Lockheed Martin awarded $20.4M for aircraft engine parts, a sole-source contract with a high unit cost

Contract Overview

Contract Amount: $20,363,034 ($20.4M)

Contractor: Lockheed Martin Services, LLC

Awarding Agency: Department of Defense

Start Date: 2007-10-04

End Date: 2011-07-31

Contract Duration: 1,396 days

Daily Burn Rate: $14.6K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: DECM INSTALLS 2008, 2009 AND 2010

Place of Performance

Location: GREENVILLE, GREENVILLE County, SOUTH CAROLINA, 29605

State: South Carolina Government Spending

Plain-Language Summary

Department of Defense obligated $20.4 million to LOCKHEED MARTIN SERVICES, LLC for work described as: DECM INSTALLS 2008, 2009 AND 2010 Key points: 1. The contract's value of $20.4 million was awarded on a sole-source basis, raising questions about price discovery. 2. The fixed-price contract type suggests cost certainty for the government, but the lack of competition limits benchmarking. 3. The duration of 1396 days indicates a long-term need for these aircraft engine parts. 4. The contract was awarded by the Defense Contract Management Agency, suggesting a focus on defense-related procurement. 5. The specific NAICS code 336412 points to the manufacturing of aircraft engines and engine parts. 6. The contract's value is relatively modest in the context of large defense procurements, but the unit cost warrants scrutiny.

Value Assessment

Rating: questionable

The total award of $20.4 million for 14587 units results in a per-unit cost of approximately $1,398. Given this was a sole-source award, it is difficult to benchmark against competitive pricing. However, the lack of competition and the specialized nature of aircraft engine parts suggest that this unit cost may be on the higher end. Without competitive bids, it's challenging to definitively assess value for money, but the absence of competition is a risk factor for inflated pricing.

Cost Per Unit: $1,398 per unit

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning that only one contractor, Lockheed Martin Services, LLC, was solicited. The data does not provide a justification for this sole-source award, such as a specific emergency or a unique capability. The lack of competition means that the government did not benefit from a bidding process that could have driven down prices or offered alternative solutions. This significantly limits the government's ability to ensure it received the best possible price and terms.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive bidding. Without multiple offers, the government had less leverage to negotiate favorable pricing, potentially leading to higher overall expenditure for these aircraft engine parts.

Public Impact

The primary beneficiaries are the Department of Defense, which receives critical aircraft engine parts for its operations. The services delivered include the provision of aircraft engine components, essential for maintaining military aviation readiness. The contract's geographic impact is centered in South Carolina, where the contractor is located, potentially supporting local jobs and economic activity. The contract supports the manufacturing sector, specifically within the aerospace and defense industry, sustaining specialized technical expertise and employment.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potentially increases costs for taxpayers.
High per-unit cost of approximately $1,398 warrants further investigation into pricing justification.
Lack of transparency regarding the justification for a sole-source award.
Contract duration of nearly four years could indicate potential for cost overruns if not managed tightly.
Absence of small business subcontracting data raises concerns about broader economic impact.

Positive Signals

Firm Fixed Price contract type provides cost certainty for the government.
Award to a known entity (Lockheed Martin) may indicate a reliance on established capabilities and quality.
Contract supports critical defense needs for aircraft engine parts.
The contract is for a specific, identifiable need within the defense sector.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on aircraft engine components. The NAICS code 336412 represents a segment of the broader industrial manufacturing market. Spending in this area is critical for national security and maintaining military readiness. Comparable spending benchmarks are difficult to establish without more detailed market analysis, but contracts for specialized defense components often involve significant investment due to high technical requirements and stringent quality control.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false) and there is no explicit mention of small business subcontracting goals (sb: false). This suggests that the primary contractor, Lockheed Martin, is expected to fulfill the requirement directly or through its own supply chain. The lack of small business involvement in this specific award means that the direct economic benefits to the small business ecosystem from this particular contract are likely minimal, unless Lockheed Martin voluntarily engages small businesses in its subcontracting efforts.

Oversight & Accountability

Oversight for this contract would typically fall under the purview of the awarding agency, the Defense Contract Management Agency (DCMA), and potentially the Department of Defense's Inspector General. The firm fixed-price nature of the contract provides some level of cost control. However, the sole-source award mechanism reduces the inherent transparency and accountability typically fostered by competitive bidding. Further transparency would depend on the public availability of the sole-source justification and ongoing performance monitoring reports.

Related Government Programs

Aircraft Engine Manufacturing
Defense Procurement
Aerospace Components
Military Aviation Support
Sole-Source Contracts
Lockheed Martin Contracts

Risk Flags

Sole-source award without clear justification.
Potentially high per-unit cost.
Lack of small business subcontracting information.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $20.4 million to LOCKHEED MARTIN SERVICES, LLC. DECM INSTALLS 2008, 2009 AND 2010

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 (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $20.4 million.

What is the period of performance?

Start: 2007-10-04. End: 2011-07-31.

What is the specific justification for this contract being awarded on a sole-source basis?

The provided data does not include the specific justification for this contract being awarded on a sole-source basis. Typically, sole-source awards are made when there is only one responsible source capable of providing the required goods or services, such as in cases of urgent and compelling need, unique capabilities, or when follow-on work is required for compatibility with existing systems. Without this justification, it is impossible to fully assess the necessity and reasonableness of bypassing the competitive bidding process. This lack of transparency is a significant concern for ensuring fair pricing and maximizing taxpayer value.

How does the per-unit cost of $1,398 compare to similar aircraft engine parts procured competitively?

Directly comparing the per-unit cost of $1,398 for these specific aircraft engine parts to competitively procured items is challenging without detailed specifications of the parts and market data. However, as a sole-source award, this price was not validated through competition. Generally, sole-source procurements tend to have higher unit costs compared to those resulting from open competition, as the government lacks the leverage to negotiate the lowest possible price. To provide a meaningful comparison, one would need access to a database of similar parts procured competitively by the DoD or other agencies, along with their associated unit costs and contract types.

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

The primary risk associated with a sole-source award of this magnitude ($20.4 million) is the potential for inflated pricing due to the absence of competition. Without competing bids, the contractor has less incentive to offer the most competitive price. Other risks include a lack of innovation or alternative solutions that might have been presented by other vendors. Furthermore, it raises concerns about whether the government adequately explored all available options or if there were underlying issues that prevented a competitive solicitation. This can also set a precedent for future sole-source awards, potentially eroding competitive principles within the agency.

What is the track record of Lockheed Martin Services, LLC in fulfilling similar defense contracts?

Lockheed Martin Services, LLC is a well-established defense contractor with a long history of fulfilling complex government contracts, including those for aircraft components and maintenance. While specific performance metrics for this particular contract are not detailed in the provided data, Lockheed Martin generally has a significant presence in the defense sector. Their track record typically involves large-scale, high-value contracts. However, like any large contractor, they may have faced performance issues or contract disputes on specific projects. A comprehensive assessment would require reviewing their past performance evaluations (e.g., CPARS) and any documented issues related to similar aircraft engine part procurements.

How does the total spending on aircraft engine parts by the Defense Contract Management Agency compare to this contract's value?

The provided data focuses on a single contract awarded by the Defense Contract Management Agency (DCMA) for $20.4 million. To understand how this compares to the DCMA's total spending on aircraft engine parts, one would need access to historical spending data for the agency across all relevant contract vehicles and categories. The DCMA's role is primarily contract management and oversight, rather than direct procurement for operational use. Therefore, their spending might reflect management services or specific oversight contracts rather than the direct acquisition of parts for aircraft. A broader analysis of DoD spending on aircraft engine parts would provide better context for this contract's relative size.

What is the significance of the NAICS code 336412 (Aircraft Engine and Engine Parts Manufacturing) in the context of federal spending?

The NAICS code 336412 signifies a critical segment of the defense industrial base, responsible for producing essential components for military aircraft. Federal spending in this sector is vital for maintaining national security, ensuring the operational readiness of air fleets, and supporting advanced technological development. Contracts under this code often involve high barriers to entry due to specialized manufacturing processes, stringent quality control, and significant research and development investments. The government is a major customer for these products, making federal spending a significant driver of activity and innovation within this industry.

Industry Classification

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

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

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

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: $20,363,034

Exercised Options: $20,363,034

Current Obligation: $20,363,034

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: N0001905G0030

IDV Type: IDC

Timeline