DoD Awards $1.34B Fixed-Price Contract to Lockheed Martin for C-130 Hercules Airframes and Spares

Contract Overview

Contract Amount: $1,335,868,198 ($1.3B)

Contractor: Lockheed Martin Corp

Awarding Agency: Department of Defense

Start Date: 2001-12-05

End Date: 2014-11-21

Contract Duration: 4,734 days

Daily Burn Rate: $282.2K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 200203!000021!5700!GU04 !ASC/GR !F3365702C2000 !A!N! !N! !20011205!20080301!003268869!003268869!834951691!N!LOCKHEED MARTIN CORPORATION !86 SOUTH COBB DR !MARIETTA !GA!30063!49756!067!13!MARIETTA !COBB !GEORGIA !+000015000000!N!N!000000000000!1510!AIRCRAFT FIXED WING !A1A!AIRFRAMES AND SPARES !3ACD!C-130 HERCULES !541330!E! !3! ! ! ! ! !99990909!B! ! !A! !D!N!J!1!001!N!1G!A!N!Z! ! !N!C!N! ! ! !A!A!A!A!000!A!A!N! ! ! ! ! ! !0001!

Place of Performance

Location: MARIETTA, COBB County, GEORGIA, 30063

State: Georgia Government Spending

Plain-Language Summary

Department of Defense obligated $1.34 billion to LOCKHEED MARTIN CORP for work described as: 200203!000021!5700!GU04 !ASC/GR !F3365702C2000 !A!N! !N! !20011205!20080301!003268869!003268869!834951691!N!LOCKHEED MARTIN CORPORATION !86 SOUTH COBB DR !MARIETTA !GA!30063!49756!067!13!MARIETTA !COBB !GEORGIA !+000015000000!N!N!000000000000!1510!AIRCRAFT FIXED WING !A1A!AIRFRAM… Key points: 1. Significant award to a major defense contractor for critical aircraft components. 2. Sole-source nature raises questions about price discovery and potential overpayment. 3. Long contract duration (13 years) suggests a sustained need for these parts. 4. The 'Engineering Services' NAICS code may indicate more than just parts procurement.

Value Assessment

Rating: questionable

The contract value of $1.34 billion over 13 years is substantial. Without comparable contracts or detailed cost breakdowns, assessing the value for money is difficult, especially given the sole-source award.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning competition was not sought. This significantly limits price discovery and may lead to higher costs for taxpayers.

Taxpayer Impact: The lack of competition for a contract of this magnitude could result in inflated prices, directly impacting taxpayer funds.

Public Impact

Ensures continued availability of C-130 Hercules aircraft, vital for military operations. Supports jobs at Lockheed Martin and its supply chain. Potential for higher costs due to sole-source award impacts overall defense budget allocation.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award
Long contract duration
Lack of transparency on pricing

Positive Signals

Supports critical military aircraft
Award to established prime contractor

Sector Analysis

This contract falls within the aerospace and defense sector, specifically focusing on aircraft manufacturing and support. Spending in this area is typically high due to the complex nature of defense systems and long product lifecycles.

Small Business Impact

No information is available regarding small business participation in this contract. Sole-source awards often have less visibility into subcontracting opportunities for small businesses.

Oversight & Accountability

The sole-source nature of this award warrants scrutiny. Further oversight is needed to ensure the pricing is fair and reasonable and that the government received the best value possible.

Related Government Programs

Engineering Services
Department of Defense Contracting
Department of the Air Force Programs

Risk Flags

Sole-source award limits competition.
Potential for cost overruns due to lack of competitive pressure.
Long contract duration may reduce flexibility.
Ambiguity in 'Engineering Services' scope.
Lack of small business subcontracting information.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $1.34 billion to LOCKHEED MARTIN CORP. 200203!000021!5700!GU04 !ASC/GR !F3365702C2000 !A!N! !N! !20011205!20080301!003268869!003268869!834951691!N!LOCKHEED MARTIN CORPORATION !86 SOUTH COBB DR !MARIETTA !GA!30063!49756!067!13!MARIETTA !COBB !GEORGIA !+000015000000!N!N!000000000000!1510!AIRCRAFT FIXED WING !A1A!AIRFRAMES AND SPARES !3ACD!C-130 HERCULES !541330!E! !3! ! ! ! ! !99990909!B! ! !A! !D!N!J!1!001!N!1G!A!N!Z! ! !N!C!N! ! ! !A!A!A!A!000!A!A!N! ! ! ! ! ! !0001!

Who is the contractor on this award?

The obligated recipient is LOCKHEED MARTIN CORP.

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 $1.34 billion.

What is the period of performance?

Start: 2001-12-05. End: 2014-11-21.

What specific engineering services are included beyond just airframes and spares, and how do they contribute to the overall cost?

The contract lists 'Engineering Services' under the NAICS code 541330. While the primary description mentions 'AIRCRAFT FIXED WING' and 'AIRFRAMES AND SPARES', the inclusion of engineering services suggests potential for design modifications, technical support, or sustainment engineering. Understanding the scope and necessity of these services is crucial for validating the contract's overall value and ensuring funds are allocated appropriately.

Given the sole-source award, what mechanisms are in place to ensure Lockheed Martin's pricing remains competitive and fair over the 13-year period?

Without a competitive bidding process, oversight relies heavily on contract clauses related to cost realism, price adjustments, and potential audits. The Department of Defense would need to actively monitor cost trends, benchmark against industry standards where possible, and potentially negotiate price changes if market conditions or performance metrics dictate. Transparency in cost reporting from the contractor is essential for effective oversight.

How does the long duration of this contract impact the government's flexibility to adapt to future technological advancements or changing operational requirements for the C-130 fleet?

A 13-year contract duration, while providing stability, can limit flexibility. The government might be locked into specific technologies or support structures that could become outdated. However, definitive contracts often include provisions for modifications or termination for convenience, allowing for adjustments. The effectiveness of these clauses in practice, especially concerning cost implications, would determine the true flexibility afforded.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services

Product/Service Code: AEROSPACE CRAFT AND STRUCTURAL COMPONENTS

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

Address: 86 SOUTH COBB DR, MARIETTA, GA, 30063

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $1,344,522,466

Exercised Options: $1,344,522,466

Current Obligation: $1,335,868,198

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline