11 EACH LAV-25 A2 AND 2 EACH LAV-CC A2 VEHICLES. Key points: 1. Contract awarded on a sole-source basis, raising questions about price discovery and potential for overpayment. 2. Limited competition may have resulted in higher costs compared to a more open bidding process. 3. The contract duration of over three years suggests a significant commitment of resources. 4. Vehicles acquired are specialized military armored vehicles, indicating a specific defense requirement. 5. The acquisition falls under the broader category of military vehicle manufacturing, a niche sector. 6. No small business set-aside was applied, suggesting the prime contractor is not a small business.

Value Assessment

Rating: fair

The contract value of $21.8 million for 13 armored vehicles, including LAV-25 A2 and LAV-CC A2 variants, averages approximately $1.67 million per vehicle. Without specific performance metrics or detailed cost breakdowns, it is difficult to definitively benchmark this against similar contracts. However, the sole-source nature of the award raises concerns about whether the government secured the best possible value, as competitive bidding typically drives down prices. The firm-fixed-price structure offers some cost certainty but does not inherently guarantee optimal pricing.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed. The Canadian Commercial Corporation (CCC) is a Canadian Crown corporation that facilitates trade between Canada and other countries. In this instance, the Department of Defense likely engaged CCC to procure these specific vehicles, possibly due to existing agreements, unique capabilities, or a lack of readily available domestic alternatives that met the stringent requirements. The absence of competition means there were no other bidders to compare against, limiting the government's ability to leverage market forces for price negotiation.

Taxpayer Impact: Sole-source awards can potentially lead to higher costs for taxpayers as the benefits of competitive bidding, which typically drives down prices, are not realized. This necessitates a higher degree of scrutiny on the justification for the sole-source award and the reasonableness of the negotiated price.

Public Impact

The primary beneficiaries are the U.S. Army, receiving advanced armored vehicles essential for military operations. The contract delivers 11 LAV-25 A2 and 2 LAV-CC A2 vehicles, enhancing the Army's armored fleet capabilities. The geographic impact is primarily within the Department of Defense's operational theaters, though manufacturing may occur in Canada. Workforce implications include specialized manufacturing and logistics roles, potentially supporting both U.S. and Canadian defense industries.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits transparency and competitive pressure, potentially impacting cost-effectiveness.
Lack of competition raises concerns about whether the government obtained the best possible price.
Contract duration of over three years requires sustained budget allocation and oversight.
Specific vehicle variants (LAV-25 A2, LAV-CC A2) suggest specialized, potentially high-cost, military equipment.

Positive Signals

Firm-fixed-price contract provides cost certainty for the government.
Acquisition of specialized armored vehicles addresses specific military operational needs.
Award to Canadian Commercial Corporation may leverage established international procurement channels.

Sector Analysis

This contract falls within the Defense Industrial Base sector, specifically focusing on the manufacturing of military armored vehicles. The market for such specialized equipment is typically characterized by high barriers to entry, significant R&D investment, and a limited number of qualified manufacturers, often with strong ties to government procurement. Comparable spending benchmarks are difficult to establish without detailed specifications and quantities, but large military vehicle procurements can run into hundreds of millions or billions of dollars.

Small Business Impact

This contract was not awarded as a small business set-aside, nor does it appear to have specific subcontracting requirements for small businesses mentioned in the provided data. The prime contractor, Canadian Commercial Corporation, is a government agency, not a small business. This means the direct impact on the small business ecosystem through this specific award is likely minimal, unless CCC engages small businesses as subcontractors, which is not detailed here.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and program management offices. As a firm-fixed-price contract, the focus is on delivery of the specified vehicles. Transparency is limited by the sole-source nature of the award. Accountability measures would involve ensuring the vehicles meet all technical specifications and are delivered on time. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Armored Vehicle Procurement
Military Vehicle Manufacturing
Department of Defense Contracts
Canadian Commercial Corporation Engagements
Tactical Wheeled Vehicles

Risk Flags

Sole-source award
Lack of competitive bidding
Potential for inflated pricing
Limited transparency in procurement process

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $21.8 million to CANADIAN COMMERCIAL CORPORATION. ACQUISITION OF 11 EACH LAV-25 A2 AND 2 EACH LAV-CC A2 VEHICLES.

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 $21.8 million.

What is the period of performance?

Start: 2009-06-29. End: 2012-12-21.

What is the track record of the Canadian Commercial Corporation (CCC) in fulfilling defense contracts for the U.S. Department of Defense?

The Canadian Commercial Corporation (CCC) acts as a facilitator for international contracting, often leveraging existing government-to-government agreements. While CCC itself doesn't manufacture, it manages contracts with Canadian suppliers. Its track record with the U.S. Department of Defense is generally positive in terms of facilitating procurement, but the specifics of performance, cost control, and adherence to timelines depend heavily on the underlying Canadian supplier. For this particular contract, the data indicates a firm-fixed-price award for specific vehicle types, suggesting a defined scope. CCC's role is to ensure the Canadian supplier meets these terms. Historical data on CCC's overall performance would require a broader analysis of its portfolio of contracts with the DoD, looking at delivery success rates, quality compliance, and any disputes or overruns.

How does the per-unit cost of these LAV-25 A2 and LAV-CC A2 vehicles compare to similar acquisitions by the U.S. military or allied nations?

The average cost per vehicle in this contract is approximately $1.67 million ($21.8 million / 13 vehicles). Benchmarking this figure is challenging without precise specifications and current market conditions. However, reports on military vehicle acquisitions often show significant price variations based on configuration, technology, and quantity. For instance, the U.S. Marine Corps' LAV fleet has undergone various upgrades and procurements over the years, with costs fluctuating. Similarly, other nations acquiring comparable armored personnel carriers or light armored vehicles might have different pricing structures due to scale, negotiation power, and specific requirements. The sole-source nature of this award makes direct comparison difficult, as competitive bids typically yield more transparent and potentially lower pricing. Further analysis would require access to detailed cost breakdowns and recent procurement data for similar platforms.

What are the primary risks associated with a sole-source contract for military hardware like armored vehicles?

The primary risks associated with a sole-source contract for military hardware are centered around cost and competition. Without competitive bidding, there is a reduced incentive for the supplier to offer the lowest possible price, potentially leading to overpayment by the government. Price justification becomes critical, and the government must rely heavily on its negotiation team and market research to ensure fairness. Another risk is the potential for reduced innovation or quality if the supplier faces no competitive pressure to improve. Furthermore, sole-source awards can sometimes indicate a lack of available alternatives or a reliance on a single supplier, creating potential supply chain vulnerabilities. For taxpayers, the risk is a less efficient use of public funds compared to what might have been achieved through open competition.

What is the expected program effectiveness or impact of acquiring these specific LAV variants for the Department of the Army?

The acquisition of 11 LAV-25 A2 and 2 LAV-CC A2 vehicles is intended to enhance the U.S. Army's capabilities in areas requiring protected mobility and reconnaissance. The LAV-25 is a versatile platform used for various roles, including troop transport, reconnaissance, and fire support. The LAV-CC (Command and Control) variant specifically supports command and communication functions on the battlefield. Acquiring these vehicles suggests a need to modernize or expand the Army's fleet of light armored vehicles, potentially to replace aging platforms or to meet new operational requirements. The effectiveness will depend on how well these vehicles integrate into existing units, their reliability in operational environments, and their contribution to mission success. The firm-fixed-price nature indicates a focus on delivering the specified equipment to meet these needs.

How has historical spending on similar military armored vehicles by the Department of Defense trended over the past decade?

Historical spending on military armored vehicles by the Department of Defense has been substantial and subject to fluctuations based on geopolitical events, strategic shifts, and budget allocations. Over the past decade, the DoD has invested heavily in modernizing its ground vehicle fleet, including wheeled and tracked armored vehicles. This includes programs for main battle tanks, infantry fighting vehicles, armored personnel carriers, and various specialized variants like command vehicles. Spending patterns are influenced by ongoing conflicts, readiness requirements, and the phasing out of older equipment. While specific figures for LAV-25 and LAV-CC procurements would require detailed analysis, the overall trend indicates a consistent, significant allocation of resources towards maintaining and upgrading armored vehicle capabilities to meet diverse operational demands.

Industry Classification

NAICS: Manufacturing › Other Transportation Equipment Manufacturing › Military Armored Vehicle, Tank, and Tank Component Manufacturing

Product/Service Code: MOTOR VEHICLES, CYCLES, TRAILERS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: W56HZV09R0366

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Government of Canada (UEI: 241015486)

Address: 50 O'CONNOR ST SUITE 1100, OTTAWA

Business Categories: Category Business, Foreign Government, Foreign Owned, Not Designated a Small Business, Special Designations

Financial Breakdown

Contract Ceiling: $21,770,833

Exercised Options: $21,770,833

Current Obligation: $21,770,833

Contract Characteristics

Cost or Pricing Data: NOT OBTAINED - WAIVED

Timeline