DoD's $52M contract for aircraft parts awarded to Sierra Nevada Company, LLC, lacked competition

Contract Overview

Contract Amount: $52,126,017 ($52.1M)

Contractor: Sierra Nevada Company, LLC

Awarding Agency: Department of Defense

Start Date: 2009-07-09

End Date: 2012-10-01

Contract Duration: 1,180 days

Daily Burn Rate: $44.2K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST NO FEE

Sector: Defense

Official Description: CONSOLES

Place of Performance

Location: SPARKS, WASHOE County, NEVADA, 89434

State: Nevada Government Spending

Plain-Language Summary

Department of Defense obligated $52.1 million to SIERRA NEVADA COMPANY, LLC for work described as: CONSOLES Key points: 1. The contract's value of over $52 million was awarded without a competitive bidding process. 2. Awarded as a definitive contract, the pricing structure was 'COST NO FEE'. 3. The contract duration spanned over 1180 days, indicating a long-term need. 4. The North American Industry Classification System (NAICS) code 336413 points to manufacturing of aircraft parts. 5. The contract was awarded by the Department of the Air Force, a branch of the DoD. 6. The contractor, Sierra Nevada Company, LLC, received the full award amount. 7. The contract was not set aside for small businesses.

Value Assessment

Rating: questionable

The 'COST NO FEE' pricing structure, while potentially covering unforeseen costs, offers limited incentive for cost control by the contractor. Without a competitive bidding process, it is difficult to benchmark the pricing against market rates or similar contracts. The absence of competition raises concerns about whether the government received the best possible value for the $52 million expenditure on aircraft parts. Further analysis would require access to the contractor's cost data to assess reasonableness.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed. This indicates that only one source was deemed capable of fulfilling the requirement, or that circumstances precluded a competitive solicitation. The lack of multiple bidders means there was no price discovery through market forces, potentially leading to higher costs for the government.

Taxpayer Impact: Sole-source awards mean taxpayers may not benefit from the cost savings typically achieved through competitive bidding, as the government did not leverage market competition to secure the best price.

Public Impact

The Department of the Air Force benefits from the acquisition of necessary aircraft parts. This contract supports the operational readiness and maintenance of Air Force aircraft. The geographic impact is primarily within the United States, where the contractor operates and parts are supplied. The contract likely supports jobs within Sierra Nevada Company, LLC and its supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition raises concerns about potential overpayment and lack of value for taxpayer money.
The 'COST NO FEE' contract type may reduce contractor incentive for cost efficiency.
Absence of small business set-aside means limited direct benefit to small business ecosystem for this specific award.

Positive Signals

Award to an established company, Sierra Nevada Company, LLC, suggests potential for reliable delivery.
The contract duration indicates a sustained need, potentially aligning with long-term Air Force requirements.
The definitive contract award type provides a framework for the agreement.

Sector Analysis

The aerospace manufacturing sector is characterized by high barriers to entry, complex supply chains, and significant R&D investment. Contracts for aircraft parts are crucial for maintaining military readiness and supporting the defense industrial base. Spending in this sector often involves specialized components and advanced manufacturing techniques. Benchmarking requires comparison with similar sole-source awards for specialized aircraft components, which can be challenging due to unique specifications.

Small Business Impact

This contract was not set aside for small businesses, nor does it appear to have specific subcontracting requirements for small businesses mentioned in the provided data. Therefore, the direct impact on the small business ecosystem for this particular award is likely minimal. However, the prime contractor, Sierra Nevada Company, LLC, may engage small businesses in its broader supply chain, which is not detailed here.

Oversight & Accountability

Oversight for this contract would fall under the Department of the Air Force's contracting and program management offices. Accountability measures would be tied to the terms of the definitive contract, including delivery schedules and specifications. Transparency is limited due to the sole-source nature and lack of public competition details. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Aircraft Parts Manufacturing
Defense Procurement
Aerospace Industry Contracts
Sole-Source Defense Contracts

Risk Flags

Lack of Competition
Non-Competitive Award Justification
Cost Plus No Fee Pricing Structure

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $52.1 million to SIERRA NEVADA COMPANY, LLC. CONSOLES

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 $52.1 million.

What is the period of performance?

Start: 2009-07-09. End: 2012-10-01.

What is the track record of Sierra Nevada Company, LLC with the Department of Defense?

Sierra Nevada Company, LLC, has a history of contracts with the Department of Defense, often in areas related to aerospace and defense systems. While this specific contract was sole-source, the company's broader portfolio typically includes a range of defense-related products and services. Analyzing their past performance on competed contracts, delivery timeliness, and quality of work across other DoD awards would provide a more comprehensive view of their reliability and capabilities. Without specific performance metrics for this contract, general industry reputation and past contract history with the DoD serve as indicators.

How does the 'COST NO FEE' pricing structure compare to other contract types for similar aircraft parts?

The 'COST NO FEE' (CNF) contract type is unusual and typically reserved for situations where the contractor incurs no fee or profit, often in specific government-furnished property scenarios or when the contractor is acting more as an agent. For standard aircraft parts procurement, 'Cost Plus Fixed Fee' (CPFF), 'Cost Plus Incentive Fee' (CPIF), or fixed-price contracts are more common. CNF contracts minimize contractor risk but also eliminate profit motive, which can sometimes lead to less focus on cost efficiency compared to incentive-based or fixed-price contracts. Benchmarking against similar parts procured under different, more common contract types would be necessary to assess value, but the unique nature of CNF makes direct comparison difficult.

What are the risks associated with awarding a $52 million contract without competition?

The primary risk of awarding a $52 million contract without competition is the potential for paying a higher price than necessary. Without competing bids, the government loses the benefit of market forces driving down costs. There's also a risk that the chosen contractor may not be the most innovative or efficient provider available. Furthermore, sole-source awards can create a perception of favoritism or a lack of transparency, potentially undermining public trust. Ensuring the necessity of the sole-source justification and conducting thorough price reasonableness analysis are critical risk mitigation steps.

What is the typical market size for aircraft parts manufacturing under NAICS code 336413?

The market size for aircraft parts manufacturing (NAICS 336413) is substantial, driven by both commercial aviation and defense needs. Globally, the aerospace parts market is valued in the hundreds of billions of dollars annually. For the defense sector specifically, spending on aircraft parts is a significant component of military budgets, supporting fleet readiness and modernization. While this contract represents a portion of that market, the overall sector is large and complex, involving numerous specialized manufacturers and suppliers.

What historical spending patterns exist for aircraft parts by the Department of the Air Force?

The Department of the Air Force consistently spends billions of dollars annually on aircraft parts and related services to maintain its vast fleet. Historical spending patterns show a continuous need for both routine maintenance parts and components for upgrades or new platforms. Spending can fluctuate based on modernization programs, operational tempo, and budget allocations. Analyzing historical data reveals trends in specific part categories, major suppliers, and the prevalence of competed versus sole-source awards, which helps in understanding the context of individual contracts like this one.

What does the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' classification imply for this contract?

The NAICS code 336413, 'Other Aircraft Parts and Auxiliary Equipment Manufacturing,' indicates that the contract is for parts that are not specifically covered under more granular classifications. This could include a wide range of components, from structural elements and engine parts to electronic systems and auxiliary equipment not fitting into other categories. It suggests a potentially diverse or specialized set of requirements for the aircraft, necessitating a broad manufacturing capability or specific expertise from the contractor.

Industry Classification

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

Product/Service Code: AEROSPACE CRAFT AND STRUCTURAL COMPONENTS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST NO FEE (S)

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: $52,126,017

Exercised Options: $52,126,017

Current Obligation: $52,126,017

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline