DoD's $46.8M contract for aircraft parts awarded to Sierra Nevada Company, LLC, lacked competition

Contract Overview

Contract Amount: $46,827,892 ($46.8M)

Contractor: Sierra Nevada Company, LLC

Awarding Agency: Department of Defense

Start Date: 2016-09-23

End Date: 2018-12-31

Contract Duration: 829 days

Daily Burn Rate: $56.5K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: IGF::OT::IGF ACAT III BIG SAFARI PALE ALE IV OPS

Place of Performance

Location: ENGLEWOOD, DENVER County, COLORADO, 80112

State: Colorado Government Spending

Plain-Language Summary

Department of Defense obligated $46.8 million to SIERRA NEVADA COMPANY, LLC for work described as: IGF::OT::IGF ACAT III BIG SAFARI PALE ALE IV OPS Key points: 1. The contract value of $46.8M for aircraft parts represents a significant investment by the Department of Defense. 2. The sole-source award to Sierra Nevada Company, LLC, raises questions about potential overpayment and lack of market pressure. 3. The contract duration of 829 days suggests a substantial period for service delivery and potential for cost escalation. 4. The 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' category indicates a specialized need within the Air Force's operations. 5. The absence of competition is a key risk indicator, potentially limiting value for money. 6. The contract's 'COST PLUS FIXED FEE' type can incentivize cost overruns if not closely monitored.

Value Assessment

Rating: questionable

Benchmarking the value of this $46.8M contract is challenging without specific details on the aircraft parts procured and their technical specifications. However, the lack of competition (sole-source award) inherently limits the ability to assess pricing against market rates or compare it to similar contracts that underwent a competitive bidding process. The 'COST PLUS FIXED FEE' contract type, while sometimes necessary for complex or R&D-intensive procurements, carries a risk of higher costs if the contractor's expenses are not rigorously scrutinized and controlled. Without competitive bids, it's difficult to ascertain if the fixed fee adequately reflects the effort and risk involved or if it includes a premium due to the absence of market alternatives.

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. This approach bypasses the standard competitive bidding process, which typically involves multiple companies submitting proposals. While sole-source awards can be justified under specific circumstances (e.g., unique capabilities, urgent needs), they significantly reduce the opportunity for price discovery through market competition. The lack of bidders means the government did not benefit from the price reductions and innovations that often arise when companies vie for a contract.

Taxpayer Impact: Taxpayers may have paid a higher price for these aircraft parts due to the absence of competitive pressure. Without multiple bids, there is less assurance that the negotiated price represents the best possible value.

Public Impact

The primary beneficiaries are likely the Department of the Air Force and its operational readiness, ensuring necessary aircraft parts are available. The services delivered include the manufacturing and supply of specialized aircraft parts, crucial for maintaining and operating Air Force assets. The geographic impact is primarily within the United States, supporting defense infrastructure and potentially related supply chains. Workforce implications include employment at Sierra Nevada Company, LLC, and potentially its subcontractors, within the aerospace manufacturing sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition increases the risk of paying above market rates.
Cost-plus contract type can lead to cost overruns if not managed tightly.
Limited transparency into the specific parts procured and their necessity.
Long contract duration (829 days) extends the period of potential financial exposure.
Sole-source awards can stifle innovation by not encouraging market competition.

Positive Signals

Award to an established contractor (Sierra Nevada Company, LLC) may indicate reliability in delivery.
The contract supports critical Air Force operations, contributing to national security.
The 'COST PLUS FIXED FEE' structure, if managed well, can provide cost certainty for the government on the fee portion.
The contract is for specific aircraft parts, suggesting a defined scope of work.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on aircraft parts. The market for specialized aircraft components is often characterized by high barriers to entry due to technical expertise, regulatory compliance, and established relationships with government agencies. While the broader aircraft parts manufacturing industry is substantial, contracts for specific military applications can be niche. Benchmarking spending in this area requires comparing it to other sole-source or competitively awarded contracts for similar types of aircraft components within the Department of Defense or allied nations.

Small Business Impact

The provided data indicates that small business participation was not a factor in this award (ss: false, sb: false). This sole-source contract did not include a small business set-aside. Consequently, there are no direct subcontracting implications for small businesses stemming from this specific award's structure. The absence of a set-aside means that opportunities for small businesses to compete for this particular work were not intentionally created through this contracting vehicle.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Air Force's contracting and program management offices. Given it's a sole-source award, scrutiny would likely focus on the justification for the sole-source procurement and the management of the 'COST PLUS FIXED FEE' elements to ensure costs remain reasonable and the fixed fee is appropriate. Inspector General (IG) jurisdiction would apply if any allegations of fraud, waste, or abuse arise. Transparency is limited by the non-competitive nature, but contract award details are typically available through federal procurement databases.

Related Government Programs

Department of Defense Aircraft Procurement
Air Force Logistics and Sustainment Contracts
Aerospace Component Manufacturing
Sole-Source Defense Contracts
Cost-Plus Fixed Fee Contracts

Risk Flags

Sole-source award lacks competitive pricing.
Cost-plus contract type carries inherent cost overrun risk.
Limited public information on specific parts and justification.
Long contract duration increases exposure to economic fluctuations.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $46.8 million to SIERRA NEVADA COMPANY, LLC. IGF::OT::IGF ACAT III BIG SAFARI PALE ALE IV OPS

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 $46.8 million.

What is the period of performance?

Start: 2016-09-23. End: 2018-12-31.

What specific aircraft parts were procured under this contract, and what is their criticality to Air Force operations?

The contract identifies the North American Industry Classification System (NAICS) code 336413 as 'Other Aircraft Parts and Auxiliary Equipment Manufacturing.' However, the specific parts are not detailed in the provided data. These parts are likely critical components for maintaining and operating specific Air Force aircraft platforms. Their criticality would range from essential structural elements to specialized electronic or mechanical systems. Without further details, it's impossible to ascertain the exact nature or criticality, but the award's value and sole-source nature suggest they are not commodity items and may require specialized manufacturing capabilities possessed by Sierra Nevada Company, LLC.

Can the $46.8M contract value be benchmarked against similar competitive awards for comparable aircraft parts?

Benchmarking this $46.8M contract value against similar competitive awards is difficult without knowing the precise specifications of the aircraft parts procured. The 'Other Aircraft Parts' category is broad. Competitive benchmarking is most effective when comparing identical or highly similar items under similar contract types. Since this was a sole-source award, there are no competing bids to establish a market price. To perform a robust benchmark, one would need to identify other contracts for the same or equivalent parts, ideally awarded competitively, and adjust for differences in quantity, technical requirements, and economic conditions over time. The lack of competition here inherently limits the validity of any external price comparison.

What is the justification for awarding this contract on a sole-source basis to Sierra Nevada Company, LLC?

The provided data indicates the contract type was 'NOT COMPETED' and lists 'ST' (Sole Source) as the source selection criteria. Standard justifications for sole-source awards often include: (1) only one responsible source exists due to unique capabilities or proprietary technology; (2) an urgent and compelling need that cannot be met by other sources; (3) a national emergency; or (4) specific statutory authority. Without access to the official justification document (e.g., a Justification and Approval - J&A), the precise reason remains unknown. However, the award to Sierra Nevada Company, LLC, suggests they were deemed the only viable provider for these specific aircraft parts at the time of the award.

How does the 'COST PLUS FIXED FEE' (CPFF) contract type impact the government's financial risk and oversight requirements?

The 'COST PLUS FIXED FEE' (CPFF) contract type means the government reimburses the contractor for all allowable costs incurred, plus a predetermined fixed fee representing profit. This structure shifts some financial risk to the government, as the total cost is not fixed upfront. The government bears the risk of cost overruns beyond the estimated cost, while the contractor's profit (the fixed fee) remains constant regardless of the final cost. This necessitates robust government oversight to ensure costs are reasonable, allocable, and allowable, and that the contractor exercises efficient management. The fixed fee itself is negotiated and should reflect the complexity and risk of the effort.

What is Sierra Nevada Company, LLC's track record with the Department of Defense, particularly in aircraft parts manufacturing?

Sierra Nevada Company, LLC (SNC) is a well-established defense contractor known for a wide range of capabilities, including aerospace systems, aviation, and electronics. While the provided data focuses on a single contract for aircraft parts, SNC has a broader history of working with the Department of Defense on various programs, often involving complex systems integration, aircraft modification, and specialized equipment. Their track record generally includes successful delivery on significant defense contracts. However, the specific performance details and quality of past deliveries for aircraft parts manufacturing under contracts similar to this one would require a deeper dive into contract performance reports and historical data beyond this single award notice.

What are the potential implications of this contract's duration (829 days) on program stability and cost control?

A contract duration of 829 days (approximately 2.3 years) indicates a medium-to-long-term requirement for the specified aircraft parts. This extended period allows for sustained production and delivery, potentially contributing to program stability by ensuring a consistent supply chain. However, it also increases the government's exposure to potential cost fluctuations due to inflation, changes in material costs, or evolving technical requirements. For a 'COST PLUS FIXED FEE' contract, a longer duration necessitates continuous oversight to manage costs effectively throughout the performance period and to ensure the fixed fee remains appropriate for the sustained effort.

Industry Classification

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

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, Manufacturer of Goods, Not Designated a Small Business, Special Designations, Subchapter S Corporation, U.S.-Owned Business, Woman Owned Business

Financial Breakdown

Contract Ceiling: $46,833,991

Exercised Options: $46,833,991

Current Obligation: $46,827,892

Subaward Activity

Number of Subawards: 64

Total Subaward Amount: $18,169,476

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA862011G4020

IDV Type: BOA

Timeline