DoD's $35M contract with Sierra Nevada Company for air transportation support lacked competition, raising value concerns

Contract Overview

Contract Amount: $35,164,107 ($35.2M)

Contractor: Sierra Nevada Company, LLC

Awarding Agency: Department of Defense

Start Date: 2014-05-17

End Date: 2015-03-16

Contract Duration: 303 days

Daily Burn Rate: $116.1K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: IGF::CT::IGF ACAT III, BIG SAFARI FMS

Place of Performance

Location: SPARKS, WASHOE County, NEVADA, 89434

State: Nevada Government Spending

Plain-Language Summary

Department of Defense obligated $35.2 million to SIERRA NEVADA COMPANY, LLC for work described as: IGF::CT::IGF ACAT III, BIG SAFARI FMS Key points: 1. The contract's sole-source nature limits price discovery and potentially inflates costs for taxpayers. 2. Performance risks are moderate, given the definitive contract type and established contractor. 3. The lack of competition suggests potential market inefficiencies or barriers to entry. 4. Spending on 'Other Support Activities for Air Transportation' is a significant category within DoD. 5. The contract's duration and cost-plus-fixed-fee structure warrant scrutiny for cost control. 6. Small business participation was not a stated requirement, potentially limiting broader economic impact.

Value Assessment

Rating: questionable

Benchmarking the value of this $35.16 million contract is challenging due to its sole-source nature and specific support activities. Without competitive bids, it's difficult to ascertain if the pricing reflects fair market value. The cost-plus-fixed-fee (CPFF) structure, while providing flexibility, can incentivize cost overruns if not rigorously managed. Comparing this to similar sole-source contracts for specialized air transportation support would be necessary for a more precise value assessment, but the inherent lack of competition is a primary concern.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, Sierra Nevada Company, LLC, was solicited. The justification for this approach is not provided in the data, but it typically implies a lack of available competition or a unique capability held by the awarded contractor. The absence of multiple bidders means there was no opportunity for price negotiation through a competitive process, potentially leading to higher costs for the government.

Taxpayer Impact: The lack of competition means taxpayers did not benefit from the cost savings typically achieved through a bidding process. This could translate to millions of dollars in potentially avoidable expenditure.

Public Impact

The primary beneficiary is the Department of Defense, receiving specialized air transportation support services. The services delivered likely ensure the operational readiness and effectiveness of specific military aviation assets. The geographic impact is concentrated where these air transportation services are required, likely within the continental US or operational theaters. Workforce implications include direct employment by Sierra Nevada Company, LLC, and potentially indirect support roles.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competitive bidding may lead to suboptimal pricing.
Cost-plus-fixed-fee contract type requires robust oversight to prevent cost escalation.
Sole-source award raises questions about market accessibility for other potential vendors.

Positive Signals

Contract awarded to an established entity (Sierra Nevada Company, LLC) potentially indicating reliability.
Definitive contract structure provides a clear framework for the services rendered.
Specific NAICS code (488190) suggests a defined scope of support activities.

Sector Analysis

The contract falls under the 'Other Support Activities for Air Transportation' sector, which is a critical component of the broader aerospace and defense industry. This sector encompasses a wide range of services essential for maintaining and operating aircraft and related infrastructure. Spending in this area is often driven by defense needs, requiring specialized expertise and adherence to stringent regulatory standards. Comparable spending benchmarks would involve analyzing other DoD contracts for similar support services, as well as commercial aviation MRO (Maintenance, Repair, and Overhaul) market rates, though defense contracts often carry unique cost structures.

Small Business Impact

This contract was not set aside for small businesses, nor does the data indicate any subcontracting requirements for small businesses. Consequently, the direct impact on the small business ecosystem is likely minimal. The absence of small business participation in a sole-source award of this magnitude suggests that opportunities for smaller firms to engage in this specific type of specialized support may be limited or that they were not considered in this procurement.

Oversight & Accountability

Oversight for this contract would typically fall under the Defense Contract Management Agency (DCMA), responsible for ensuring contractor performance and compliance. Accountability measures are inherent in the contract terms, particularly the cost-plus-fixed-fee structure which requires detailed reporting and justification of expenses. Transparency is limited due to the sole-source nature; however, contract award data is publicly available. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

DoD Aviation Support Contracts
Air Transportation Services
Logistics and Maintenance Contracts
Defense Logistics Agency Contracts

Risk Flags

Lack of Competition
Cost-Plus Contract Type
Potential for Cost Overruns
Limited Transparency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $35.2 million to SIERRA NEVADA COMPANY, LLC. IGF::CT::IGF ACAT III, BIG SAFARI FMS

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 $35.2 million.

