DoD's $66.7M IGF MK21 AFA Components Refurbishment Contract Awarded to Lockheed Martin Corp
Contract Overview
Contract Amount: $66,734,524 ($66.7M)
Contractor: Lockheed Martin Corp
Awarding Agency: Department of Defense
Start Date: 2015-07-30
End Date: 2020-09-11
Contract Duration: 1,870 days
Daily Burn Rate: $35.7K/day
Competition Type: NOT COMPETED
Pricing Type: COST NO FEE
Sector: Defense
Official Description: IGF::CT::IGF MK21 AFA COMPONENTS REFURBISHMENT AND REPAIR.
Place of Performance
Location: KING OF PRUSSIA, MONTGOMERY County, PENNSYLVANIA, 19406
Plain-Language Summary
Department of Defense obligated $66.7 million to LOCKHEED MARTIN CORP for work described as: IGF::CT::IGF MK21 AFA COMPONENTS REFURBISHMENT AND REPAIR. Key points: 1. Contract awarded on a cost-no-fee basis, indicating potential for cost overruns. 2. Long performance period of 1870 days suggests a complex and extensive refurbishment process. 3. Sole-source award raises concerns about price discovery and potential lack of competitive pressure. 4. The contract falls under engineering services, a sector with varying levels of competition. 5. No small business set-aside was applied, potentially limiting opportunities for smaller firms. 6. The contract's value is significant, requiring robust oversight to ensure value for money.
Value Assessment
Rating: questionable
The contract's cost-no-fee structure presents a risk as the government bears the cost of any overruns. Benchmarking this specific refurbishment contract is challenging due to its specialized nature. However, the extended duration and lack of competition suggest that a more competitive bidding process might have yielded better pricing for the taxpayer. The absence of a fixed price or incentive fee structure makes it difficult to assess value for money without detailed cost breakdowns.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was awarded on a sole-source basis, meaning only one bidder, Lockheed Martin Corp., was solicited. This approach bypasses the standard competitive bidding process, which typically involves multiple companies vying for the contract. While sole-source awards can be justified in specific circumstances (e.g., unique capabilities, national security), they generally lead to less price competition and potentially higher costs for the government.
Taxpayer Impact: Sole-source awards limit the government's ability to secure the best possible price through competition, potentially resulting in higher expenditures for taxpayers compared to a fully competed contract.
Public Impact
The primary beneficiary is the Department of Defense, ensuring the continued operational readiness of IGF MK21 aircraft components. Services delivered include refurbishment and repair, crucial for maintaining the lifespan and functionality of critical defense assets. The geographic impact is primarily within Pennsylvania, where the contractor is located, and potentially extends to military bases utilizing these components. Workforce implications include skilled labor in engineering, manufacturing, and repair within Lockheed Martin's operations.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Cost-no-fee structure increases risk of cost overruns for the government.
- Sole-source award limits competitive pressure, potentially leading to inflated prices.
- Lack of transparency in cost breakdown due to the contract type.
- Extended performance period could indicate unforeseen complexities or scope creep.
- No small business participation noted, missing opportunities for economic inclusion.
Positive Signals
- Contract ensures critical component refurbishment, maintaining defense readiness.
- Award to a major defense contractor suggests access to specialized expertise.
- Long-term contract provides stability for essential maintenance services.
- The contract is managed by the Defense Contract Management Agency, indicating oversight.
Sector Analysis
This contract falls within the Engineering Services sector, specifically related to defense systems maintenance and upgrade. The aerospace and defense industry is characterized by high barriers to entry, significant R&D investment, and a substantial portion of government spending. Comparable spending benchmarks for complex component refurbishment can vary widely based on the specific system, technology involved, and the level of degradation. Government contracts in this area often involve specialized knowledge and proprietary technologies, sometimes leading to sole-source or limited competition scenarios.
Small Business Impact
This contract did not include a small business set-aside, nor does it appear to have specific subcontracting requirements for small businesses mentioned in the provided data. This means that opportunities for small businesses to participate in this significant defense contract are likely limited. The absence of set-asides in large sole-source contracts can reduce the overall impact on the small business ecosystem within the defense industrial base.
Oversight & Accountability
The contract is managed by the Defense Contract Management Agency (DCMA), which provides contract administration services to the Department of Defense. Oversight mechanisms would typically include monitoring contractor performance, costs, and compliance with contract terms. Transparency is limited by the sole-source nature and cost-no-fee structure, making detailed public scrutiny of cost-effectiveness difficult. Inspector General jurisdiction would apply to investigations of fraud, waste, or abuse related to the contract.
Related Government Programs
- Aircraft Component Maintenance
- Defense Logistics and Sustainment
- Engineering Services for Military Equipment
- Lockheed Martin Defense Contracts
- Cost-Plus Contracts
- Sole-Source Defense Procurements
Risk Flags
- Sole-source award
- Cost-no-fee contract type
- Long performance period
- Lack of small business participation
Tags
defense, department-of-defense, lockheed-martin-corp, engineering-services, sole-source, cost-no-fee, component-refurbishment, aircraft-maintenance, pennsylvania, defense-contract-management-agency, large-contract
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $66.7 million to LOCKHEED MARTIN CORP. IGF::CT::IGF MK21 AFA COMPONENTS REFURBISHMENT AND REPAIR.
Who is the contractor on this award?
The obligated recipient is LOCKHEED MARTIN CORP.
Which agency awarded this contract?
Awarding agency: Department of Defense (Defense Contract Management Agency).
What is the total obligated amount?
The obligated amount is $66.7 million.
What is the period of performance?
Start: 2015-07-30. End: 2020-09-11.
What is the historical spending pattern for IGF MK21 AFA component refurbishment and repair contracts awarded to Lockheed Martin Corp. or other entities?
Analyzing historical spending for IGF MK21 AFA component refurbishment and repair requires access to comprehensive federal procurement databases. Without specific historical data points for this exact component series and contractor, a precise trend is difficult to establish. However, generally, defense component sustainment contracts are long-term and can represent significant, recurring expenditures. The nature of military hardware often necessitates ongoing maintenance and refurbishment to ensure operational readiness. If this $66.7 million contract is a sole-source award for a critical component, it suggests either a unique capability held by Lockheed Martin or a lack of competitive alternatives identified by the Department of Defense. Historical data would be crucial to determine if this award represents an increase, decrease, or consistent level of spending for this specific sustainment activity and to assess if previous contracts were also sole-sourced or competed.
How does the cost-no-fee (CNF) structure impact the government's ability to control costs and ensure value for money compared to other contract types like fixed-price or cost-plus-incentive-fee?
The Cost-No-Fee (CNF) contract structure places the entire financial risk on the government. Unlike fixed-price contracts where the contractor is obligated to complete the work for a set price, or cost-plus contracts that include incentives for efficiency, CNF means the government reimburses the contractor for all allowable costs incurred, regardless of the final price. There is no fee or profit for the contractor, which is intended to incentivize cost consciousness. However, this structure can lead to less stringent cost management by the contractor if they believe the government will cover all expenses. It also makes it challenging for the government to benchmark value, as the contractor has less incentive to innovate cost-saving measures. Compared to fixed-price contracts, CNF offers less price certainty. Compared to cost-plus-incentive-fee (CPIF), where both parties share in cost savings or overruns, CNF shifts all risk to the government, potentially leading to higher overall expenditures if not meticulously overseen.
What specific technical expertise or proprietary technology does Lockheed Martin Corp. possess that justifies a sole-source award for IGF MK21 AFA components?
Sole-source awards are typically justified when a specific contractor possesses unique capabilities, proprietary technology, or essential expertise that cannot be replicated by other firms. For Lockheed Martin Corp. regarding IGF MK21 AFA components, this could stem from their original design and manufacturing role for the system, holding critical intellectual property, specialized tooling, or unique testing facilities required for refurbishment. The justification would need to demonstrate that no other source can meet the government's requirements within the necessary timeframe or to the required standard. Without access to the specific justification documentation submitted by the Department of Defense, it's impossible to detail the exact technical reasons. However, in the defense sector, original equipment manufacturers (OEMs) often maintain sole-source positions for sustainment of complex, integrated systems due to the deep institutional knowledge and proprietary data they possess.
What are the potential risks associated with the long performance period (1870 days) for this refurbishment contract?
A long performance period of 1870 days (approximately 5 years) for a refurbishment contract introduces several potential risks. Firstly, it increases the likelihood of scope creep, where the requirements may evolve or expand over time, potentially leading to cost increases if not managed strictly. Secondly, the extended duration makes it harder to accurately forecast final costs, especially under a cost-no-fee structure, as unforeseen technical challenges or material price fluctuations can occur. Thirdly, there's a risk of technological obsolescence; while refurbishing existing components, advancements in related technologies might emerge, potentially making the refurbished items less effective or requiring further modifications. Lastly, maintaining consistent oversight and contractor performance over such a long period requires sustained effort and resources from the contracting agency to ensure quality and prevent complacency.
Are there any known performance issues or track record concerns with Lockheed Martin Corp. on similar defense sustainment or refurbishment contracts?
Assessing Lockheed Martin Corp.'s track record on similar defense sustainment or refurbishment contracts requires a deep dive into contract performance databases, past performance reviews, and any reported issues from oversight bodies like the Government Accountability Office (GAO) or Inspectors General. Lockheed Martin is a major defense contractor, and like any large entity, they likely have a complex history of contract performance. While specific details on issues related to IGF MK21 AFA components are not provided, general concerns in defense sustainment can include cost overruns, schedule delays, or quality control issues. Conversely, they are also responsible for successfully delivering numerous critical systems. A comprehensive review would involve examining contract close-out data, any disputes, or contract modifications on comparable projects to identify patterns of excellence or recurring problems.
Industry Classification
NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services
Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES
Competition & Pricing
Extent Competed: NOT COMPETED
Solicitation Procedures: ONLY ONE SOURCE
Pricing Type: COST NO FEE (S)
Evaluated Preference: NONE
Contractor Details
Address: 230 MALL BLVD, KING OF PRUSSIA, PA, 19406
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $70,191,939
Exercised Options: $68,742,679
Current Obligation: $66,734,524
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Parent Contract
Parent Award PIID: FA821414D0002
IDV Type: IDC
Timeline
Start Date: 2015-07-30
Current End Date: 2020-09-11
Potential End Date: 2020-09-11 00:00:00
Last Modified: 2022-10-31
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