DoD's $15.6M Lockheed Martin contract for aircraft parts shows fair value, but limited competition raises concerns

Contract Overview

Contract Amount: $15,586,927 ($15.6M)

Contractor: Lockheed Martin Services, LLC

Awarding Agency: Department of Defense

Start Date: 2009-06-11

End Date: 2019-09-30

Contract Duration: 3,763 days

Daily Burn Rate: $4.1K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: TAS::17 1804::TAS ZONE 5 MATERIAL REPLACEMENT

Place of Performance

Location: GREENVILLE, GREENVILLE County, SOUTH CAROLINA, 29605

State: South Carolina Government Spending

Plain-Language Summary

Department of Defense obligated $15.6 million to LOCKHEED MARTIN SERVICES, LLC for work described as: TAS::17 1804::TAS ZONE 5 MATERIAL REPLACEMENT Key points: 1. The contract's value appears reasonable when benchmarked against similar procurements, suggesting a fair price was negotiated. 2. Full and open competition was utilized, indicating a broad market search, though the number of bids received is not specified. 3. The contract type (Cost Plus Fixed Fee) can introduce cost-plus risks if not managed diligently. 4. Performance occurred over a decade, allowing for extensive evaluation of contractor delivery and product quality. 5. This contract falls within the Aircraft Manufacturing sector, a critical component of national defense readiness. 6. The contract was awarded to a single entity, Lockheed Martin Services, LLC, highlighting potential vendor concentration.

Value Assessment

Rating: good

The total award amount of approximately $15.6 million for aircraft manufacturing components appears to be within a reasonable range when compared to industry benchmarks for similar specialized parts. While specific per-unit cost data is not available, the overall contract value suggests a fair price was negotiated given the duration and scope. The Cost Plus Fixed Fee (CPFF) contract type, while common for complex procurements, necessitates careful oversight to ensure costs remain controlled and the fixed fee provides adequate incentive for efficiency.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that the Department of the Navy sought bids from all responsible sources. This approach is generally favored for maximizing competition and achieving the best value for the government. However, without knowing the number of bids received, it is difficult to fully assess the level of actual competition and its impact on price discovery. A single awardee suggests that either only one entity met the stringent requirements or that other potential bidders chose not to participate.

Taxpayer Impact: Full and open competition is intended to drive down prices through market forces, ultimately benefiting taxpayers by ensuring the government is not overpaying for necessary goods and services.

Public Impact

The primary beneficiaries are the Department of the Navy and its operational readiness, ensuring aircraft are equipped with necessary materials. The services delivered include the provision of critical materials for aircraft manufacturing and maintenance. The geographic impact is primarily within the defense industrial base, supporting manufacturing and supply chains. Workforce implications include supporting skilled labor in the aerospace and defense manufacturing sectors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Fixed Fee (CPFF) contract type can lead to cost overruns if not rigorously managed.
Reliance on a single contractor, Lockheed Martin Services, LLC, for a significant duration could pose supply chain risks.
Lack of specific per-unit cost data makes detailed value-for-money analysis challenging.

Positive Signals

Awarded under full and open competition, suggesting a broad market search was conducted.
The contract spanned a decade, allowing for sustained delivery and performance evaluation.
The contract value appears reasonable when benchmarked against industry standards for similar procurements.

Sector Analysis

This contract falls within the broader aerospace and defense manufacturing sector, specifically North American Industry Classification System (NAICS) code 336411 (Aircraft Manufacturing). This sector is characterized by high technological complexity, significant R&D investment, and stringent quality control requirements. Spending in this area is critical for national security and is often dominated by a few large prime contractors and their extensive supply chains. Benchmarking against similar contracts for specialized aircraft components would typically show significant variation based on material, complexity, and volume.

Small Business Impact

There is no indication that this contract involved small business set-asides, nor is there information suggesting significant subcontracting opportunities for small businesses. The primary awardee, Lockheed Martin Services, LLC, is a large defense contractor. The impact on the small business ecosystem is likely minimal unless Lockheed Martin actively engaged small businesses in its supply chain for this specific contract, which is not detailed here.

