DoD Awards $2.57B SAOC Contract to Sierra Nevada Company, LLC for Aircraft Manufacturing

Contract Overview

Contract Amount: $2,567,126,631 ($2.6B)

Contractor: Sierra Nevada Company, LLC

Awarding Agency: Department of Defense

Start Date: 2024-04-26

End Date: 2032-10-29

Contract Duration: 3,108 days

Daily Burn Rate: $826.0K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Defense

Official Description: SURVIVABLE AIRBORNE OPERATIONS CENTER (SAOC)

Place of Performance

Location: ENGLEWOOD, DENVER County, COLORADO, 80112

State: Colorado Government Spending

Plain-Language Summary

Department of Defense obligated $2.57 billion to SIERRA NEVADA COMPANY, LLC for work described as: SURVIVABLE AIRBORNE OPERATIONS CENTER (SAOC) Key points: 1. Significant investment in advanced aircraft manufacturing for survivable airborne operations. 2. Competition was full and open, suggesting potential for competitive pricing. 3. Contract type (Cost Plus Incentive Fee) introduces performance-based incentives. 4. Focus on aircraft manufacturing indicates a critical defense capability.

Value Assessment

Rating: good

The contract value of $2.57 billion is substantial. Benchmarking against similar large-scale aircraft manufacturing contracts would be necessary to fully assess value, but the full and open competition suggests an effort to achieve a fair price.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, which generally promotes price discovery and competitive pricing. This method allows multiple vendors to bid, potentially leading to a more favorable outcome for the government.

Taxpayer Impact: The full and open competition aims to ensure taxpayer funds are used efficiently by fostering a competitive environment for this significant defense procurement.

Public Impact

Enhances national security through advanced airborne command and control capabilities. Supports the Department of the Air Force's strategic operational readiness. Potential for technological advancements in aircraft manufacturing and systems integration.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Incentive Fee contracts can lead to cost overruns if not managed carefully.
Long contract duration (until 2032) requires sustained oversight.
Lack of small business participation noted.

Positive Signals

Full and open competition is a positive signal for price reasonableness.
Definitive contract provides a clear framework for the acquisition.
Focus on survivable operations addresses critical defense needs.

Sector Analysis

This contract falls within the Defense sector, specifically aircraft manufacturing. Spending in this area is typically high due to the complexity and critical nature of defense assets. Benchmarks would focus on similar large-scale aircraft development and production programs.

Small Business Impact

The data indicates that small businesses were not directly involved in this contract award (sb: false). This suggests the prime contractor is a large entity, and further analysis would be needed to determine if small businesses are involved as subcontractors.

Oversight & Accountability

The definitive contract structure and the Department of the Air Force's oversight are crucial for managing this large-scale project. Regular performance reviews and cost audits will be essential to ensure accountability and adherence to contract terms.

Related Government Programs

Aircraft Manufacturing
Department of Defense Contracting
Department of the Air Force Programs

Risk Flags

Cost Plus Incentive Fee (CPIF) contract type.
Long contract duration extending to October 2029.
No direct small business participation indicated.
High contract value requires significant oversight.
Potential for technological obsolescence over program lifespan.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $2.57 billion to SIERRA NEVADA COMPANY, LLC. SURVIVABLE AIRBORNE OPERATIONS CENTER (SAOC)

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 $2.57 billion.

What is the period of performance?

Start: 2024-04-26. End: 2032-10-29.

What are the key performance metrics tied to the incentive fee structure, and how will they be measured to ensure optimal value for the government?

The specific performance metrics for the incentive fee are not detailed in the provided data. Typically, these could include factors like meeting delivery schedules, achieving specific technical performance thresholds, system reliability, or cost reduction targets. The Air Force will need robust measurement and verification processes to ensure these metrics are objectively assessed and that the incentive fee structure effectively drives desired outcomes and delivers value.

Given the long duration and complexity, what are the primary technical and programmatic risks associated with the SAOC program, and what mitigation strategies are in place?

Key risks likely include technological obsolescence over the program's lifespan, integration challenges with existing systems, potential cost overruns inherent in CPIF contracts, and schedule delays. Mitigation strategies would typically involve phased development, rigorous testing and validation, strong program management, continuous risk assessment, and contingency planning for unforeseen issues. The government's oversight will be critical in managing these risks.

How does the SAOC program's capabilities align with current and future projected threats, and what is the expected impact on the Air Force's operational effectiveness?

The SAOC is designed to provide survivable airborne command and control, crucial for maintaining operational effectiveness during high-threat scenarios. Its capabilities are expected to enhance the Air Force's ability to command and control forces from a protected platform, ensuring continuity of operations. This directly addresses the need for resilient command structures in modern warfare, thereby bolstering overall strategic deterrence and response capabilities.

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

Offers Received: 2

Pricing Type: COST PLUS INCENTIVE FEE (V)

Evaluated Preference: NONE

Contractor Details

Address: 12500 BELFORD AVE, ENGLEWOOD, CO, 80112

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: $12,216,063,801

Exercised Options: $10,062,626,106

Current Obligation: $2,567,126,631

Subaward Activity

Number of Subawards: 118

Total Subaward Amount: $240,965,970

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline