DoD's $103M contract for aircraft parts awarded to Sierra Nevada Company, LLC, lacked competition

Contract Overview

Contract Amount: $103,233,998 ($103.2M)

Contractor: Sierra Nevada Company, LLC

Awarding Agency: Department of Defense

Start Date: 2012-09-28

End Date: 2013-09-30

Contract Duration: 367 days

Daily Burn Rate: $281.3K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: ACAT III BIG SAFARI; SP50 FY13 CLS

Place of Performance

Location: SPARKS, WASHOE County, NEVADA, 89434

State: Nevada Government Spending

Plain-Language Summary

Department of Defense obligated $103.2 million to SIERRA NEVADA COMPANY, LLC for work described as: ACAT III BIG SAFARI; SP50 FY13 CLS Key points: 1. The contract's value of over $103 million represents a significant investment in aircraft parts. 2. The sole-source award suggests limited market options or specific contractor capabilities were deemed essential. 3. The 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' sector is critical for defense readiness. 4. A Cost Plus Fixed Fee contract type can introduce cost escalation risks if not managed tightly. 5. The short duration of 367 days for this large award warrants scrutiny of project phasing and delivery. 6. The absence of small business involvement raises questions about broader economic impact.

Value Assessment

Rating: questionable

Benchmarking the value of this $103 million contract is challenging without specific details on the aircraft parts procured and their intended use. However, the sole-source nature and Cost Plus Fixed Fee structure inherently carry higher risk for cost overruns compared to competitively bid fixed-price contracts. The relatively short duration for such a substantial award also raises questions about the efficiency and necessity of the procurement approach, potentially indicating a rushed or urgent need that may have bypassed more cost-effective options.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning Sierra Nevada Company, LLC was the only bidder considered. This approach bypasses the standard competitive bidding process, which typically involves multiple vendors submitting proposals. While sole-source awards can be justified for unique capabilities or urgent needs, they limit price discovery and can lead to higher costs for the government compared to a competitive environment.

Taxpayer Impact: The lack of competition means taxpayers did not benefit from potential cost savings that could have arisen from multiple companies vying for the contract. This could translate to a higher overall expenditure for the required aircraft parts.

Public Impact

The primary beneficiaries are the Department of the Air Force, receiving critical aircraft parts for its operations. The contract supports the maintenance and operational readiness of specific Air Force aircraft fleets. The geographic impact is primarily within the United States, where Sierra Nevada Company, LLC operates and where the parts will be utilized. Workforce implications include employment at Sierra Nevada Company, LLC and its supply chain partners.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potentially increases costs for taxpayers.
Cost Plus Fixed Fee contract type carries inherent risk of cost escalation.
Short contract duration for a large value may indicate rushed procurement or inefficient planning.
Lack of small business participation limits broader economic benefits and subcontracting opportunities.

Positive Signals

Award to an established contractor like Sierra Nevada Company, LLC suggests access to specialized capabilities.
The contract addresses a specific need within the Department of Defense's aircraft maintenance and supply chain.
The contract ensures the availability of critical aircraft parts, supporting defense readiness.

Sector Analysis

The 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' sector is a vital component of the aerospace and defense industry. This contract falls within a segment focused on specialized components that are essential for the operation and maintenance of military aircraft. The market for such parts can be highly specialized, with a limited number of manufacturers possessing the necessary certifications, technology, and production capacity. Spending in this area is directly tied to defense budgets and the operational tempo of military aviation.

Small Business Impact

This contract did not include a small business set-aside, and the data indicates no small business participation (sb: false). The sole-source nature of the award further limits opportunities for small businesses to participate either as prime contractors or subcontractors. This approach may not leverage the innovative capabilities of the small business sector and could result in missed opportunities for economic development and subcontracting.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Air Force's contracting and program management offices. Given the sole-source award and Cost Plus Fixed Fee structure, robust oversight is crucial to monitor costs, ensure performance, and verify the necessity of expenditures. The Inspector General's office within the Department of Defense may also conduct audits or investigations to ensure accountability and prevent fraud, waste, and abuse.

Related Government Programs

Aircraft Parts Manufacturing
Defense Logistics Agency Contracts
Air Force Procurement
Sole-Source Defense Contracts
Cost-Plus Contracts

Risk Flags

Sole-source award
Cost Plus Fixed Fee contract type
Lack of competition
No small business participation

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $103.2 million to SIERRA NEVADA COMPANY, LLC. ACAT III BIG SAFARI; SP50 FY13 CLS

Who is the contractor on this award?

The obligated recipient is SIERRA NEVADA COMPANY, LLC.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Air Force).

What is the total obligated amount?

The obligated amount is $103.2 million.

What is the period of performance?

Start: 2012-09-28. End: 2013-09-30.

What specific aircraft parts were procured under this contract, and what was their intended use?

The provided data indicates the contract (NAICS 336413) is for 'Other Aircraft Parts and Auxiliary Equipment Manufacturing.' However, it does not specify the exact parts. These could range from complex avionics components to structural elements or engine parts. The intended use is for the Department of the Air Force, likely supporting the maintenance, repair, and overhaul (MRO) of specific aircraft platforms. Without more granular information, it's difficult to ascertain the precise nature of the components and their criticality to specific Air Force missions or fleet readiness.

Why was this contract awarded on a sole-source basis instead of through full and open competition?

Sole-source awards are typically justified when only one responsible source is available or capable of meeting the government's needs. This could be due to proprietary technology, unique manufacturing capabilities, urgent and compelling circumstances, or a lack of adequate competition in the market for the specific item. For this contract, the Department of the Air Force would have had to document the rationale for not seeking competitive bids, citing reasons such as the specialized nature of the parts or the contractor's exclusive ability to produce them within the required timeframe and specifications.

What are the potential risks associated with the Cost Plus Fixed Fee (CPFF) contract type for this procurement?

The Cost Plus Fixed Fee (CPFF) contract type means the contractor is reimbursed for all allowable costs plus a predetermined fixed fee representing profit. The primary risk for the government is cost escalation, as the contractor is incentivized to incur costs to complete the work, and the fixed fee remains constant regardless of the final cost. Effective oversight is critical to scrutinize allowable costs and ensure the contractor exercises due diligence in managing expenses. If cost controls are weak, the total expenditure could significantly exceed initial estimates, even though the fee is fixed.

How does the $103 million contract value compare to typical spending in the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' sector for the Department of the Air Force?

The $103 million value for a single contract in the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' sector is substantial. While the Department of the Air Force procures a vast array of parts and equipment, a sole-source award of this magnitude warrants scrutiny. Comparable spending benchmarks would typically involve analyzing historical data for similar sole-source awards or the total annual spending within this NAICS code by the Air Force. Without access to that specific comparative data, it's difficult to definitively state if this is high or low, but its size suggests a significant procurement of critical or specialized components.

What is Sierra Nevada Company, LLC's track record with the Department of Defense, particularly for aircraft parts?

Sierra Nevada Company, LLC (now part of Sierra Nevada Corporation) has a significant history of contracting with the Department of Defense, including the Air Force. They are known for providing a range of aerospace and defense solutions, including electronic warfare systems, communication systems, and aircraft modifications. While the specific data here doesn't detail their past performance on aircraft parts manufacturing, their established presence suggests they possess the technical capabilities and security clearances required for such defense contracts. A deeper dive into their contract history would reveal specific performance metrics and past awards in this category.

What are the implications of the short contract duration (367 days) for a $103 million award?

A contract duration of 367 days for an award valued at over $103 million suggests a concentrated effort to procure and deliver specific aircraft parts within a relatively short timeframe. This could imply an urgent operational need, a rapid prototyping requirement, or a phased delivery schedule for a larger, multi-year program. The compressed timeline may increase logistical challenges and potentially necessitate expedited production processes, which could impact costs. It also means that the government needs to be highly efficient in its oversight and acceptance processes to ensure timely delivery and quality.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Other Aircraft Parts and Auxiliary Equipment Manufacturing

Product/Service Code: COMM/DETECT/COHERENT RADIATION

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 444 SALOMON CIR, SPARKS, NV, 89434

Business Categories: Category Business, Manufacturer of Goods, Not Designated a Small Business, Special Designations, Subchapter S Corporation, U.S.-Owned Business, Woman Owned Business

Financial Breakdown

Contract Ceiling: $106,604,887

Exercised Options: $106,604,887

Current Obligation: $103,233,998

Subaward Activity

Number of Subawards: 20

Total Subaward Amount: $1,216,066

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA862011G4020

IDV Type: BOA

Timeline