DoD's $91.3M contract for aircraft parts awarded to Sierra Nevada Company, LLC, lacked competition

Contract Overview

Contract Amount: $91,289,433 ($91.3M)

Contractor: Sierra Nevada Company, LLC

Awarding Agency: Department of Defense

Start Date: 2012-09-25

End Date: 2015-01-31

Contract Duration: 858 days

Daily Burn Rate: $106.4K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST NO FEE

Sector: Defense

Official Description: ACAT III BIG SAFARI; NSAV CONVERSION

Place of Performance

Location: SPARKS, WASHOE County, NEVADA, 89434

State: Nevada Government Spending

Plain-Language Summary

Department of Defense obligated $91.3 million to SIERRA NEVADA COMPANY, LLC for work described as: ACAT III BIG SAFARI; NSAV CONVERSION Key points: 1. The contract's value of $91.3 million represents a significant investment in specialized aircraft parts. 2. Awarded as a sole-source contract, it bypasses competitive bidding processes, potentially impacting price discovery. 3. The duration of 858 days suggests a substantial project timeline for the delivered goods. 4. The 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' sector indicates a focus on niche components. 5. The contract's cost-plus-no-fee structure requires careful monitoring of contractor expenses. 6. The absence of small business set-asides means limited direct benefit to smaller enterprises in this award.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging without comparable sole-source awards for similar specialized aircraft parts. The 'Cost No Fee' (Cost Plus No Fee) pricing structure means the government reimburses the contractor for allowable costs plus a fixed fee, but the fee is not directly tied to performance. This structure can incentivize cost overruns if not rigorously managed. Without competitive bids, it's difficult to ascertain if the price reflects fair market value or if a more competitive process could have yielded savings.

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. This typically occurs when only one responsible source is available or when a compelling justification for other than full and open competition exists. The lack of multiple bidders means there was no opportunity for price competition, which is a primary driver for achieving the best possible pricing for the government.

Taxpayer Impact: Sole-source awards limit the government's ability to leverage market competition to secure lower prices, potentially resulting in higher costs for taxpayers compared to a competed contract.

Public Impact

The primary beneficiary is the Department of Defense, specifically the Air Force, receiving specialized aircraft parts. The contract supports the operational readiness and maintenance of specific aircraft platforms. The geographic impact is likely concentrated around the contractor's facilities and the military bases where the parts are deployed. The workforce implications include employment at Sierra Nevada Company, LLC, and potentially its subcontractors, within the aerospace manufacturing sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated costs for taxpayers.
Cost-plus-no-fee structure requires stringent oversight to prevent cost overruns.
Sole-source nature limits transparency in pricing and value assessment.
No small business participation noted, potentially excluding smaller innovative firms.

Positive Signals

Award to an established contractor (Sierra Nevada Company, LLC) suggests potential for reliable delivery.
Specialized nature of parts indicates a critical need met by this contract.
Contract duration suggests a long-term need for these components.

Sector Analysis

The 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' sector is a specialized segment within the broader aerospace industry. This industry is characterized by high technological demands, stringent quality control, and significant R&D investment. Contracts in this area often involve complex components critical for aircraft performance and safety. Spending in this sector can fluctuate based on defense budgets, modernization programs, and the lifecycle of various aircraft fleets. Comparable spending benchmarks are difficult to establish due to the niche nature of specific parts and sole-source awards.

Small Business Impact

This contract did not include a small business set-aside, nor is there an indication of significant subcontracting opportunities for small businesses. The award to a large prime contractor suggests that the primary focus was on fulfilling the specific requirements of the Department of the Air Force, rather than on fostering small business participation. This approach may limit the opportunities for smaller, specialized firms to contribute to this particular defense procurement and potentially gain valuable experience.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Air Force's contracting and program management offices. Given the 'Cost No Fee' structure, rigorous financial oversight is crucial to monitor allowable costs and ensure the fixed fee is justified. Transparency is limited due to the sole-source nature, but contract performance reviews and audits by the Defense Contract Audit Agency (DCAA) would be standard oversight mechanisms. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Aircraft Parts Manufacturing
Defense Procurement
Aerospace Components
Sole-Source Contracts
Cost-Plus Contracts

Risk Flags

Sole-source award lacks competition
Cost-plus contract type requires stringent oversight
Potential for cost overruns
Limited transparency in pricing

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $91.3 million to SIERRA NEVADA COMPANY, LLC. ACAT III BIG SAFARI; NSAV CONVERSION

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 $91.3 million.

What is the period of performance?

Start: 2012-09-25. End: 2015-01-31.

What is the specific nature of the 'ACAT III BIG SAFARI; NSAV CONVERSION' requirement?

