Over $135 million for aircraft parts, awarded via a non-competitive contract to Lockheed Martin Corporation

Contract Overview

Contract Amount: $135,568,940 ($135.6M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2006-10-01

End Date: 2011-11-30

Contract Duration: 1,886 days

Daily Burn Rate: $71.9K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Defense

Official Description: AIRFRAME

Place of Performance

Location: PALMDALE, LOS ANGELES County, CALIFORNIA, 93599

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $135.6 million to LOCKHEED MARTIN CORPORATION for work described as: AIRFRAME Key points: 1. The contract's value of over $135 million for aircraft parts suggests a significant need for specialized components. 2. Awarded as 'NOT COMPETED', this contract raises questions about the availability of alternative suppliers and potential cost efficiencies. 3. The use of a Cost Plus Incentive Fee (CPIF) pricing structure indicates a degree of complexity and shared risk between the government and contractor. 4. The contract duration of 1886 days (over 5 years) points to a long-term requirement for these aircraft parts. 5. The award to Lockheed Martin Corporation, a major defense contractor, aligns with the sector's consolidation and reliance on established players. 6. The absence of small business involvement (ss: false, sb: false) suggests this contract did not prioritize small business participation.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging without specific details on the 'AIRFRAME' components procured. However, a $135 million award for aircraft parts, especially when not competitively bid, warrants scrutiny. The CPIF contract type can lead to costs exceeding initial estimates if not managed carefully. Without comparison to similar sole-source procurements or market rates for these specific parts, it's difficult to definitively assess value for money. The high dollar amount suggests critical components, but the lack of competition limits transparency on pricing.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was explicitly marked as 'NOT COMPETED', indicating that a full and open competition was not conducted. This typically occurs when a specific vendor is the only source capable of meeting the requirement, often due to proprietary technology, unique expertise, or urgent needs. The lack of competition means there were likely no other bidders, preventing price discovery through a bidding process and potentially leading to higher costs for the government.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive pressure. Without multiple bids, there's less assurance that the price reflects the lowest possible cost for the required aircraft parts.

Public Impact

The primary beneficiaries are likely the Department of Defense, specifically units relying on the 'AIRFRAME' for which these parts are intended. The services delivered involve the provision of critical aircraft parts, essential for maintaining operational readiness and capability. The contract's geographic impact is centered in California, where the award was made. Workforce implications may include specialized manufacturing and logistics roles within Lockheed Martin Corporation and its supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may result in inflated prices.
Cost Plus Incentive Fee contracts can lead to cost overruns if not closely monitored.
Absence of small business participation limits opportunities for smaller enterprises.
Limited transparency due to sole-source award makes value assessment difficult.

Positive Signals

Award to a major defense contractor like Lockheed Martin suggests access to established expertise and production capabilities.
The long contract duration indicates a stable, long-term supply chain for critical components.
The CPIF structure, while carrying risk, aims to incentivize performance and cost control.

Sector Analysis

The aerospace and defense sector is characterized by high barriers to entry, complex supply chains, and significant government investment. This contract for aircraft parts falls within the broader 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' industry. The market is dominated by large, established players like Lockheed Martin due to the specialized nature of the products and stringent quality requirements. Spending in this sector is often driven by national security needs and long-term platform sustainment, with contracts frequently being sole-source or limited competition due to proprietary designs or existing platform integration.

Small Business Impact

This contract does not appear to have a small business set-aside (ss: false, sb: false). The award to a large prime contractor like Lockheed Martin Corporation suggests that subcontracting opportunities may exist for small businesses within their supply chain. However, without specific subcontracting plans or goals mandated for this particular award, the direct impact on the small business ecosystem is uncertain. The lack of a direct set-aside means small businesses did not have a dedicated opportunity to compete for the prime contract itself.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and program management structures, potentially involving the Defense Contract Management Agency (DCMA) given the 'sa' field. Accountability measures are inherent in the CPIF contract type, which links contractor profit to performance and cost targets. Transparency is limited due to the sole-source nature of the award; however, contract modifications, performance reports, and final cost data would likely be subject to internal DoD review and potentially Inspector General oversight if issues arise.

