DoD's $136M Lockheed Martin Contract for Aircraft Parts: Cost Plus Fixed Fee Raises Oversight Questions
Contract Overview
Contract Amount: $136,105,310 ($136.1M)
Contractor: Lockheed Martin Corporation
Awarding Agency: Department of Defense
Start Date: 2014-04-01
End Date: 2020-09-30
Contract Duration: 2,374 days
Daily Burn Rate: $57.3K/day
Competition Type: NOT COMPETED
Pricing Type: COST PLUS FIXED FEE
Sector: Defense
Official Description: SUPPLIES AND SERVICES.
Place of Performance
Location: PALMDALE, LOS ANGELES County, CALIFORNIA, 93599
Plain-Language Summary
Department of Defense obligated $136.1 million to LOCKHEED MARTIN CORPORATION for work described as: SUPPLIES AND SERVICES. Key points: 1. Significant contract value of $136M awarded to a single large corporation. 2. Sole-source award to Lockheed Martin suggests limited competition. 3. Cost Plus Fixed Fee (CPFF) contract type can incentivize higher costs. 4. Lack of competition and CPFF structure present potential risks to value for money.
Value Assessment
Rating: questionable
The Cost Plus Fixed Fee (CPFF) contract type, especially for supplies and services, can lead to higher costs as the contractor is reimbursed for all allowable costs plus a fixed fee. Without strong oversight and clear performance metrics, this structure may not ensure the best value for taxpayers.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
The contract was not competed, indicating a sole-source award to Lockheed Martin. This significantly limits price discovery and competitive pressure, potentially leading to a higher price than if multiple vendors had vied for the contract.
Taxpayer Impact: The lack of competition and the CPFF structure may result in taxpayers paying more than necessary for these aircraft parts and services.
Public Impact
Taxpayers may be overpaying due to the absence of competitive bidding. The Department of Defense's reliance on a single contractor for critical aircraft parts could pose supply chain risks. The long contract duration (2014-2020) warrants scrutiny of ongoing cost-effectiveness.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award
- Cost Plus Fixed Fee contract type
- Lack of competition
- High contract value
Positive Signals
- Awarded to a major defense contractor with established capabilities
Sector Analysis
This contract falls within the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' sector. Spending in this area is critical for maintaining military readiness. Benchmarks for similar sole-source CPFF contracts for aircraft parts are difficult to establish without detailed cost breakdowns, but competitive awards typically yield better pricing.
Small Business Impact
The contract was awarded to Lockheed Martin Corporation, a large business. There is no indication that small businesses were involved as subcontractors or partners in this specific award, suggesting a missed opportunity for small business participation.
Oversight & Accountability
The use of a Cost Plus Fixed Fee contract for a sole-source award necessitates robust oversight from the Department of the Air Force to ensure costs are reasonable and the fixed fee is justified. The long duration of the contract further emphasizes the need for continuous monitoring and accountability.
Related Government Programs
- Other Aircraft Parts and Auxiliary Equipment Manufacturing
- Department of Defense Contracting
- Department of the Air Force Programs
Risk Flags
- Potential for overpayment due to sole-source and CPFF structure.
- Lack of competitive pressure may lead to reduced innovation or efficiency.
- Dependency on a single supplier could create supply chain vulnerabilities.
- Long contract duration increases the risk of cost escalation without adequate oversight.
Tags
other-aircraft-parts-and-auxiliary-equip, department-of-defense, ca, delivery-order, 100m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $136.1 million to LOCKHEED MARTIN CORPORATION. SUPPLIES AND SERVICES.
Who is the contractor on this award?
The obligated recipient is LOCKHEED MARTIN CORPORATION.
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 $136.1 million.
What is the period of performance?
Start: 2014-04-01. End: 2020-09-30.
What specific justification was provided for awarding this contract on a sole-source basis rather than seeking competitive bids?
Sole-source awards are typically justified when only one responsible source can provide the required supplies or services, or in cases of urgent and compelling need. For this contract, the justification would need to detail why Lockheed Martin was the only viable option and the specific circumstances that precluded a competitive process. Without this information, it's difficult to assess the validity of the sole-source determination.
How were the 'allowable costs' and the 'fixed fee' determined and monitored under this Cost Plus Fixed Fee contract to ensure fair pricing?
Under a CPFF contract, the government must have mechanisms in place to audit and approve 'allowable costs' based on contract terms and federal acquisition regulations. The 'fixed fee' should be negotiated based on the complexity, risk, and effort involved. Continuous monitoring and auditing by the contracting officer and finance personnel are crucial to prevent cost overruns and ensure the fee remains fair and reasonable throughout the contract's life.
What steps were taken to ensure the effectiveness and performance of Lockheed Martin Corporation in delivering the specified aircraft parts and auxiliary equipment?
Effectiveness is typically measured through performance metrics, quality assurance surveillance plans (QASPs), and contractor performance evaluations. For this contract, the Air Force would have been responsible for monitoring delivery schedules, product quality, and overall adherence to contract requirements. Regular progress reviews and inspections would be standard procedures to ensure the contractor met its obligations.
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
Pricing Type: COST PLUS FIXED FEE (U)
Evaluated Preference: NONE
Contractor Details
Parent Company: Lockheed Martin Corp (UEI: 834951691)
Address: 1011 LOCKHEED WAY, PALMDALE, CA, 93599
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $156,603,433
Exercised Options: $136,105,310
Current Obligation: $136,105,310
Subaward Activity
Number of Subawards: 17
Total Subaward Amount: $1,368,722
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: YES
Parent Contract
Parent Award PIID: FA852814D0015
IDV Type: IDC
Timeline
Start Date: 2014-04-01
Current End Date: 2020-09-30
Potential End Date: 2020-09-30 00:00:00
Last Modified: 2020-04-23
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