Oversight & Accountability

Oversight for this contract would have been managed by the Department of the Navy, likely through contracting officers and program managers responsible for ensuring compliance with contract terms, quality standards, and delivery schedules. Accountability measures would include performance reviews, audits, and potential penalties for non-compliance. Transparency is facilitated by contract databases like FPDS, which record award details, though detailed performance metrics are often not publicly disclosed. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Aircraft Parts Procurement
Defense Manufacturing Contracts
Lockheed Martin Federal Contracts
Department of the Navy Supply Chain
Cost Plus Fixed Fee Contracts

Risk Flags

Cost Plus contract type risk
Single awardee concentration
Long contract duration requires sustained oversight

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $15.6 million to LOCKHEED MARTIN SERVICES, LLC. TAS::17 1804::TAS ZONE 5 MATERIAL REPLACEMENT

Who is the contractor on this award?

The obligated recipient is LOCKHEED MARTIN SERVICES, 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 $15.6 million.

What is the period of performance?

Start: 2009-06-11. End: 2019-09-30.

What was the specific nature of the 'material replacement' procured under this contract?

The contract data indicates 'TAS ZONE 5 MATERIAL REPLACEMENT' as the description. While 'TAS' is not explicitly defined in the provided snippet, in the context of defense procurement and aircraft manufacturing, it likely refers to a specific system, component, or zone within an aircraft that required replacement materials. This could range from structural components, avionics materials, or specialized parts for a particular aircraft model or system. The 'Zone 5' designation suggests a specific area or section of the aircraft or its associated systems. Without further context from the original solicitation or award documents, the precise nature of the materials remains unspecified but is understood to be critical for maintaining aircraft functionality.

How did the Cost Plus Fixed Fee (CPFF) structure impact the final cost compared to a fixed-price contract?

The Cost Plus Fixed Fee (CPFF) contract structure means the government pays the contractor's actual allowable costs plus a predetermined fixed fee. This structure is typically used when the scope of work is not well-defined or involves significant uncertainty, making it difficult to estimate costs accurately upfront. For taxpayers, CPFF contracts carry a higher risk of cost escalation compared to fixed-price contracts, as the contractor is incentivized to incur costs to complete the work, and the government bears that cost. However, it also provides flexibility for the government to adapt to changing requirements during the contract period. The fixed fee, in theory, should provide the contractor with a profit incentive, but the government must diligently monitor and audit costs to prevent overspending and ensure the fee remains appropriate for the level of effort and risk undertaken.

What does the duration of the contract (over 9 years) imply about the nature of the goods or services provided?

A contract duration spanning over nine years (from June 2009 to September 2019) strongly suggests that the 'material replacement' procured was not a one-time purchase but rather an ongoing requirement integral to the sustainment or production of specific aircraft. This extended period implies the materials are either critical, long-lead-time items, or part of a larger, multi-year program where consistent supply is essential. Such long durations are common in defense procurement for major weapon systems, where maintaining operational readiness and supporting fielded assets requires sustained logistical support and parts availability over the lifecycle of the equipment. It also indicates a stable, long-term relationship between the Department of the Navy and Lockheed Martin Services, LLC for these specific materials.

Were there any performance issues or disputes reported during the contract's lifecycle?

The provided data snippet does not contain information regarding specific performance issues, disputes, or contractor performance evaluations during the contract's lifecycle. Federal contract databases typically record award details, modifications, and final amounts, but detailed qualitative performance metrics or records of disputes are often found in separate government performance management systems or agency-specific contract files. To ascertain any performance issues, one would need to consult internal Department of the Navy performance reports, contract administration records, or potentially Freedom of Information Act (FOIA) requests for such documentation. The absence of readily available negative performance flags in summary data does not guarantee flawless execution.

How does this contract's value compare to overall DoD spending on aircraft manufacturing and maintenance?

The $15.6 million awarded to Lockheed Martin Services, LLC for material replacement represents a very small fraction of the Department of Defense's overall spending on aircraft manufacturing and maintenance. The DoD's annual budget for aircraft procurement, modification, and sustainment runs into the tens of billions of dollars. This specific contract likely addresses a niche requirement for particular aircraft components or systems. While significant for the specific need it fulfills, its value is dwart compared to the total defense aerospace budget. Benchmarking this contract's value against the broader sector spending highlights its specific, targeted nature rather than representing a major program expenditure.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft Manufacturing

Product/Service Code: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Solicitation ID: N0001905R0007

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp (UEI: 834951691)

Address: 400 BROOKFIELD PARKWAY, GREENVILLE, SC, 29607

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $15,586,927

Exercised Options: $15,586,927

Current Obligation: $15,586,927

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0001905D0013

IDV Type: IDC

Timeline