DoD's $12.15M contract for SNC MISD Sustainment awarded to Sierra Nevada Company, LLC

Contract Overview

Contract Amount: $12,151,068 ($12.2M)

Contractor: Sierra Nevada Company, LLC

Awarding Agency: Department of Defense

Start Date: 2024-09-17

End Date: 2027-06-30

Contract Duration: 1,016 days

Daily Burn Rate: $12.0K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: SNC MISD SUSTAINMENT

Place of Performance

Location: SPARKS, WASHOE County, NEVADA, 89434

State: Nevada Government Spending

Plain-Language Summary

Department of Defense obligated $12.2 million to SIERRA NEVADA COMPANY, LLC for work described as: SNC MISD SUSTAINMENT Key points: 1. Contract awarded on a sole-source basis, limiting price competition. 2. Duration of over 3 years suggests a need for sustained support. 3. Cost Plus Fixed Fee contract type may incentivize cost overruns. 4. No small business set-aside indicates potential for large prime contractor benefits. 5. Focus on Search, Detection, Navigation, Guidance systems points to critical defense capabilities. 6. Awarded by the Department of the Navy, a major defense spender.

Value Assessment

Rating: questionable

The contract's value of $12.15 million for sustainment services over approximately 3 years needs further benchmarking against similar support contracts for complex defense systems. Without competitive bidding, it is difficult to ascertain if the pricing reflects fair market value. The Cost Plus Fixed Fee (CPFF) structure, while common for R&D or uncertain scope work, can sometimes lead to higher overall costs if not meticulously managed, as the contractor is reimbursed for all allowable costs plus a fixed fee. This structure warrants close monitoring of cost performance.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one contractor, Sierra Nevada Company, LLC, was solicited. This approach bypasses the competitive bidding process, which typically drives down prices and fosters innovation. While sole-source awards can be justified for unique capabilities or urgent needs, they reduce transparency and limit the government's ability to secure the best possible pricing and terms.

Taxpayer Impact: The lack of competition means taxpayers may not be receiving the most cost-effective solution. Without competing bids, there is a reduced incentive for the contractor to offer the lowest possible price.

Public Impact

The primary beneficiaries are the Department of the Navy and its operational units relying on the SNC MISD systems. Services delivered include sustainment, ensuring the continued functionality and readiness of critical navigation and guidance equipment. The geographic impact is likely concentrated within Navy operational theaters and maintenance facilities. Workforce implications may involve specialized technical personnel for maintenance and support of these advanced systems.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure on pricing.
Cost Plus Fixed Fee contract type can lead to cost escalation if not managed tightly.
Lack of small business participation may limit broader economic benefits.

Positive Signals

Award to an established contractor (Sierra Nevada Company) suggests potential for reliable service delivery.
Sustainment contract indicates a commitment to maintaining critical defense capabilities.
Longer contract duration provides stability for essential system support.

Sector Analysis

The contract falls within the 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' sector (NAICS 334511). This industry is characterized by high technological complexity, significant R&D investment, and close ties to defense spending. Companies in this space often possess specialized expertise and proprietary technologies. Benchmarking against other sustainment contracts for similar complex defense electronics would provide further context on value.

Small Business Impact

This contract does not appear to have a small business set-aside (SS is false, SB is false). Consequently, the prime contract is awarded directly to Sierra Nevada Company, LLC, a large business. There is no explicit information provided regarding subcontracting plans for small businesses. This means opportunities for small businesses to participate in this contract may be limited unless the prime contractor voluntarily includes them in their supply chain.

Oversight & Accountability

Oversight for this contract will likely be managed by the Department of the Navy's contracting and program management offices. Accountability measures would typically involve performance reviews, milestone tracking, and adherence to the Cost Plus Fixed Fee terms. Transparency is reduced due to the sole-source nature of the award. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Naval Air Systems Command (NAVAIR) Contracts
Defense Logistics Agency (DLA) Sustainment Programs
Air Force Navigation Systems Support
Army Aviation Systems Maintenance

Risk Flags

Sole-source award
Cost Plus Fixed Fee contract type
Lack of small business participation

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $12.2 million to SIERRA NEVADA COMPANY, LLC. SNC MISD SUSTAINMENT

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 Navy).

What is the total obligated amount?

The obligated amount is $12.2 million.

What is the period of performance?

Start: 2024-09-17. End: 2027-06-30.

What is Sierra Nevada Company's track record with similar sole-source sustainment contracts for defense systems?

Sierra Nevada Company (SNC) has a significant history of working with the Department of Defense across various platforms and systems. While specific details on their sole-source sustainment contracts for similar 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' (NAICS 334511) are not provided in this data snippet, SNC is known for its expertise in areas like electronic warfare, aviation systems, and communication technologies. Their involvement in complex defense programs suggests they possess the technical capabilities required for sustainment. However, the lack of competitive bidding on this particular contract means that direct comparisons of SNC's performance against other potential providers on price and value are not readily available from this award alone. Further analysis would require examining past performance reviews and contract modifications for similar SNC contracts.

How does the Cost Plus Fixed Fee (CPFF) pricing structure compare to other contract types for sustainment services?

The Cost Plus Fixed Fee (CPFF) contract type reimburses the contractor for all allowable costs incurred, plus a predetermined fixed fee representing profit. This contrasts with fixed-price contracts, where the price is set regardless of the final cost, incentivizing the contractor to control expenses. CPFF is often used when the scope of work is not well-defined or involves significant research and development, making it difficult to estimate costs accurately upfront. For sustainment services, where the scope can sometimes be predictable, other contract types like Firm-Fixed-Price (FFP) or Cost Plus Incentive Fee (CPIF) might offer better value by aligning contractor incentives more closely with cost control and performance. The CPFF structure here, especially in a sole-source context, warrants careful oversight to prevent cost overruns and ensure the fixed fee remains appropriate for the services rendered.

What are the primary risks associated with a sole-source award for critical defense system sustainment?

The primary risks associated with a sole-source award for critical defense system sustainment include reduced price competition, potentially leading to higher costs for taxpayers. Without multiple bidders, there is less incentive for the contractor to optimize efficiency or offer innovative cost-saving solutions. Furthermore, reliance on a single supplier can create vulnerabilities in the supply chain and increase dependence on that specific contractor's capabilities and pricing. There's also a risk of 'vendor lock-in,' where the government becomes heavily reliant on the incumbent, making it difficult and costly to switch providers in the future. Transparency is diminished, making it harder to independently verify the fairness of the pricing and the necessity of all incurred costs.

What is the historical spending pattern for SNC MISD sustainment within the Department of the Navy?

The provided data only details a single award of $12.15 million for SNC MISD Sustainment with an end date of June 30, 2027. It does not offer historical spending patterns. To understand historical spending, one would need to access contract databases (like FPDS or SAM.gov) to identify previous contracts awarded for the sustainment of the SNC MISD system, potentially by the Department of the Navy or other branches. This would involve looking at the total amount obligated over time, the number of contracts awarded, the contractors involved, and the duration of those sustainment efforts. Without this historical data, it's impossible to assess if the current $12.15 million award represents an increase, decrease, or stable level of spending for this particular sustainment requirement.

What are the implications of the 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' (NAICS 334511) classification for this contract?

The classification under NAICS code 334511, 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing,' indicates that the contract is for the sustainment of highly specialized and technologically advanced equipment. This sector typically involves complex engineering, precision manufacturing, and rigorous testing. Companies operating within this NAICS code often possess unique intellectual property, specialized facilities, and highly skilled workforces. For sustainment, this implies a need for contractors with deep technical knowledge of the specific systems, potentially including proprietary diagnostic tools and repair procedures. The high-tech nature of this industry often correlates with higher contract values and longer sustainment cycles due to the complexity and critical role of the equipment in defense operations.

Industry Classification

NAICS: Manufacturing › Navigational, Measuring, Electromedical, and Control Instruments Manufacturing › Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing

Product/Service Code: COMM/DETECT/COHERENT RADIATION

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

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: $13,079,564

Exercised Options: $12,151,068

Current Obligation: $12,151,068

Subaward Activity

Number of Subawards: 10

Total Subaward Amount: $1,577,979

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0001923D0012

IDV Type: IDC

Timeline