Department of Defense awarded $123M for aircraft parts, with limited competition and a cost-plus-fixed-fee structure

Contract Overview

Contract Amount: $123,104,920 ($123.1M)

Contractor: Sierra Nevada Company, LLC

Awarding Agency: Department of Defense

Start Date: 2014-10-31

End Date: 2019-06-30

Contract Duration: 1,703 days

Daily Burn Rate: $72.3K/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 FY15 SP50 CLS

Place of Performance

Location: SPARKS, WASHOE County, NEVADA, 89434

State: Nevada Government Spending

Plain-Language Summary

Department of Defense obligated $123.1 million to SIERRA NEVADA COMPANY, LLC for work described as: IGF::CT::IGF ACAT III BIG SAFARI FY15 SP50 CLS Key points: 1. The contract utilized a cost-plus-fixed-fee pricing structure, which can lead to higher costs if not carefully managed. 2. Limited competition for this contract may have resulted in a less favorable price for the government. 3. The contract duration of over 1700 days suggests a long-term need for these aircraft parts. 4. The award was a delivery order against a larger contract, indicating a phased approach to procurement. 5. The specific nature of the aircraft parts suggests a specialized requirement within the Air Force's operations.

Value Assessment

Rating: fair

Benchmarking the value for this specific delivery order is challenging without knowing the exact parts and quantities. However, the cost-plus-fixed-fee (CPFF) structure, while common for complex or uncertain scope work, carries inherent risks of cost overruns. The total award amount of $123 million over nearly five years suggests a significant investment. Without comparable sole-source or limited-competition contracts for similar specialized aircraft components, a precise value-for-money assessment is difficult, but the pricing structure warrants careful monitoring.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was not competed openly, indicating that the Department of the Air Force likely had specific reasons for selecting Sierra Nevada Company, LLC. This could be due to proprietary technology, existing integration, or a lack of other qualified sources. The limited competition means that the government did not benefit from the price discovery mechanisms that a broader solicitation would typically provide, potentially leading to higher costs than if multiple vendors had bid.

Taxpayer Impact: Taxpayers may have paid a premium due to the lack of robust competition, as the government did not have the leverage of multiple bids to drive down the price.

Public Impact

The primary beneficiaries are the Department of the Air Force, ensuring the continued operational readiness of its aircraft fleet. The services delivered involve the manufacturing and supply of critical aircraft parts, essential for maintenance and repair. The geographic impact is primarily within the United States, supporting Air Force bases and operations. Workforce implications include supporting specialized manufacturing jobs within Sierra Nevada Company, LLC and its supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus-fixed-fee structure increases risk of cost overruns.
Limited competition may lead to suboptimal pricing.
Long contract duration requires sustained oversight.
Lack of detailed public information on specific parts procured.

Positive Signals

Award to an established contractor with potential expertise in aircraft components.
Delivery order structure allows for phased funding and management.
Contract supports critical defense readiness needs.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on aircraft parts. The market for specialized aircraft components is often characterized by high barriers to entry due to technical expertise, certifications, and intellectual property. Spending in this area is critical for maintaining national defense capabilities. Comparable spending benchmarks would typically involve analyzing other contracts for similar aircraft systems or components, though direct comparisons can be difficult due to the unique nature of defense procurement.

Small Business Impact

There is no indication that this contract included a small business set-aside. Given the specialized nature of aircraft parts manufacturing and the limited competition, it is unlikely that small businesses were primary awardees. Subcontracting opportunities for small businesses may exist within Sierra Nevada Company's supply chain, but this is not explicitly detailed in the provided data.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Air Force's contracting and program management offices. Accountability measures would be tied to the terms of the cost-plus-fixed-fee contract, requiring detailed reporting from the contractor on costs incurred and progress made. Transparency is limited due to the nature of the limited competition and the specific defense requirements, but contract modifications and performance reports would be subject to internal review and potentially Inspector General oversight.

Related Government Programs

Aircraft Maintenance and Repair
Aerospace Manufacturing
Defense Procurement
Air Force Logistics

Risk Flags

Limited Competition
Cost-Plus-Fixed-Fee Contract Type
Potential for Cost Overruns

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $123.1 million to SIERRA NEVADA COMPANY, LLC. IGF::CT::IGF ACAT III BIG SAFARI FY15 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 $123.1 million.

What is the period of performance?

Start: 2014-10-31. End: 2019-06-30.

What specific aircraft systems or platforms does this contract support?

The provided data does not specify the exact aircraft systems or platforms that this contract supports. The North American Industry Classification System (NAICS) code 336413, 'Other Aircraft Parts and Auxiliary Equipment Manufacturing,' indicates the general industry but not the specific end-use. To determine the supported platforms, one would need to consult the detailed contract award documents or agency procurement databases, which often contain line-item details or program references. Understanding the specific platforms is crucial for assessing the criticality and strategic importance of the procured parts.

How does the cost-plus-fixed-fee structure compare to other pricing models for similar defense contracts?

Cost-plus-fixed-fee (CPFF) contracts are common in defense procurement, particularly when the scope of work is not fully defined at the outset or involves significant research and development. Unlike fixed-price contracts, CPFF shifts some cost risk to the government while incentivizing the contractor to complete the work. However, it can lead to higher overall costs if the contractor's actual costs exceed initial estimates significantly, as the fixed fee remains constant. Compared to firm-fixed-price (FFP) contracts, CPFF offers more flexibility but less cost certainty for the government. For specialized aircraft parts, if the design or manufacturing process is complex or subject to change, CPFF might be deemed necessary, but it requires robust government oversight to manage costs effectively.

What are the potential risks associated with limited competition for this contract?

Limited competition, as seen in this contract awarded to Sierra Nevada Company, LLC, poses several risks. Primarily, it can lead to higher prices for the government because the absence of multiple bidders reduces the incentive for the contractor to offer the most competitive rate. It also limits the government's ability to explore innovative solutions or alternative suppliers that might emerge in a broader competition. Furthermore, it can create a perception of favoritism or a lack of due diligence in seeking the best value. In the long term, it may stifle innovation within the broader supplier base if opportunities are consistently channeled to a limited number of contractors.

What is the historical spending pattern for Sierra Nevada Company, LLC with the Department of Defense?

To assess the historical spending pattern for Sierra Nevada Company, LLC with the Department of Defense, one would need to analyze contract award data over several fiscal years. This would involve querying databases like the Federal Procurement Data System (FPDS) or USAspending.gov for all contracts awarded to this entity by the DoD. Key metrics to examine would include the total dollar value of contracts, the types of services or goods procured, the agencies awarding the contracts (e.g., Air Force, Navy, Army), and the competition levels for those awards. A pattern of consistent, large-value awards, especially sole-source or limited-competition ones, might indicate a strategic partnership or a critical supplier role.

How does the $123 million award compare to the overall budget for aircraft parts within the Department of the Air Force?

Comparing this $123 million award to the overall budget for aircraft parts within the Department of the Air Force requires access to the Air Force's detailed budget appropriations and spending reports for the relevant fiscal years (2014-2019). Aircraft parts procurement is a significant component of the Air Force's maintenance, repair, and overhaul (MRO) budget. This specific award represents a portion of that larger spending category. To contextualize its significance, one would need to determine the total annual expenditure on aircraft parts and compare this award's value as a percentage of that total. Without that broader budget data, it's difficult to ascertain if $123 million is a substantial or minor allocation within the Air Force's overall parts procurement strategy.

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: $128,665,701

Exercised Options: $128,665,701

Current Obligation: $123,104,920

Subaward Activity

Number of Subawards: 108

Total Subaward Amount: $21,853,675

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA862011G4020

IDV Type: BOA

Timeline