DoD's $72.6M Contractor Logistics Support for AC-130 Precision Strike Package awarded to Sierra Nevada Company, LLC

Contract Overview

Contract Amount: $72,576,779 ($72.6M)

Contractor: Sierra Nevada Company, LLC

Awarding Agency: Department of Defense

Start Date: 2016-04-01

End Date: 2019-03-31

Contract Duration: 1,094 days

Daily Burn Rate: $66.3K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: IGF::CT::IGF AC-130 PRECISION STRIKE PACKAGE CONTRACTOR LOGISTICS SUPPORT CONTRACT

Place of Performance

Location: SPARKS, WASHOE County, NEVADA, 89434

State: Nevada Government Spending

Plain-Language Summary

Department of Defense obligated $72.6 million to SIERRA NEVADA COMPANY, LLC for work described as: IGF::CT::IGF AC-130 PRECISION STRIKE PACKAGE CONTRACTOR LOGISTICS SUPPORT CONTRACT Key points: 1. Contract awarded to a single entity, raising questions about competitive pricing. 2. Logistics support for critical AC-130 aircraft indicates a high-stakes operational requirement. 3. Long-term contract duration (1094 days) suggests a need for sustained support. 4. Firm Fixed Price contract type aims to control costs but may limit flexibility. 5. No small business set-aside indicates a focus on specialized capabilities. 6. Contract awarded by the Department of the Air Force, a major defense spender.

Value Assessment

Rating: questionable

The contract's value of $72.6 million over approximately three years for logistics support of AC-130 aircraft is substantial. Without a competitive bidding process, it is difficult to benchmark the pricing against market rates or similar contracts. The firm fixed-price structure suggests an attempt to cap costs, but the lack of competition means the government may not have secured the best possible value. Further analysis would require comparing the services provided and their cost to industry standards for similar specialized aircraft support.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award. This approach is typically used when only one vendor possesses the necessary specialized skills, technology, or security clearances required for the service. The lack of competition means that the government did not benefit from a bidding process that could have driven down prices through market forces. It also limits the opportunity to explore innovative solutions from a wider range of potential providers.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as there is no competitive pressure to ensure the most economical price. This necessitates robust internal justification and oversight to ensure the price is fair and reasonable.

Public Impact

Directly benefits the U.S. Air Force's operational readiness and mission effectiveness by ensuring the AC-130 fleet is maintained and supported. Provides critical logistics services, including maintenance, repair, and supply chain management, for a vital component of U.S. air power. Geographic impact is likely global, supporting deployments of the AC-130 aircraft wherever they are stationed or deployed. Workforce implications include the potential for highly skilled technical and logistical jobs within Sierra Nevada Company, LLC and its subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition raises concerns about potential overpayment and lack of cost-efficiency.
Sole-source nature limits transparency into the pricing justification and potential for better deals.
Long contract duration without re-competition could lead to complacency or reduced incentive for innovation.
Dependence on a single contractor for critical logistics support poses a supply chain risk.

Positive Signals

Firm Fixed Price contract type provides cost certainty for the government.
Award to an established company (Sierra Nevada Company, LLC) suggests access to specialized expertise.
Focus on AC-130 logistics indicates support for a critical and specialized military asset.

Sector Analysis

This contract falls within the aerospace and defense sector, specifically focusing on contractor logistics support for specialized military aircraft. The market for such services is characterized by high barriers to entry due to technical expertise, security requirements, and long-standing relationships with government agencies. Spending in this area is driven by the need to maintain the operational readiness of aging or complex weapon systems, often requiring bespoke support solutions. Comparable spending benchmarks would typically involve analyzing other logistics support contracts for similar high-value military platforms.

Small Business Impact

The contract data indicates that this was not a small business set-aside, nor does it explicitly mention subcontracting goals for small businesses. This suggests that the primary contractor, Sierra Nevada Company, LLC, was selected based on its own capabilities, and there may be limited direct opportunities for small businesses to participate as prime contractors. However, the prime contractor might engage small businesses as subcontractors for specific components or services, but this is not detailed in the provided data.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Air Force's contracting and program management offices. As a sole-source award, there would be a heightened need for robust justification of the price and scope of work to ensure fairness and reasonableness. Inspector General investigations could be initiated if any allegations of fraud, waste, or abuse arise. Transparency is limited due to the non-competitive nature, but contract performance metrics and financial reporting would be subject to review.

Related Government Programs

AC-130 Gunship Program
Air Force Logistics Command
Defense Contractor Support Services
Special Operations Aviation Support

Risk Flags

Sole-source award
Lack of competitive pricing
Potential for cost overruns
Dependence on single contractor

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $72.6 million to SIERRA NEVADA COMPANY, LLC. IGF::CT::IGF AC-130 PRECISION STRIKE PACKAGE CONTRACTOR LOGISTICS SUPPORT CONTRACT

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 $72.6 million.

What is the period of performance?

Start: 2016-04-01. End: 2019-03-31.

What is the track record of Sierra Nevada Company, LLC in providing logistics support for military aircraft, particularly the AC-130?

Sierra Nevada Company, LLC (SNC) has a significant track record in aerospace and defense, including work on various military aircraft platforms. While specific details on their AC-130 logistics support prior to this contract may require deeper investigation, SNC is known for its expertise in areas such as avionics, electronic warfare, and aircraft modification. Their involvement in complex defense programs suggests a capacity to handle demanding logistical requirements. However, the absence of competition for this specific contract means that the government relied on its assessment of SNC's capabilities without direct comparison to other potential providers for this particular service.

How does the $72.6 million contract value compare to similar AC-130 logistics support contracts or industry benchmarks?

Benchmarking this $72.6 million contract value is challenging due to its sole-source nature and the specialized requirements of AC-130 logistics support. Without competitive bids, it's difficult to ascertain if the price reflects market rates or represents a premium. To establish a comparison, one would need to identify other contracts for similar specialized aircraft (e.g., heavy lift, special mission aircraft) logistics, maintenance, and sustainment services, considering factors like contract duration, scope of services, and the specific aircraft's complexity. Industry reports on defense logistics support costs for comparable platforms could also provide a reference point, but direct comparisons are often limited by proprietary data and unique contract terms.

What are the primary risks associated with a sole-source award for critical aircraft logistics support?

The primary risks associated with a sole-source award for critical aircraft logistics support include potential overpricing, reduced incentive for contractor efficiency and innovation, and a lack of market validation for the services rendered. Taxpayers may bear a higher cost without competitive pressure. Furthermore, dependence on a single provider can create vulnerabilities in the supply chain and operational continuity if the contractor faces financial difficulties, performance issues, or geopolitical challenges. The government also loses the opportunity to benefit from alternative solutions or technological advancements that might be offered by other qualified companies.

How effective is the firm fixed-price contract type in managing costs for specialized logistics services like this?

The Firm Fixed Price (FFP) contract type is generally effective in managing costs by shifting the risk of cost overruns to the contractor. This provides the government with cost certainty, as the price is set upfront. For specialized logistics services, FFP can be beneficial if the scope of work is well-defined and the contractor has a clear understanding of the costs involved. However, if unforeseen technical challenges or scope changes arise, an FFP contract can sometimes lead to disputes or a contractor's reluctance to perform additional work without a contract modification, potentially impacting flexibility and timely execution. In a sole-source scenario, the effectiveness is also contingent on the fairness of the initial negotiated price.

What is the historical spending pattern for AC-130 logistics support by the Department of the Air Force?

Analyzing the historical spending patterns for AC-130 logistics support by the Department of the Air Force would involve examining past contracts for sustainment, maintenance, and supply chain management related to the AC-130 fleet. This would likely reveal a consistent need for specialized support due to the aircraft's unique capabilities and operational role. Spending trends might be influenced by factors such as aircraft age, modernization programs, operational tempo, and evolving threat environments. A review of historical data could indicate whether spending has been increasing, decreasing, or remaining stable, and whether previous contracts were competed or sole-sourced, providing context for the current award.

What are the implications of this contract on the overall readiness and operational capability of the AC-130 fleet?

This contract is directly tied to the operational readiness and capability of the AC-130 fleet. By ensuring that essential logistics support, maintenance, and supply chain functions are managed by Sierra Nevada Company, LLC, the Air Force aims to keep these critical aircraft mission-capable. The effectiveness of this contract in maintaining readiness depends on the contractor's performance, the adequacy of the provided services, and the ability to address unforeseen maintenance needs promptly. A well-executed logistics support contract is crucial for the sustained deployment and effectiveness of the AC-130 in its various roles, from close air support to precision strike missions.

Industry Classification

NAICS: Transportation and Warehousing › Support Activities for Air Transportation › Other Support Activities for Air Transportation

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

Competition & Pricing

Extent Competed: NOT COMPETED

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: 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: $73,837,816

Exercised Options: $73,836,816

Current Obligation: $72,576,779

Subaward Activity

Number of Subawards: 179

Total Subaward Amount: $23,180,829

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline