DoD awards $125.6M modification for ISR/SAR aircraft, raising value-for-money questions

Contract Overview

Contract Amount: $125,661,368 ($125.7M)

Contractor: Sierra Nevada Company, LLC

Awarding Agency: Department of Defense

Start Date: 2016-04-01

End Date: 2024-10-31

Contract Duration: 3,135 days

Daily Burn Rate: $40.1K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: NON-ACAT FMS RSAF KA350ER ISR/SAR MODIFICATION BASIC UCA

Place of Performance

Location: HAGERSTOWN, WASHINGTON County, MARYLAND, 21742

State: Maryland Government Spending

Plain-Language Summary

Department of Defense obligated $125.7 million to SIERRA NEVADA COMPANY, LLC for work described as: NON-ACAT FMS RSAF KA350ER ISR/SAR MODIFICATION BASIC UCA Key points: 1. Contract value significantly increased through modification, warranting scrutiny of original pricing and scope. 2. Sole-source award limits competitive pressure, potentially impacting cost efficiency for taxpayers. 3. Long contract duration (over 8 years) suggests a need for ongoing performance monitoring. 4. The modification's purpose (ISR/SAR) points to critical intelligence, surveillance, and reconnaissance capabilities. 5. Contract awarded to Sierra Nevada Company, LLC, a significant player in defense aerospace. 6. Lack of competition raises concerns about price discovery and potential overpayment.

Value Assessment

Rating: questionable

The modification significantly increases the contract's total value. Without details on the original contract and the specific changes introduced by this modification, it is difficult to benchmark the pricing effectively. However, a substantial increase in value on a sole-source contract warrants a closer look at the cost justification and whether the new price reflects fair market value compared to similar ISR/SAR platform modifications.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not open to competitive bidding. This typically occurs when only one contractor possesses the necessary capabilities or when urgency dictates a direct award. The lack of competition means that price discovery through market forces was absent, potentially leading to higher costs for the government.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive bidding. Without competing offers, there is less assurance that the negotiated price represents the best possible value.

Public Impact

The primary beneficiaries are the Department of Defense, which receives enhanced intelligence, surveillance, and reconnaissance capabilities. The services delivered include modifications to aircraft for ISR/SAR missions, crucial for operational awareness. The geographic impact is likely global, supporting military operations wherever deployed. Workforce implications may include specialized engineering, manufacturing, and technical support roles at the contractor's facilities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially inflating costs.
Significant contract value increase via modification requires detailed justification.
Long contract duration could mask inefficiencies if not closely monitored.
Lack of transparency in modification details hinders independent value assessment.

Positive Signals

Supports critical ISR/SAR capabilities for national security.
Award to an established defense contractor suggests technical expertise.
Firm Fixed Price contract type provides cost certainty for the government.

Sector Analysis

This contract falls within the aerospace and defense sector, specifically focusing on aircraft modification for intelligence, surveillance, and reconnaissance (ISR) and search and rescue (SAR) missions. The market for such specialized defense services is characterized by high technical barriers to entry and a limited number of qualified contractors. Spending in this area is driven by evolving geopolitical threats and the need for advanced situational awareness capabilities.

Small Business Impact

The contract data indicates that small business participation was not a primary consideration, as the contract was awarded to a large business and there is no indication of small business set-asides or subcontracting requirements. This suggests that the primary focus was on specialized capabilities rather than fostering small business engagement. The impact on the small business ecosystem is likely minimal for this specific award.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Contract Management Agency (DCMA), ensuring compliance with contract terms and performance standards. Accountability measures are inherent in the contract structure, particularly with a Firm Fixed Price award. Transparency may be limited due to the sole-source nature and the proprietary details of defense modifications, though contract modifications are generally subject to federal procurement regulations.

Related Government Programs

Intelligence, Surveillance, and Reconnaissance (ISR) Platforms
Specialized Aircraft Modifications
Defense Aerospace Manufacturing
Military Intelligence Systems

Risk Flags

Sole-source award
Significant contract modification value
Lack of competition

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $125.7 million to SIERRA NEVADA COMPANY, LLC. NON-ACAT FMS RSAF KA350ER ISR/SAR MODIFICATION BASIC UCA

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 (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $125.7 million.

What is the period of performance?

Start: 2016-04-01. End: 2024-10-31.

What specific capabilities does the KA350ER ISR/SAR modification provide, and how do these enhance DoD operations?

The KA350ER modification likely enhances the King Air 350ER aircraft with advanced sensors and systems for Intelligence, Surveillance, and Reconnaissance (ISR) and Search and Rescue (SAR) missions. This could include integrating high-resolution cameras, radar, signals intelligence (SIGINT) equipment, and communication systems. These capabilities enable the DoD to gather critical real-time information on enemy activities, monitor vast areas for threats, and conduct effective search and rescue operations in challenging environments. The enhanced situational awareness provided by these platforms is crucial for tactical decision-making and overall mission success in various operational theaters.

How does the $125.6 million total contract value compare to similar ISR/SAR aircraft modification contracts?

Benchmarking this contract's total value of $125.6 million against similar ISR/SAR aircraft modifications requires access to a comprehensive database of defense contracts. However, for a specialized modification of a turboprop aircraft like the King Air 350ER, this value appears substantial, especially considering it's a modification rather than a new aircraft purchase. The value is influenced by the complexity of the integrated systems, the specific airframe, and the duration of the contract. Without specific details on the scope of work for this modification, direct comparison is challenging, but it falls within the range of significant defense modernization efforts.

What are the primary risks associated with a sole-source award for defense aircraft modifications?

The primary risks associated with a sole-source award for defense aircraft modifications include a lack of competitive pricing, which can lead to higher costs for the government and taxpayers. Without competing bids, there is less incentive for the contractor to offer the most cost-effective solution. Additionally, sole-source awards can reduce transparency in the procurement process and may limit opportunities for innovation from other potential suppliers. There's also a risk that the government may not be getting the best available technology or service if alternatives were not explored due to the sole-source designation.

What is Sierra Nevada Company, LLC's track record with similar defense contracts, particularly in ISR/SAR modifications?

Sierra Nevada Company, LLC (SNC) has a significant track record in the defense sector, including extensive experience with aircraft modification and the integration of advanced systems for ISR and other mission requirements. They are known for developing and modifying platforms for various government agencies, including the U.S. Air Force, Navy, and Army. SNC has been involved in numerous projects related to electronic warfare, intelligence gathering, and special mission aircraft. Their expertise in systems integration and platform modernization suggests they are well-equipped to handle complex modifications like the KA350ER ISR/SAR project.

How has spending on ISR/SAR capabilities evolved within the Department of Defense over the past five years?

Spending on Intelligence, Surveillance, and Reconnaissance (ISR) capabilities within the Department of Defense has remained a high priority over the past five years, driven by persistent global threats and the need for persistent surveillance. While specific figures fluctuate annually based on budget allocations and strategic priorities, there has been a consistent investment in upgrading existing platforms, developing new sensor technologies, and enhancing data processing and dissemination. The focus has shifted towards more agile, networked ISR assets, including unmanned systems and modernized manned platforms like the KA350ER, reflecting a trend towards multi-domain operations and improved situational awareness across all services.

Industry Classification

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

Product/Service Code: AEROSPACE CRAFT COMPONENTS AND ACCESSORIES

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Sierra Nevada Corporation

Address: 18632 JARKEY DR, HAGERSTOWN, MD, 21742

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: $125,661,368

Exercised Options: $125,661,368

Current Obligation: $125,661,368

Subaward Activity

Number of Subawards: 96

Total Subaward Amount: $32,688,648

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline