Department of Defense awards $655M aircraft manufacturing contract to Sierra Nevada Company, LLC

Contract Overview

Contract Amount: $655,269,891 ($655.3M)

Contractor: Sierra Nevada Company, LLC

Awarding Agency: Department of Defense

Start Date: 2013-02-27

End Date: 2020-06-30

Contract Duration: 2,680 days

Daily Burn Rate: $244.5K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: SNC MODEL DO 0001

Place of Performance

Location: SHALIMAR, OKALOOSA County, FLORIDA, 32579

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $655.3 million to SIERRA NEVADA COMPANY, LLC for work described as: SNC MODEL DO 0001 Key points: 1. Contract value represents significant investment in specialized aircraft manufacturing capabilities. 2. Full and open competition suggests a potentially competitive bidding process. 3. Contract duration of 2680 days indicates a long-term need for these services. 4. Fixed-price contract type shifts performance risk to the contractor. 5. The North American Industry Classification System (NAICS) code 336411 points to a focus on aircraft engine and engine parts manufacturing. 6. Geographic location in Florida may indicate specific operational or manufacturing advantages.

Value Assessment

Rating: good

The contract value of $655.3 million over approximately 7.3 years (2680 days) for aircraft manufacturing is substantial. Benchmarking this against similar large-scale defense manufacturing contracts is challenging without more specific details on the aircraft type and scope of work. However, the firm fixed-price structure suggests that the government has negotiated a price upfront, which can be advantageous if the contractor can deliver efficiently. The absence of reported overruns or significant modifications (implied by the data provided) could indicate good initial pricing and management.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under 'full and open competition,' indicating that all responsible sources were permitted to submit bids. This typically suggests a robust bidding process where multiple companies had the opportunity to compete for the work. The specific number of bidders is not provided, but the designation implies a level of market engagement that should theoretically drive competitive pricing.

Taxpayer Impact: A full and open competition generally benefits taxpayers by fostering a competitive environment that can lead to lower prices and better value compared to sole-source or limited competition awards.

Public Impact

The primary beneficiaries are the Department of Defense, which receives critical aircraft manufacturing services. The contract supports the production or modification of specialized aircraft, enhancing military readiness and capabilities. The geographic impact is centered in Florida, potentially creating or sustaining jobs in the aerospace manufacturing sector within that state. Workforce implications include skilled labor demand in areas such as aerospace engineering, manufacturing, assembly, and quality control.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if the fixed-price contract does not adequately account for unforeseen manufacturing complexities.
Dependence on a single contractor for a significant duration could pose supply chain risks.
The specific nature of 'Aircraft Manufacturing' can be broad; performance issues could arise if the scope is not precisely defined and managed.

Positive Signals

Firm fixed-price contract shifts risk to the contractor, potentially leading to cost savings for the government if managed well.
Full and open competition suggests a healthy market and potential for competitive pricing.
The long contract duration indicates a stable, long-term requirement, allowing for efficient production planning and potential economies of scale.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, a critical component of the U.S. industrial base. The NAICS code 336411 specifically relates to aircraft engine and engine parts manufacturing. This sector is characterized by high technological barriers to entry, significant R&D investment, and stringent quality and regulatory requirements. Spending in this area is often driven by national security needs and technological advancements. Comparable spending benchmarks would typically involve other large-scale defense contracts for aircraft systems or components.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). Therefore, there are no direct subcontracting requirements mandated by a small business set-aside. However, the prime contractor, Sierra Nevada Company, LLC, may voluntarily engage small businesses in its supply chain. The overall impact on the small business ecosystem is indirect, relying on the prime's procurement practices.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of the Air Force, a component of the Department of Defense. Mechanisms likely include contract performance reviews, milestone tracking, quality assurance inspections, and financial audits. Transparency is typically managed through contract reporting systems like the Federal Procurement Data System (FPDS). Inspector General (IG) jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Defense Production Act Investments
Aircraft Procurement, Air Force
Aerospace Manufacturing Support Programs
Military Aircraft Engine Contracts

Risk Flags

Potential for technological obsolescence over the contract's long duration.
Risk of supply chain disruptions impacting production timelines.
Dependence on contractor's ability to manage fixed-price cost controls effectively.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $655.3 million to SIERRA NEVADA COMPANY, LLC. SNC MODEL DO 0001

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 $655.3 million.

What is the period of performance?

Start: 2013-02-27. End: 2020-06-30.

What is the specific type of aircraft or component being manufactured under this contract?

The provided data identifies the North American Industry Classification System (NAICS) code as 336411, which pertains to 'Aircraft Engine and Engine Parts Manufacturing.' While this indicates the general industry, it does not specify the exact aircraft model, system, or component being produced. Further details would be required from the contract's statement of work or award description to understand the precise nature of the manufactured goods. This specificity is crucial for assessing technical risks, performance metrics, and the strategic importance of the contract.

How does the awarded price compare to market rates for similar aircraft manufacturing services?

Benchmarking the $655.3 million contract value against market rates for similar aircraft manufacturing services is difficult without knowing the specific type of aircraft or components, the complexity of the manufacturing process, and the required technological specifications. The 'full and open competition' suggests that the market was engaged, which theoretically drives competitive pricing. However, without access to detailed cost breakdowns, profit margins, or data on competing bids, a precise comparison to market rates is not feasible. The firm fixed-price nature implies a negotiated price that the government deemed acceptable at the time of award.

What are the key performance indicators (KPIs) and quality assurance measures for this contract?

The provided data does not explicitly list the Key Performance Indicators (KPIs) or specific quality assurance (QA) measures for this contract. However, for a defense contract of this magnitude in aircraft manufacturing, KPIs would typically include on-time delivery, adherence to technical specifications, defect rates, and production efficiency. QA measures would likely involve rigorous inspections at various manufacturing stages, material testing, compliance with aerospace standards (e.g., AS9100), and final acceptance testing. The Department of the Air Force would have a quality assurance representative (QAR) overseeing these aspects.

What is the historical spending trend for aircraft manufacturing within the Department of the Air Force?

Historical spending trends for aircraft manufacturing within the Department of the Air Force (DAF) are substantial and fluctuate based on modernization programs, readiness requirements, and geopolitical factors. The DAF consistently allocates significant portions of its budget to procuring and maintaining aircraft and their components. This $655.3 million contract represents one significant award within a broader pattern of ongoing investment. Analyzing past five to ten years of DAF procurement data would reveal trends in spending on new platforms versus upgrades, engine manufacturing, and associated support services, highlighting the cyclical nature of defense acquisitions.

What is the track record of Sierra Nevada Company, LLC, in fulfilling large-scale defense manufacturing contracts?

Sierra Nevada Company, LLC (SNC) has a notable track record in defense contracting, often specializing in advanced technologies, aircraft modification, and systems integration. While this specific contract focuses on manufacturing, SNC's broader experience includes work on intelligence, surveillance, and reconnaissance (ISR) platforms, electronic warfare systems, and various aircraft upgrades. Their performance on previous large-scale contracts would be a key factor in the government's decision-making process, assessed through past performance evaluations during the bidding phase. Information on contract modifications, overruns, or disputes on prior SNC contracts would provide further insight.

What are the potential risks associated with the long duration (2680 days) of this contract?

The long duration of 2680 days (approximately 7.3 years) for this aircraft manufacturing contract presents several potential risks. Technological obsolescence is a concern; the technology required at the start of the contract might be outdated by its completion, especially in the fast-paced aerospace industry. Cost escalation is another risk, even with a fixed-price contract, if unforeseen material cost increases or labor rate changes occur beyond initial projections, potentially impacting the contractor's profitability or leading to requests for equitable adjustments. Furthermore, long-term reliance on a single contractor can create supply chain vulnerabilities and reduce flexibility if requirements change significantly.

Industry Classification

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

Product/Service Code: AEROSPACE CRAFT AND STRUCTURAL COMPONENTS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Sierra Nevada Corporation

Address: 198 EGLIN PKWY NE, FORT WALTON BEACH, FL, 32548

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: $663,379,774

Exercised Options: $660,767,527

Current Obligation: $655,269,891

Subaward Activity

Number of Subawards: 280

Total Subaward Amount: $351,928,314

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: FA863713D6003

IDV Type: IDC

Timeline