The designation 'ACAT III BIG SAFARI; NSAV CONVERSION' points to a specific program within the Department of Defense's acquisition framework. ACAT (Acquisition Category) III typically refers to programs with estimated costs between $50 million and $300 million, requiring specific oversight levels. 'BIG SAFARI' is a well-known, highly classified acquisition program managed by the National Reconnaissance Office (NRO) and often involves intelligence-related systems, including space and airborne platforms. 'NSAV CONVERSION' likely refers to a specific modification or upgrade to an existing intelligence, surveillance, and reconnaissance (ISR) or related asset, possibly involving the conversion of a platform or system for enhanced capabilities. The sole-source award suggests this conversion is highly specialized and potentially tied to classified technologies or unique contractor expertise.

How does the 'Cost No Fee' (CNF) contract type typically affect contractor performance and government oversight?

The Cost No Fee (CNF) contract type, a variation of cost-plus contracts, reimburses the contractor for all allowable costs incurred during performance but provides a fixed fee that is not directly tied to performance metrics. This means the contractor is incentivized to control costs to maximize their profit margin (the fixed fee), but there's no direct financial reward for exceeding performance expectations or penalties for underperformance beyond the potential for future contract awards. For the government, this necessitates robust oversight to ensure costs are allowable, allocable, and reasonable. It requires diligent monitoring of contractor expenditures and progress to prevent cost overruns and ensure the project stays within budget. Unlike incentive fee contracts, CNF lacks a direct mechanism to reward exceptional performance, making the government's role in defining clear requirements and monitoring execution even more critical.

What are the implications of awarding a sole-source contract for specialized aircraft parts in the defense sector?

Awarding a sole-source contract for specialized aircraft parts in the defense sector implies that the requirement is highly unique, potentially proprietary, or that only one contractor possesses the necessary technical expertise, facilities, or security clearances. While this can ensure the use of specific, critical components or technologies, it bypasses the competitive bidding process. This lack of competition can lead to higher prices for the government compared to what might be achieved through a competitive solicitation. It also reduces transparency in pricing and limits opportunities for other capable suppliers to enter the market or offer alternative solutions. For taxpayers, it means potentially paying a premium for these specialized parts, underscoring the importance of rigorous justification for sole-source awards and strong cost-control measures.

What is the typical track record of Sierra Nevada Company, LLC, in fulfilling defense contracts?

Sierra Nevada Company, LLC (SNC), now a subsidiary of Sierra Nevada Corporation, has a substantial track record in fulfilling defense and aerospace contracts. They are known for their work in areas such as electronic warfare, intelligence, surveillance, and reconnaissance (ISR), aviation systems, and space technology. SNC has been a prime contractor on numerous complex government programs, often involving advanced technology integration and modifications. Their history includes significant work with the U.S. Air Force, Army, Navy, and intelligence agencies. While specific performance details for every contract are not publicly available, SNC is generally regarded as a capable and experienced defense contractor, often undertaking challenging and specialized projects, including those requiring sole-source awards due to unique capabilities.

How does the $91.3 million contract value compare to typical spending in the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' NAICS code?

The NAICS code 336413, 'Other Aircraft Parts and Auxiliary Equipment Manufacturing,' encompasses a wide range of specialized components. A single contract valued at $91.3 million is substantial within this sector, particularly for a sole-source award. While overall annual spending across this entire NAICS code by the government can reach billions, individual contract values vary greatly depending on the specific part, quantity, and complexity. A contract of this magnitude suggests a significant procurement, possibly for a critical system upgrade, a large fleet support requirement, or a unique component for a specialized aircraft or platform. Without more granular data on the specific parts procured and the number of such contracts awarded annually, it's difficult to provide a precise benchmark, but $91.3 million represents a considerable investment for a single award in this category.

What are the potential risks associated with a sole-source, cost-plus contract for complex aircraft components?

Sole-source, cost-plus contracts for complex aircraft components carry several inherent risks. The primary risk is financial: the lack of competition can lead to inflated prices, and the cost-plus structure, even with a fixed fee, can incentivize less aggressive cost management by the contractor, potentially leading to cost overruns if not tightly controlled. There's also a risk of reduced innovation, as the contractor may focus on fulfilling the defined scope rather than exploring more efficient or advanced solutions that might arise in a competitive environment. Furthermore, sole-source awards can create dependency on a single supplier, posing supply chain risks if that supplier faces difficulties. Government oversight is critical to mitigate these risks, requiring detailed cost analysis, performance monitoring, and clear definition of requirements to ensure value for money and timely delivery of critical components.

Industry Classification

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

Product/Service Code: AEROSPACE CRAFT AND STRUCTURAL COMPONENTS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST NO FEE (S)

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: $138,970,433

Exercised Options: $91,289,433

Current Obligation: $91,289,433

Subaward Activity

Number of Subawards: 83

Total Subaward Amount: $29,611,136

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA862011G4020

IDV Type: BOA

Timeline