DoD's $136M contract for aircraft parts awarded to Sierra Nevada Company, LLC, lacked competition

Contract Overview

Contract Amount: $136,285,778 ($136.3M)

Contractor: Sierra Nevada Company, LLC

Awarding Agency: Department of Defense

Start Date: 2013-09-30

End Date: 2019-04-30

Contract Duration: 2,038 days

Daily Burn Rate: $66.9K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: IGF::CT::IGF ACAT III BIG SAFARI; SP50 CLS

Place of Performance

Location: SPARKS, WASHOE County, NEVADA, 89434

State: Nevada Government Spending

Plain-Language Summary

Department of Defense obligated $136.3 million to SIERRA NEVADA COMPANY, LLC for work described as: IGF::CT::IGF ACAT III BIG SAFARI; SP50 CLS Key points: 1. The contract's value of $136.3 million over its lifetime raises questions about cost-effectiveness due to the lack of competitive bidding. 2. The sole-source nature of this award limits price discovery and potentially increases the financial burden on the government. 3. Performance risks are moderate, given the specialized nature of aircraft parts manufacturing, but are amplified by the absence of market validation. 4. This contract falls within the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' sector, a critical component of defense readiness. 5. The duration of the contract, over 2000 days, suggests a long-term need for these specialized parts. 6. The absence of small business participation is noted, with no indication of set-aside or subcontracting plans.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging without comparable sole-source awards or detailed cost breakdowns. The 'Cost Plus Fixed Fee' pricing structure can sometimes lead to higher costs if not rigorously managed. Given the lack of competition, it's difficult to ascertain if the government received the best possible value for the $136.3 million obligated.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one bidder, Sierra Nevada Company, LLC, was considered. This approach bypasses the standard competitive procurement process, which typically involves soliciting bids from multiple qualified vendors. The lack of competition means there was no opportunity for price negotiation based on market forces or for evaluating alternative solutions from other companies.

Taxpayer Impact: Sole-source awards can result in higher prices for taxpayers as the government does not benefit from the cost-saving pressures inherent in a competitive bidding environment. This can lead to less efficient use of public funds.

Public Impact

The primary beneficiaries of this contract are the Department of the Air Force and potentially its operational units requiring specialized aircraft parts. The services delivered include the manufacturing and supply of 'Other Aircraft Parts and Auxiliary Equipment'. The geographic impact is primarily within the United States, supporting defense logistics and readiness. Workforce implications include employment at Sierra Nevada Company, LLC, and its supply chain partners in the aerospace manufacturing sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated costs for taxpayers.
Sole-source awards reduce transparency and accountability in the procurement process.
Absence of small business participation limits opportunities for smaller firms in the defense supply chain.
The 'Cost Plus Fixed Fee' contract type can incentivize cost overruns if not closely monitored.

Positive Signals

Contract awarded to a known entity, Sierra Nevada Company, LLC, potentially indicating a trusted supplier.
The contract addresses a specific need for aircraft parts, crucial for maintaining operational readiness.
The duration suggests a stable, long-term requirement, allowing for potential economies of scale in production.

Sector Analysis

This contract falls under the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' industry, a sub-sector of the broader aerospace and defense market. This sector is characterized by high technological demands, stringent quality control, and significant government procurement. Comparable spending benchmarks are difficult to establish for sole-source awards, but the overall defense aircraft parts market is substantial, with billions spent annually on maintenance, repair, and overhaul (MRO) services and parts.

Small Business Impact

This contract does not appear to have included any small business set-aside provisions, nor is there any indication of subcontracting to small businesses. The sole-source nature of the award inherently limits opportunities for small businesses to participate in this specific procurement. This could represent a missed opportunity to foster growth and innovation within the small business defense industrial base.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Air Force's contracting and program management offices. Inspector General investigations could be initiated if specific concerns regarding fraud, waste, or abuse arise. Transparency is limited due to the sole-source nature and the lack of publicly available detailed cost justifications.

Related Government Programs

Aircraft Parts Manufacturing
Defense Procurement
Sole-Source Contracts
Aerospace Manufacturing
Air Force Contracts

Risk Flags

Sole-source award lacks competitive justification.
Potential for cost overruns due to CPFF structure.
Lack of transparency in pricing and justification.
No small business participation noted.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $136.3 million to SIERRA NEVADA COMPANY, LLC. IGF::CT::IGF ACAT III BIG SAFARI; SP50 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 $136.3 million.

What is the period of performance?

Start: 2013-09-30. End: 2019-04-30.

What is the specific justification for awarding this contract on a sole-source basis?

The provided data does not include the specific justification for the sole-source award. Typically, sole-source procurements are justified when only one responsible source can provide the required supplies or services, often due to unique capabilities, proprietary technology, or urgent and compelling needs. Without this documentation, it is impossible to independently verify the necessity of bypassing the competitive process. This lack of transparency is a significant concern for ensuring fair and efficient use of taxpayer funds.

How does the 'Cost Plus Fixed Fee' (CPFF) structure compare to other contract types for similar aircraft parts?

Cost Plus Fixed Fee (CPFF) contracts reimburse the contractor for allowable costs plus a fixed fee representing profit. This structure is often used when the scope of work is not precisely defined or when there is uncertainty in costs. However, it can incentivize contractors to incur higher costs, as their fee is fixed regardless of the total cost. For aircraft parts, fixed-price contracts (like Firm-Fixed-Price) are generally preferred when requirements are well-defined, as they shift cost risk to the contractor and offer greater price certainty for the government. The use of CPFF here, especially in a sole-source context, warrants scrutiny to ensure costs were managed effectively.

What is the historical spending pattern for this specific type of aircraft part or with this contractor?

The provided data indicates this contract, identified by 'IGF::CT::IGF ACAT III BIG SAFARI; SP50 CLS', was awarded in September 2013 and ended in April 2019, with a total value of approximately $136.3 million. Without access to broader contract databases or specific program histories, it's difficult to establish a detailed historical spending pattern for this exact part or for Sierra Nevada Company, LLC, within this specific category. However, the significant value and duration suggest a consistent, long-term requirement for these components within the Air Force's operations.

What are the potential risks associated with the long duration (2038 days) of this contract?

The contract duration of 2038 days (approximately 5.6 years) presents several potential risks. Firstly, it increases the exposure to economic fluctuations, such as inflation in material costs or labor rates, which could impact the overall cost if not adequately accounted for in the pricing. Secondly, technological advancements in aircraft or parts manufacturing could render the contracted items obsolete or less efficient before the contract's end. Lastly, a longer duration can sometimes lead to complacency in performance monitoring and contract management if not actively overseen. Ensuring robust contract management and flexibility clauses are crucial for mitigating these risks.

Are there any performance metrics or key performance indicators (KPIs) associated with this contract?

The provided data does not specify any performance metrics or Key Performance Indicators (KPIs) for this contract. In 'Cost Plus Fixed Fee' contracts, performance is often monitored through adherence to schedules, quality standards, and delivery timelines. However, without explicit KPIs detailed in the contract documentation, it is challenging to objectively assess the contractor's performance and the overall effectiveness of the delivered goods. The absence of clearly defined metrics can make it difficult to hold the contractor accountable for specific performance outcomes.

Industry Classification

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

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › MANAGEMENT SUPPORT SERVICES

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: $266,518,843

Exercised Options: $136,497,881

Current Obligation: $136,285,778

Subaward Activity

Number of Subawards: 234

Total Subaward Amount: $31,572,467

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA862011G4020

IDV Type: BOA

Timeline