What is the period of performance?

Start: 2014-05-17. End: 2015-03-16.

What specific air transportation support services were provided under this contract?

The contract's NAICS code, 488190, indicates 'Other Support Activities for Air Transportation.' This broad category can encompass a range of services including, but not limited to, aircraft maintenance and repair, ground support operations, air traffic control support, aerial port services, and logistical support for aviation operations. Without further details specific to this contract (e.g., a Statement of Work), the precise nature of the services remains generalized. However, given the 'BIG SAFARI FMS' designation, it likely pertains to specialized support for specific intelligence, surveillance, and reconnaissance (ISR) or other high-value aviation platforms managed under Foreign Military Sales (FMS) or similar programs.

Why was this contract awarded on a sole-source basis?

The provided data indicates the contract was 'NOT COMPETED,' signifying a sole-source award. The specific justification for this determination is not included. Common reasons for sole-source awards include the unique capability of a single contractor, urgent and compelling needs where competition is impractical, or when only one responsible source exists. For instance, if Sierra Nevada Company, LLC possessed proprietary technology or specialized expertise essential for the 'BIG SAFARI FMS' program that no other entity could replicate within the required timeframe, a sole-source award might be deemed necessary by the Department of Defense.

How does the Cost Plus Fixed Fee (CPFF) contract type impact cost control and value for money?

A Cost Plus Fixed Fee (CPFF) contract reimburses the contractor for allowable costs incurred, plus a predetermined fixed fee representing profit. This structure is often used when the scope of work is not precisely defined or involves significant uncertainty. While it allows for flexibility and encourages contractor effort, it shifts much of the cost risk to the government. Effective cost control relies heavily on robust government oversight, detailed cost auditing, and clear definition of allowable costs. Without stringent management, CPFF contracts can lead to cost overruns, potentially diminishing the value for money compared to fixed-price contracts where cost risk is borne by the contractor.

What is the significance of the 'BIG SAFARI FMS' designation?

The 'BIG SAFARI FMS' designation suggests this contract is related to the 'Big Safari' program, which is a U.S. Air Force-led initiative focused on developing and acquiring special mission aircraft, often for intelligence, surveillance, and reconnaissance (ISR) purposes. The 'FMS' component indicates that these services or platforms are intended for Foreign Military Sales, meaning the ultimate end-user is a foreign government purchasing through U.S. government channels. This context implies the contract supports highly specialized, potentially sensitive, and technologically advanced aviation systems.

What is the historical spending pattern for Sierra Nevada Company, LLC with the Department of Defense?

While this specific contract data provides a snapshot of one award ($35.16 million from May 2014 to March 2015), Sierra Nevada Company, LLC (now part of Sierra Nevada Corporation) has a long history of receiving significant contracts from the Department of Defense across various programs. Their work often involves advanced aerospace technologies, electronic warfare systems, and special mission aircraft modifications. Analyzing their broader contract portfolio with DoD would reveal a pattern of substantial engagement in complex defense projects, often in areas requiring specialized engineering and integration capabilities. This specific contract appears to be a relatively small component of their overall defense business.

Are there any performance risks associated with this contract given its duration and type?

The contract had a duration of 303 days (approximately 10 months) and was a definitive contract type (Cost Plus Fixed Fee). Performance risks are generally considered moderate. The CPFF structure, while flexible, requires diligent oversight to ensure the contractor meets performance standards and manages costs effectively. The 'BIG SAFARI FMS' designation suggests complex systems, which inherently carry technical risks. However, Sierra Nevada Company, LLC is an established defense contractor with a track record in specialized aviation programs, which may mitigate some of the inherent risks. The primary risk lies in potential cost overruns due to the CPFF nature and the possibility of scope creep if not managed tightly.

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) › MANAGEMENT SUPPORT 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: $55,054,162

Exercised Options: $39,154,162

Current Obligation: $35,164,107

Subaward Activity

Number of Subawards: 77

Total Subaward Amount: $12,736,443

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline