Department of the Army awarded $27.1M contract for simple key loaders, with Sierra Nevada Company as the sole provider

Contract Overview

Contract Amount: $27,136,025 ($27.1M)

Contractor: Sierra Nevada Company, LLC

Awarding Agency: Department of Defense

Start Date: 2019-09-06

End Date: 2022-06-30

Contract Duration: 1,028 days

Daily Burn Rate: $26.4K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: W15P7T-19-F-0125 WAS CREATED TO FULFILL CUSTOMER REQUESTS TO PROCURE SIMPLE KEY LOADERS (SKLS) V3.1 UNITS ON CONTRACT AS MON-FOREIGN MILITARY SALES (FMS) CUSTOMERS ALSO.

Place of Performance

Location: SPARKS, WASHOE County, NEVADA, 89434

State: Nevada Government Spending

Plain-Language Summary

Department of Defense obligated $27.1 million to SIERRA NEVADA COMPANY, LLC for work described as: W15P7T-19-F-0125 WAS CREATED TO FULFILL CUSTOMER REQUESTS TO PROCURE SIMPLE KEY LOADERS (SKLS) V3.1 UNITS ON CONTRACT AS MON-FOREIGN MILITARY SALES (FMS) CUSTOMERS ALSO. Key points: 1. The contract's value of $27.1 million for simple key loaders (SKLs) V3.1 units appears to be a significant investment in secure communication equipment. 2. The sole-source nature of this award raises questions about potential price inflation and the lack of competitive pressure to ensure best value. 3. The duration of the contract (over 1000 days) suggests a sustained need for these specialized communication devices. 4. The primary customer appears to be the Department of the Army, with potential for Foreign Military Sales, indicating a critical national security function. 5. The specific equipment, SKLs V3.1, points to a need for advanced cryptographic key management, essential for secure military communications. 6. The absence of small business set-asides suggests the contract was not structured to specifically benefit smaller enterprises in this sector.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging without more specific details on the SKLs V3.1 units and their capabilities. However, the sole-source award mechanism inherently limits the ability to assess competitive pricing and ensure the best possible value for taxpayer dollars. Without competitive bids, it's difficult to determine if the $27.1 million represents a fair market price for the quantity and type of equipment procured. Further analysis would require comparing the unit cost to similar cryptographic equipment or previous procurements of SKLs.

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 considered. This approach bypasses the standard competitive bidding process, which typically involves soliciting offers from multiple qualified suppliers. The lack of competition means that the government did not explore alternative sources or leverage market dynamics to potentially secure a lower price or more favorable terms. This method is usually reserved for situations where only one vendor can provide the required goods or services, or in cases of urgent need.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as there is no competitive pressure to drive down prices. This limits the government's ability to achieve cost savings and potentially reduces the overall return on investment for public funds.

Public Impact

The primary beneficiaries are the Department of the Army and potentially allied nations through Foreign Military Sales, who will receive secure communication equipment. The services delivered include the procurement of Simple Key Loaders (SKLs) V3.1 units, crucial for managing cryptographic keys. The geographic impact is likely global, given the potential for FMS, supporting U.S. military operations and allied defense capabilities. Workforce implications are minimal in terms of direct job creation from this contract, but it supports specialized roles within Sierra Nevada Company and the Department of Defense related to secure communications.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potential cost savings.
Lack of transparency in the procurement process due to non-competitive nature.
Potential for over-reliance on a single supplier for critical communication hardware.

Positive Signals

Ensures availability of specific, potentially specialized, cryptographic equipment.
Directly supports national security and military communication needs.
Contract awarded to a known entity, Sierra Nevada Company, LLC.

Sector Analysis

The procurement of Simple Key Loaders (SKLs) falls within the broader defense electronics and secure communications sector. This market is characterized by high technological barriers to entry, stringent security requirements, and significant government spending. The market size for secure communication equipment is substantial, driven by ongoing defense modernization efforts and the need for robust encryption solutions across various government agencies and allied forces. This contract represents a specific, niche procurement within this larger sector, focusing on cryptographic key management devices.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Consequently, there are no direct subcontracting implications specifically mandated for small businesses through this award. The procurement was handled directly with Sierra Nevada Company, LLC, suggesting that small businesses were not prioritized or included in the primary contracting mechanism for this specific requirement.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Army's contracting and program management offices. Accountability measures would be tied to the delivery of the SKLs V3.1 units according to the contract's specifications and timeline. Transparency is limited due to the sole-source nature of the award, making public scrutiny of the procurement process more challenging. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Defense Communications Equipment
Cryptographic Devices
Foreign Military Sales (FMS)
Tactical Communication Systems
National Security Systems

Risk Flags

Sole-source procurement
Lack of competitive bidding
Potential for inflated pricing
Limited transparency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $27.1 million to SIERRA NEVADA COMPANY, LLC. W15P7T-19-F-0125 WAS CREATED TO FULFILL CUSTOMER REQUESTS TO PROCURE SIMPLE KEY LOADERS (SKLS) V3.1 UNITS ON CONTRACT AS MON-FOREIGN MILITARY SALES (FMS) CUSTOMERS ALSO.