Related Government Programs

Aircraft Manufacturing
Defense Procurement
Aerospace Parts Supply
Logistics and Sustainment
Sole-Source Contracts

Risk Flags

Sole-source award limits price competition.
Potential for cost overruns with CPIF contract type.
Lack of transparency in pricing due to non-competitive nature.
No small business participation noted.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $135.6 million to LOCKHEED MARTIN CORPORATION. AIRFRAME

Who is the contractor on this award?

The obligated recipient is LOCKHEED MARTIN CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $135.6 million.

What is the period of performance?

Start: 2006-10-01. End: 2011-11-30.

What specific 'AIRFRAME' components were procured under this contract, and what is their criticality to operational readiness?

The provided data does not specify the exact 'AIRFRAME' components. However, given the substantial value of over $135 million and the award to Lockheed Martin Corporation, it is highly probable that these are critical, high-value, or specialized parts essential for the maintenance and operation of specific military aircraft platforms. These could range from complex structural elements to advanced avionics or engine components. The criticality is implied by the long-term nature of the contract and the sole-source award, suggesting unique specifications or integration requirements that only the incumbent contractor can meet. Further investigation into the specific contract line items or associated documentation would be necessary to identify the precise components and their direct impact on military readiness.

How does the Cost Plus Incentive Fee (CPIF) structure for this contract compare to industry standards for similar sole-source procurements?

The CPIF contract type is common in defense procurement, especially for complex projects where costs are difficult to estimate accurately upfront and where contractor performance incentives are desired. For sole-source procurements of aircraft parts, CPIF allows the government to share in cost savings or overruns with the contractor, incentivizing efficiency. Benchmarking this specific CPIF structure against industry standards would require detailed knowledge of the target cost, incentive sharing ratios, and ceiling prices established for this contract, which are not provided. However, the use of CPIF in a sole-source context suggests a recognition by the DoD that precise cost prediction was challenging, and they sought to align contractor incentives with government objectives for cost control and performance delivery over the contract's multi-year duration.

What is the historical spending pattern for aircraft parts from Lockheed Martin Corporation by the Department of Defense?

Historical spending data for aircraft parts from Lockheed Martin Corporation by the Department of Defense is extensive, reflecting the company's significant role as a prime contractor for numerous military aircraft platforms. While this specific contract represents a single award of $135.6 million, Lockheed Martin consistently receives billions of dollars annually from the DoD for aircraft, related parts, and sustainment services across various programs (e.g., F-35, F-16, C-130). Analyzing broader spending patterns would reveal a trend of substantial, long-term investment in Lockheed Martin platforms, necessitating ongoing procurement of spare parts, modifications, and support. This particular contract, though large, is likely one component of a much larger, continuous flow of funds to the company for aircraft sustainment and upgrades.

What are the potential risks associated with a sole-source award of this magnitude for aircraft parts?

The primary risk associated with a sole-source award of this magnitude is the potential for inflated pricing due to the lack of competitive pressure. Without competing bids, the government has less leverage to negotiate the lowest possible price. There's also a risk of complacency from the contractor, as the absence of competition reduces the urgency to innovate or improve efficiency. Furthermore, reliance on a single source can create supply chain vulnerabilities; if Lockheed Martin faces production issues, the government's aircraft operations could be significantly impacted. Finally, the lack of transparency inherent in sole-source contracts makes it harder for oversight bodies and the public to verify that taxpayers are receiving fair value for their investment.

What is the typical duration for contracts of this nature (aircraft parts, large value, sole-source)?

Contracts for aircraft parts, especially those involving specialized components for major defense platforms and awarded on a sole-source basis, often have extended durations. The 1886-day (approximately 5.1 years) duration of this contract is not unusual. Such long periods are necessary to ensure a stable and continuous supply of critical parts needed for aircraft sustainment, maintenance, and operational readiness over a significant portion of an aircraft's lifecycle. Sole-source awards, in particular, may be structured for longer terms to secure a dedicated production line or specialized manufacturing capability from the incumbent provider, reflecting the long-term nature of defense platform support and the high costs associated with re-competing such specialized requirements.

Industry Classification

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

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE (V)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp (UEI: 834951691)

Address: 1011 LOCKHEED WAY, PALMDALE, CA, 93599

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $144,028,369

Exercised Options: $138,481,969

Current Obligation: $135,568,940

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA852807D0015

IDV Type: IDC

Timeline