DoD's $88M contract for aircraft parts to Sierra Nevada Company, LLC, awarded without competition

Contract Overview

Contract Amount: $88,348,296 ($88.3M)

Contractor: Sierra Nevada Company, LLC

Awarding Agency: Department of Defense

Start Date: 2009-10-01

End Date: 2011-09-30

Contract Duration: 729 days

Daily Burn Rate: $121.2K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: BASIC BOA ORDER

Place of Performance

Location: SPARKS, WASHOE County, NEVADA, 89434, UNITED STATES OF AMERICA

State: Nevada Government Spending

Plain-Language Summary

Department of Defense obligated $88.3 million to SIERRA NEVADA COMPANY, LLC for work described as: BASIC BOA ORDER Key points: 1. The contract's value of $88.3 million over two years suggests significant investment in specialized aircraft components. 2. Awarded on a Cost Plus Fixed Fee basis, this contract structure allows for cost overruns, potentially increasing the final price. 3. The lack of competition raises concerns about price discovery and whether the government secured the best possible value. 4. This contract falls under 'Other Aircraft Parts and Auxiliary Equipment Manufacturing,' a niche within the broader aerospace sector. 5. The duration of 729 days indicates a substantial, medium-term requirement for these parts. 6. The contract was awarded to Sierra Nevada Company, LLC, a known entity in the aerospace and defense industry.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging without specific details on the aircraft parts procured and their criticality. However, the Cost Plus Fixed Fee (CPFF) pricing structure, especially when awarded without competition, inherently carries a higher risk of cost escalation compared to fixed-price contracts. The government bears the risk of cost overruns, while the contractor is guaranteed a fixed fee. This can lead to less incentive for cost control on the contractor's part. Without competitive bids, it's difficult to ascertain if the $88.3 million represents a fair market price for the goods and services provided.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded using the 'NOT COMPETED' method, indicating a sole-source procurement. This means the Department of the Air Force did not solicit bids from multiple potential suppliers. Reasons for sole-source awards can include unique capabilities, proprietary technology, or urgent needs where only one source can fulfill the requirement. The absence of a competitive bidding process limits the government's ability to leverage market forces to achieve the lowest possible price and potentially explore innovative solutions from a wider range of vendors.

Taxpayer Impact: Sole-source awards mean taxpayers may not be getting the most cost-effective solution, as the potential for price negotiation is significantly reduced without competing offers.

Public Impact

The primary beneficiaries are likely the Department of Defense, specifically the Air Force, which receives critical aircraft parts. The services delivered involve the manufacturing and supply of 'Other Aircraft Parts and Auxiliary Equipment,' essential for maintaining aircraft operational readiness. The geographic impact is primarily within the United States, where the contractor operates and the parts are likely utilized by Air Force bases. Workforce implications include employment opportunities within Sierra Nevada Company, LLC, and potentially its subcontractors, in the aerospace manufacturing sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition increases the risk of paying a premium for the parts.
CPFF contract type can lead to higher costs if not closely managed.
Limited transparency into the justification for sole-source award.
Potential for cost overruns without strong government oversight.
Difficulty in benchmarking value due to unique or specialized nature of parts.

Positive Signals

Award to an established contractor, Sierra Nevada Company, LLC, suggests a degree of reliability.
Contract duration indicates a sustained need and potential for a stable supply chain.
The 'Other Aircraft Parts' category suggests specialized, potentially high-value components.
Fixed fee component in CPFF provides some cost certainty for contractor profit.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on aircraft parts. The 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' (NAICS 336413) industry encompasses a wide range of components, from structural elements to specialized systems. The total government spending in this sector is substantial, driven by the continuous need for aircraft maintenance, upgrades, and new acquisitions. Benchmarking this specific contract's value is difficult without knowing the exact nature of the parts, but it represents a portion of the overall defense budget allocated to sustainment and readiness.

Small Business Impact

The data indicates this contract was not set aside for small businesses (ss: false, sb: false). Given the sole-source nature and the likely specialized requirements for aircraft parts, it is improbable that small businesses would have been primary awardees unless they were subcontractors. The absence of a small business set-aside suggests that the primary contractor, Sierra Nevada Company, LLC, is likely a large business, and subcontracting opportunities for small businesses are not explicitly detailed in this award notice.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Air Force's contracting and program management offices. As a Cost Plus Fixed Fee contract awarded without competition, rigorous oversight is crucial to monitor costs, ensure performance, and verify the necessity of expenditures. The Inspector General's office within the Department of Defense would have jurisdiction to investigate potential fraud, waste, or abuse. Transparency is limited by the sole-source nature, but contract performance reports and financial audits would be key accountability measures.

Related Government Programs

Aircraft Parts Procurement
Aerospace Manufacturing Contracts
Department of Defense Sustainment Contracts
Sole-Source Defense Contracts
Cost Plus Fixed Fee Contracts

Risk Flags

Lack of Competition
Cost Plus Fixed Fee Contract Type
Potential for Cost Overruns
Limited Transparency in Award Justification

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $88.3 million to SIERRA NEVADA COMPANY, LLC. BASIC BOA ORDER

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 $88.3 million.

What is the period of performance?

Start: 2009-10-01. End: 2011-09-30.

What specific aircraft parts were procured under this contract, and what is their criticality to Air Force operations?

The provided data identifies the contract under NAICS code 336413, 'Other Aircraft Parts and Auxiliary Equipment Manufacturing.' However, it does not specify the exact nature or quantity of the parts. These could range from engine components, avionics, structural elements, or specialized systems critical for the operational readiness and mission effectiveness of specific Air Force aircraft. Without this detailed information, it is impossible to fully assess the criticality or justify the sole-source award. Further investigation into contract line item numbers (CLINs) or associated documentation would be required to identify the specific parts and their roles in Air Force platforms.

What was the justification for awarding this contract on a sole-source basis instead of through full and open competition?

The data explicitly states the contract was 'NOT COMPETED,' indicating a sole-source award. Typical justifications for sole-source procurements include situations where only one responsible source can provide the required supplies or services, such as when the item is unique, proprietary, or requires specialized expertise possessed by only one contractor. For aircraft parts, this could be due to proprietary designs, unique manufacturing processes, or critical integration requirements with existing platforms where only the original equipment manufacturer or a designated supplier can fulfill the need. A formal justification document (e.g., a Justification and Approval for Other Than Full and Open Competition) would typically be required and should outline the specific rationale and evidence supporting the sole-source decision.

How does the Cost Plus Fixed Fee (CPFF) pricing structure compare to other contract types for similar aircraft parts procurements, and what are the associated risks?

Cost Plus Fixed Fee (CPFF) contracts reimburse the contractor for allowable costs incurred plus a fixed fee representing profit. This structure is often used when the scope of work is not well-defined or involves research and development. Compared to fixed-price contracts, CPFF shifts more cost risk to the government, as the contractor is incentivized to incur costs to cover their expenses, while the fixed fee remains constant regardless of actual costs. For aircraft parts, fixed-price contracts are generally preferred when requirements are clear, as they provide better cost control. The CPFF structure here, especially without competition, increases the risk of cost overruns and may lead to a higher final price than a competitively bid fixed-price contract. Effective government oversight is paramount to manage costs under a CPFF arrangement.

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

Sierra Nevada Company, LLC (SNC) is a well-established defense contractor known for its work in aerospace, aviation, and defense electronics. They have a history of delivering complex systems and components to the Department of Defense. While this specific contract focuses on 'Other Aircraft Parts,' SNC's broader portfolio includes aircraft modifications, sensor systems, and electronic warfare capabilities, suggesting they possess the technical expertise and manufacturing capacity relevant to this award. Their track record with the DoD generally indicates experience in meeting stringent defense requirements, though the specifics of their performance on CPFF contracts and sole-source awards would require deeper analysis of past performance evaluations and contract histories.

How does the $88.3 million contract value compare to historical spending patterns for similar aircraft parts by the Air Force or DoD?

Without knowing the specific parts procured, a direct comparison of the $88.3 million value is difficult. However, the Department of Defense consistently spends billions annually on aircraft parts and sustainment. This contract represents a significant, but not extraordinary, investment for a two-year period. Historical spending data for 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' (NAICS 336413) or specific aircraft platforms could provide context. If this contract covers highly specialized or long-lead-time components, the value might be considered reasonable. Conversely, if it involves more common parts, the lack of competition and CPFF structure could make it appear less cost-effective compared to competitively sourced, fixed-price agreements for similar items.

Industry Classification

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

Product/Service Code: QUALITY CONTROL, TEST, INSPECTION › INSPECTION 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, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business, Subchapter S Corporation, Woman Owned Business

Financial Breakdown

Contract Ceiling: $88,348,296

Exercised Options: $88,348,296

Current Obligation: $88,348,296

Contract Characteristics

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA862006G4026

IDV Type: IDC

Timeline