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 Army).

What is the total obligated amount?

The obligated amount is $27.1 million.

What is the period of performance?

Start: 2019-09-06. End: 2022-06-30.

What is the specific model and capability of the SKLs V3.1 units procured under this contract?

The data provided indicates the procurement of 'SIMPLE KEY LOADERS (SKLS) V3.1 UNITS'. SKLs are portable, secure devices used by military and intelligence personnel to securely transfer cryptographic keys between different communication systems and devices. The V3.1 designation likely refers to a specific version or iteration of the SKL, implying potential upgrades in functionality, security features, or compatibility compared to previous versions. These units are critical for maintaining the confidentiality and integrity of classified communications by ensuring that only authorized entities possess the correct cryptographic keys. The exact technical specifications, such as encryption algorithms supported, key capacity, battery life, and physical ruggedness, would be detailed in the contract's statement of work, which is not publicly available in this dataset.

Why was this contract awarded on a sole-source basis instead of through full and open competition?

The provided data states the contract was 'NOT COMPETED' and lists the contract type as 'sole-source'. Sole-source awards are typically justified when only one responsible source is available or capable of meeting the government's needs. This could be due to unique proprietary technology, specialized expertise, or critical compatibility requirements with existing systems. For cryptographic equipment like SKLs, there might be specific security certifications or interoperability standards that only a particular vendor, like Sierra Nevada Company, LLC, can meet. Without further documentation from the Department of the Army justifying the sole-source determination, it is difficult to ascertain the precise reasons. However, such justifications are usually required to ensure that competition is not unnecessarily restricted.

What is the historical spending pattern for SKLs by the Department of the Army or Department of Defense?

The provided data only details a single contract, W15P7T-19-F-0125, valued at $27.1 million for SKLs V3.1 units awarded in September 2019. This specific contract does not offer insight into broader historical spending patterns for SKLs. To understand historical trends, one would need to analyze procurement data over multiple fiscal years, looking for previous contracts for SKLs or similar cryptographic key management devices. This would involve searching databases like the Federal Procurement Data System (FPDS) for contracts awarded by the Department of the Army and other DoD components. Analyzing such data could reveal fluctuations in demand, changes in unit costs over time, and the prevalence of sole-source versus competitive awards for these types of items.

How does the $27.1 million contract value compare to other similar procurements for cryptographic equipment?

Direct comparison of the $27.1 million contract value for SKLs V3.1 units to other procurements is challenging without knowing the exact quantity of units purchased and their specific technical capabilities. The value represents the total contract ceiling or awarded amount over its duration (September 2019 to June 2022). To benchmark effectively, one would need to identify contracts for comparable cryptographic key management devices, such as other types of key loaders or secure communication modules, from the same or similar time period. Analyzing the per-unit cost, if derivable, would be a more accurate method for comparison. Given the sole-source nature of this award, it is difficult to assess if this represents a competitive market price or a premium paid due to lack of competition.

What are the potential risks associated with a sole-source award for critical communication equipment?

Sole-source awards for critical communication equipment like SKLs carry several potential risks. Firstly, the lack of competition can lead to higher prices than might be achieved through a competitive bidding process, resulting in inefficient use of taxpayer funds. Secondly, it can foster vendor lock-in, making it difficult and costly to switch to alternative suppliers in the future, even if better options emerge. Thirdly, without the scrutiny of multiple bidders, there's a reduced incentive for the sole provider to innovate or maintain the highest levels of service and quality. Finally, it can limit the government's visibility into the broader market for such technologies and potentially overlook emerging solutions from other companies, including small businesses that might offer innovative alternatives.

Industry Classification

NAICS: Manufacturing › Communications Equipment Manufacturing › Radio and Television Broadcasting and Wireless Communications Equipment Manufacturing

Product/Service Code: COMM/DETECT/COHERENT RADIATION

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

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

Financial Breakdown

Contract Ceiling: $27,136,025

Exercised Options: $27,136,025

Current Obligation: $27,136,025

Subaward Activity

Number of Subawards: 28

Total Subaward Amount: $16,508,741

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: W15P7T12D0019

IDV Type: IDC

Timeline