DoD's $104.7M Air Force contract for airborne networking systems awarded to Sierra Nevada Company, LLC

Contract Overview

Contract Amount: $104,715,686 ($104.7M)

Contractor: Sierra Nevada Company, LLC

Awarding Agency: Department of Defense

Start Date: 2017-07-12

End Date: 2024-03-31

Contract Duration: 2,454 days

Daily Burn Rate: $42.7K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: IGF::OT::IGF DEVELOPMENT, INSTALLATION AND TESTING OF THE AIRBORNE MISSION NETWORKING SYSTEM ON THE MC-130J AIRCRAFT

Place of Performance

Location: SPARKS, WASHOE County, NEVADA, 89434

State: Nevada Government Spending

Plain-Language Summary

Department of Defense obligated $104.7 million to SIERRA NEVADA COMPANY, LLC for work described as: IGF::OT::IGF DEVELOPMENT, INSTALLATION AND TESTING OF THE AIRBORNE MISSION NETWORKING SYSTEM ON THE MC-130J AIRCRAFT Key points: 1. Contract awarded on a sole-source basis, raising questions about potential cost efficiencies. 2. Significant duration of over 2000 days suggests a complex, long-term project. 3. The contract type (Cost Plus Fixed Fee) can incentivize cost overruns. 4. No small business participation noted, potentially limiting broader economic impact. 5. The specific nature of airborne mission networking implies critical defense capabilities. 6. High dollar value indicates a substantial investment in advanced military technology.

Value Assessment

Rating: questionable

The contract's value of $104.7 million for airborne mission networking systems requires careful benchmarking against similar defense technology procurements. Without competitive bidding, it is difficult to ascertain if the pricing reflects fair market value. The Cost Plus Fixed Fee (CPFF) contract structure, while common for complex R&D, can lead to higher costs if not rigorously managed, as the contractor is reimbursed for all allowable costs plus a fixed fee. This structure may not be the most cost-effective for taxpayers compared to fixed-price contracts, especially if scope creep occurs.

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 among multiple vendors. This approach is typically used when only one vendor possesses the necessary specialized technology, capabilities, or security clearances. While it ensures access to specific expertise, it bypasses the price discovery mechanisms inherent in competitive bidding, potentially leading to higher costs for the government.

Taxpayer Impact: Sole-source awards limit opportunities for other companies to bid and can result in higher prices for taxpayers due to the absence of competitive pressure to reduce costs.

Public Impact

The primary beneficiaries are the U.S. Air Force, receiving advanced airborne networking capabilities for MC-130J aircraft. The contract delivers critical technology for enhancing mission effectiveness and communication in airborne operations. Geographic impact is national, supporting defense readiness across various operational theaters. Workforce implications include specialized engineering, manufacturing, and testing roles within Sierra Nevada Company and its potential subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potential cost savings.
Cost Plus Fixed Fee contract type may incentivize higher spending if not closely monitored.
Lack of transparency in the sole-source justification could mask potential inefficiencies.
Extended contract duration increases the risk of cost escalation due to unforeseen factors.
No small business set-aside or subcontracting plan noted, potentially limiting economic benefits for smaller firms.

Positive Signals

Award to a known entity (Sierra Nevada Company) suggests a level of trust in their capabilities.
The contract addresses a critical defense need for advanced networking technology.
The fixed fee component of the CPFF contract provides some cost predictability for the contractor's profit.
The long duration may indicate a comprehensive approach to system development and integration.

Sector Analysis

This contract falls within the Aircraft Manufacturing sector, specifically focusing on advanced avionics and communication systems. The market for defense electronics and integrated systems is highly specialized, often dominated by a few key players with the necessary R&D capabilities and security clearances. Spending in this area is driven by the need for technological superiority and enhanced operational effectiveness in military aviation. Comparable spending benchmarks would involve other large-scale defense electronics integration contracts for military aircraft.

Small Business Impact

This contract does not appear to include any small business set-aside provisions, nor is there explicit mention of subcontracting goals for small businesses. This suggests that the primary contractor, Sierra Nevada Company, LLC, is expected to perform the majority of the work internally or with larger partners. Consequently, the direct economic impact on the small business ecosystem for this specific contract may be limited, missing opportunities for specialized small firms to contribute to critical defense technology development.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Air Force's contracting and program management offices. The Inspector General (IG) of the Department of Defense would have jurisdiction for audits and investigations into potential fraud, waste, or abuse. Transparency is often limited for sole-source defense contracts, but reporting requirements on cost and performance would be mandated. The CPFF structure necessitates robust financial oversight to ensure costs are allowable and reasonable.

Related Government Programs

Airborne Communication Systems
Military Aircraft Avionics
Defense Networking Technology
MC-130J Special Operations Aircraft Programs
Department of Defense Research and Development Contracts

Risk Flags

Sole-source award
Cost-reimbursable contract type
Long contract duration
Lack of small business participation

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $104.7 million to SIERRA NEVADA COMPANY, LLC. IGF::OT::IGF DEVELOPMENT, INSTALLATION AND TESTING OF THE AIRBORNE MISSION NETWORKING SYSTEM ON THE MC-130J AIRCRAFT

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 $104.7 million.

What is the period of performance?

Start: 2017-07-12. End: 2024-03-31.

What is the specific justification for awarding this contract on a sole-source basis to Sierra Nevada Company, LLC?

The provided data indicates the contract was awarded as 'NOT COMPETED,' which is synonymous with a sole-source award. The specific justification for this sole-source determination is not detailed in the provided data snippet. Typically, sole-source awards are justified when only one responsible source is available to meet the government's needs. This could be due to unique technological capabilities, proprietary information, critical security requirements, or a lack of adequate competition. For a contract of this magnitude and technical complexity, the Air Force would have likely conducted a thorough market research effort and documented why other potential contractors could not fulfill the requirement. Further investigation into the contract's official justification documentation (e.g., a Justification and Approval document) would be necessary to understand the precise reasons.

How does the Cost Plus Fixed Fee (CPFF) contract type compare to other contract types in terms of cost efficiency for this type of project?

The Cost Plus Fixed Fee (CPFF) contract type is often used for research and development or complex system integration projects where the scope of work is not fully defined at the outset, or where innovation is a primary driver. In a CPFF contract, the contractor is reimbursed for all allowable costs incurred, plus a predetermined fixed fee representing their profit. Compared to fixed-price contracts, CPFF generally offers less cost certainty for the government, as the final price is not fixed. However, it can be more efficient than other cost-reimbursement types (like Cost Plus Incentive Fee) if the fixed fee adequately incentivizes performance without excessive cost escalation. The primary risk for the government is that costs can exceed initial estimates, although the fixed fee provides some predictability regarding the contractor's profit margin. Rigorous oversight is crucial to manage costs effectively under a CPFF arrangement.

What are the potential risks associated with the long duration (2454 days) of this contract?

A contract duration of 2454 days (approximately 6.7 years) presents several potential risks. Firstly, the longer the contract period, the greater the chance of scope creep or evolving requirements, which, under a CPFF structure, can lead to significant cost increases. Secondly, technological obsolescence is a risk; by the end of the contract, the 'state-of-the-art' technology being developed might be surpassed by newer advancements, potentially diminishing the long-term value of the delivered system. Thirdly, economic factors such as inflation and changes in material costs over such an extended period can impact the final cost. Finally, maintaining consistent oversight and program management focus over many years can be challenging, increasing the risk of performance degradation or missed milestones if not diligently managed.

Are there any indications of performance issues or contractor track record concerns with Sierra Nevada Company, LLC on similar defense contracts?

The provided data snippet does not contain information regarding Sierra Nevada Company, LLC's track record or any performance issues on this or similar contracts. To assess their track record, one would need to consult databases like the Federal Procurement Data System (FPDS), the Contractor Performance Assessment Reporting System (CPARS), or conduct specific searches for past performance reviews and contract awards involving Sierra Nevada Company. Given the sole-source nature and significant value of this contract, it is likely that the Air Force conducted due diligence on the contractor's past performance and capabilities. However, without access to that specific information, a definitive assessment cannot be made based solely on the data provided.

How does this contract's spending compare to historical spending on airborne networking systems or similar defense electronics for the Air Force?

To compare this contract's spending ($104.7 million) to historical trends, one would need access to historical data on Air Force procurements for airborne networking systems, avionics, and related defense electronics. This would involve analyzing spending patterns over several fiscal years, identifying comparable contract vehicles (both sole-source and competed), and examining the scope and technical complexity of those contracts. Without such historical data, it's difficult to determine if $104.7 million represents a typical, high, or low investment for this type of capability. Factors like inflation, technological advancements, and the specific capabilities of the MC-130J platform would need to be considered for a meaningful comparison.

What are the implications of the 'Aircraft Manufacturing' NAICS code (336411) for this contract?

The North American Industry Classification System (NAICS) code 336411, 'Aircraft Manufacturing,' indicates that the primary business activity related to this contract falls under the production of complete aircraft and their principal component parts. While this contract is for 'Airborne Mission Networking System' installation and testing, the NAICS code suggests that the work may involve integration into the aircraft structure or systems that are considered integral manufacturing components. This code is typically associated with large, complex defense manufacturing programs. It implies that the contractor possesses or is expected to utilize facilities and expertise related to aircraft production, modification, or integration, aligning with the specialized nature of advanced military aviation technology.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft Manufacturing

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

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: FA850917R0004

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Sierra Nevada Corporation

Address: 444 SALOMON CIR, SPARKS, NV, 89434

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

Financial Breakdown

Contract Ceiling: $107,579,643

Exercised Options: $104,952,544

Current Obligation: $104,715,686

Actual Outlays: $2,200,197

Subaward Activity

Number of Subawards: 79

Total Subaward Amount: $22,781,396

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline