DoD's $92.8M EMARSS-VADER GREEN modification to Sierra Nevada Company, LLC, lacked competition

Contract Overview

Contract Amount: $92,843,875 ($92.8M)

Contractor: Sierra Nevada Company, LLC

Awarding Agency: Department of Defense

Start Date: 2015-03-25

End Date: 2019-10-31

Contract Duration: 1,681 days

Daily Burn Rate: $55.2K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: IGF::OT::IGF EMARSS-VADER GREEN SYSTEM MODIFICATION

Place of Performance

Location: HAGERSTOWN, WASHINGTON County, MARYLAND, 21742

State: Maryland Government Spending

Plain-Language Summary

Department of Defense obligated $92.8 million to SIERRA NEVADA COMPANY, LLC for work described as: IGF::OT::IGF EMARSS-VADER GREEN SYSTEM MODIFICATION Key points: 1. The contract modification represents a significant investment in aircraft systems. 2. Lack of competition raises concerns about potential overpayment and reduced value. 3. The cost-plus-fixed-fee structure may incentivize higher costs without strong oversight. 4. Performance context is limited due to the nature of system modifications. 5. This contract falls within the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' sector. 6. The duration of the contract suggests a long-term need for these modifications.

Value Assessment

Rating: questionable

Benchmarking the value of this $92.8 million modification is challenging without detailed cost breakdowns and comparisons to similar sole-source contracts. The cost-plus-fixed-fee (CPFF) pricing structure, while common for complex modifications, can lead to higher overall costs if not tightly managed. Without competitive bidding, there's a reduced incentive for the contractor to minimize expenses, potentially impacting the value for money received by the Department of Defense. Further analysis would require access to the contractor's cost data and a comparison with industry standards for similar modifications.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning there was no open competition. This approach is typically used when only one responsible source can provide the required goods or services. However, the lack of competition limits the government's ability to explore alternative solutions or secure the best possible pricing through a bidding process. The absence of multiple bidders means price discovery is not driven by market forces, potentially leading to less favorable terms for the government.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive pressure. Without a bidding process, the government cannot be assured it received the lowest possible price for the services rendered.

Public Impact

The primary beneficiaries are the Department of Defense, specifically the Army, through enhanced aircraft capabilities. The services delivered involve modifications to the EMARSS-VADER GREEN system, crucial for intelligence, surveillance, and reconnaissance missions. The geographic impact is likely concentrated where these modified aircraft are deployed, supporting military operations. Workforce implications may include specialized technical personnel required for the modification and maintenance of these advanced systems.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potentially increases costs for taxpayers.
Cost-plus-fixed-fee contract type can incentivize higher spending if not rigorously overseen.
Lack of transparency in cost justification for sole-source modifications.
Potential for contractor lock-in due to specialized nature of modifications.
Limited public information on the specific technical advancements or necessity of the modification.

Positive Signals

Contract supports critical intelligence, surveillance, and reconnaissance (ISR) capabilities for the DoD.
Sierra Nevada Company, LLC is a known entity in aerospace and defense, suggesting some level of established capability.
The modification addresses specific system needs, implying an effort to maintain or improve operational effectiveness.
Long contract duration (1681 days) suggests a sustained commitment to enhancing critical defense assets.

Sector Analysis

This contract falls under the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' sector, a segment of the broader aerospace and defense industry. This industry is characterized by high technological complexity, significant R&D investment, and substantial government procurement. The market size for defense-related aircraft modifications is substantial, driven by the need to maintain and upgrade aging fleets and incorporate new technologies. Comparable spending benchmarks for similar sole-source modifications are difficult to ascertain without proprietary data, but the $92.8 million figure indicates a significant investment in a specific platform.

Small Business Impact

This contract was not set aside for small businesses, and there is no indication of subcontracting opportunities for small businesses within the provided data. The sole-source nature of the award further limits the potential for small business participation. This means the primary contract value flows to the large prime contractor, with limited direct benefit to the small business ecosystem unless Sierra Nevada Company, LLC actively engages them for specific components or services not detailed here.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Army's contracting and program management offices. Accountability measures would be tied to the terms of the Cost Plus Fixed Fee (CPFF) contract, requiring the contractor to justify costs and meet performance milestones. Transparency is limited due to the sole-source nature and the proprietary details of defense modifications. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

EMARSS Program
Intelligence, Surveillance, and Reconnaissance (ISR) Systems
DoD Aircraft Modernization Programs
Special Operations Forces (SOF) Support Equipment

Risk Flags

Sole-source award
Cost-plus-fixed-fee contract type
Lack of competitive bidding
Significant contract value without clear justification

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $92.8 million to SIERRA NEVADA COMPANY, LLC. IGF::OT::IGF EMARSS-VADER GREEN SYSTEM MODIFICATION

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 Army).

What is the total obligated amount?

The obligated amount is $92.8 million.

What is the period of performance?

Start: 2015-03-25. End: 2019-10-31.

What specific technical upgrades or modifications were made to the EMARSS-VADER GREEN system under this contract?

The provided data does not specify the exact technical upgrades or modifications made to the EMARSS-VADER GREEN system. The contract is described as a 'modification,' and the North American Industry Classification System (NAICS) code 336413 pertains to 'Other Aircraft Parts and Auxiliary Equipment Manufacturing.' This suggests work related to enhancing or altering components of the aircraft system. Without access to the contract's Statement of Work (SOW) or technical exhibits, the precise nature of the modifications remains undisclosed. Such details are often classified or considered proprietary due to national security and competitive business reasons.

How does the $92.8 million cost compare to similar EMARSS system modifications or upgrades?

Direct comparison of the $92.8 million cost for this modification to similar EMARSS system upgrades is difficult without access to detailed cost data and a benchmark of comparable sole-source contracts. The contract type is Cost Plus Fixed Fee (CPFF), which means the government pays the contractor's allowable costs plus a fixed fee. This structure can lead to higher total costs compared to fixed-price contracts if cost controls are not stringent. Given the sole-source nature, there was no competitive bidding to establish a market-driven price. Therefore, assessing whether $92.8 million represents good value requires an in-depth audit of the contractor's costs and a comparison to industry standards for similar, complex aircraft system modifications, which is not publicly available.

What is Sierra Nevada Company, LLC's track record with Department of Defense contracts, particularly for ISR systems?

Sierra Nevada Company, LLC (SNC) has a significant track record with the Department of Defense, often involved in complex aerospace and defense projects. They are known for their work in areas such as intelligence, surveillance, and reconnaissance (ISR) platforms, electronic warfare systems, and aviation systems integration. SNC has been awarded numerous contracts across various military branches for aircraft modifications, sensor integration, and specialized mission equipment. While specific performance details for every contract are not always public, SNC is generally recognized as a capable provider in these specialized fields. Their history suggests they possess the technical expertise required for substantial system modifications like the EMARSS-VADER GREEN project.

What are the primary risks associated with a sole-source, cost-plus-fixed-fee contract of this magnitude?

The primary risks associated with a sole-source, Cost Plus Fixed Fee (CPFF) contract of this magnitude ($92.8 million) include potential cost overruns and reduced value for money. Since there is no competition, the government lacks the leverage to negotiate the lowest possible price. The CPFF structure, while allowing flexibility for unforeseen technical challenges, can incentivize the contractor to incur higher costs to increase the fixed fee base, or at least not aggressively pursue cost savings. Oversight is critical; inadequate monitoring of the contractor's expenditures and performance can lead to inefficiencies and inflated final costs. Additionally, reliance on a single source can create dependency and limit future options if the contractor's performance or business situation changes.

How does this contract align with broader Department of the Army modernization or ISR strategy?

This contract, involving modifications to the EMARSS-VADER GREEN system, likely aligns with the Department of the Army's broader strategy to enhance its Intelligence, Surveillance, and Reconnaissance (ISR) capabilities. Modernization efforts in the Army often focus on upgrading existing platforms to incorporate advanced sensors, communication systems, and data processing technologies to maintain situational awareness and provide actionable intelligence. The EMARSS platform is designed for persistent ISR missions, and modifications suggest an effort to keep these systems effective against evolving threats and technological advancements. The substantial investment indicates a strategic priority placed on robust ISR assets for current and future operational needs.

What is the historical spending trend for EMARSS-VADER GREEN system modifications or similar ISR aircraft programs within the DoD?

Historical spending trends for specific system modifications like EMARSS-VADER GREEN are not readily available in public databases. However, overall Department of Defense spending on ISR platforms and aircraft modernization has been substantial and consistent over the past two decades, driven by ongoing global security challenges and the increasing importance of real-time intelligence. Programs involving modifications to specialized aircraft often involve significant, multi-year investments due to the complexity of the systems and the need for continuous upgrades. While this specific $92.8 million modification represents a large single award, it should be viewed within the context of sustained, high-level defense spending on ISR capabilities across various branches of the military.

Industry Classification

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

Product/Service Code: RESEARCH AND DEVELOPMENT › C – National Defense R&D 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, Special Designations, Subchapter S Corporation, U.S.-Owned Business, Woman Owned Business

Financial Breakdown

Contract Ceiling: $101,392,652

Exercised Options: $97,118,634

Current Obligation: $92,843,875

Subaward Activity

Number of Subawards: 63

Total Subaward Amount: $14,135,747

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline