DoD awards $26.5M for KC-10 engine services, with Lockheed Martin securing the contract

Contract Overview

Contract Amount: $26,531,172 ($26.5M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2019-10-01

End Date: 2021-05-13

Contract Duration: 590 days

Daily Burn Rate: $45.0K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: KC-10 ENGINE MAINTENANCE, REPAIR, OVERHAUL, MODIFICATION, AND TESTING

Place of Performance

Location: FORT WORTH, TARRANT County, TEXAS, 76108

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $26.5 million to LOCKHEED MARTIN CORPORATION for work described as: KC-10 ENGINE MAINTENANCE, REPAIR, OVERHAUL, MODIFICATION, AND TESTING Key points: 1. Contract value represents a significant investment in maintaining critical aerial refueling capabilities. 2. The firm-fixed-price structure aims to control costs and provide predictability for the government. 3. Competition dynamics for specialized aerospace maintenance can influence pricing and innovation. 4. Performance context is crucial, as engine reliability directly impacts mission readiness. 5. This contract falls within the broader Defense sector's extensive spending on aircraft sustainment. 6. The duration of the contract suggests a long-term need for these specialized services.

Value Assessment

Rating: good

The contract value of $26.5 million for engine maintenance, repair, overhaul, modification, and testing of KC-10 aircraft appears reasonable given the specialized nature of the services. Benchmarking against similar complex aerospace maintenance contracts would provide a more precise value-for-money assessment. The firm-fixed-price (FFP) contract type suggests that the contractor bears the risk of cost overruns, which can be advantageous for the government if managed effectively. However, without detailed cost breakdowns or comparisons to industry standards for specific engine components or services, a definitive value assessment is challenging.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple qualified bidders had the opportunity to submit proposals. This competitive process is generally expected to drive down prices and encourage the selection of the most capable and cost-effective solution. The number of bidders is not specified, but the 'full and open' designation suggests a robust competitive environment. This approach allows the government to leverage the market to its fullest extent.

Taxpayer Impact: Full and open competition is beneficial for taxpayers as it promotes a level playing field, encourages competitive pricing, and increases the likelihood of obtaining the best value for public funds.

Public Impact

The primary beneficiaries are the U.S. Air Force units operating the KC-10 Extender aircraft, ensuring their operational readiness. Services delivered include essential maintenance, repair, overhaul, modification, and testing of KC-10 engines. The geographic impact is likely centered around bases where KC-10 aircraft are stationed and maintained. Workforce implications include the need for highly skilled technicians and engineers specializing in aerospace propulsion systems.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if unforeseen technical issues arise during complex overhauls.
Dependence on a single contractor for critical, specialized engine maintenance could pose supply chain risks.
Ensuring consistent quality and adherence to stringent aerospace standards throughout the contract lifecycle.

Positive Signals

Firm-fixed-price contract structure provides cost certainty for the government.
Full and open competition suggests a competitive environment that can lead to better pricing.
Award to a major defense contractor like Lockheed Martin implies access to significant technical expertise and resources.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on aircraft parts and auxiliary equipment. The market for specialized aircraft engine maintenance is characterized by high barriers to entry due to technical expertise, certifications, and capital investment. Spending in this area is critical for maintaining the operational readiness of military fleets. Comparable spending benchmarks would involve analyzing other contracts for similar engine types or aircraft platforms across different branches of the military.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). Lockheed Martin Corporation is a large prime contractor. While the prime contract is not a small business set-aside, there may be opportunities for small businesses to participate as subcontractors to Lockheed Martin, depending on their subcontracting plan and the specific needs for specialized services or components.

Oversight & Accountability

Oversight for this contract is likely managed by the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor compliance with contract terms and quality standards. Accountability measures would include performance reviews, adherence to delivery schedules, and quality control inspections. Transparency is facilitated through contract award databases and reporting requirements, though specific details of the maintenance performed may be sensitive.

Related Government Programs

KC-10 Extender Sustainment Programs
Air Mobility Command Aircraft Maintenance
Aerospace Engine Repair and Overhaul Services
Defense Logistics Agency Aviation Support

Risk Flags

Potential for cost growth if unforeseen technical issues arise.
Dependence on sole-source provider for critical components or expertise.
Ensuring consistent quality and compliance with stringent aerospace standards.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $26.5 million to LOCKHEED MARTIN CORPORATION. KC-10 ENGINE MAINTENANCE, REPAIR, OVERHAUL, MODIFICATION, AND TESTING

Who is the contractor on this award?

The obligated recipient is LOCKHEED MARTIN CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $26.5 million.

What is the period of performance?

Start: 2019-10-01. End: 2021-05-13.

What is the historical spending trend for KC-10 engine maintenance and related services by the Department of Defense?

Analyzing historical spending for KC-10 engine maintenance requires accessing detailed contract databases over several fiscal years. Generally, sustainment costs for aging aircraft fleets like the KC-10 tend to increase over time due to wear and tear, the need for more frequent repairs, and the increasing scarcity of parts. The Department of Defense allocates significant portions of its budget to aircraft sustainment, which includes engine MRO (Maintenance, Repair, and Overhaul). Trends can be influenced by factors such as flight hours, operational tempo, and the introduction of new technologies or upgrades. Without specific historical data for this contract vehicle or similar ones, it's difficult to pinpoint exact trends, but it's reasonable to assume consistent, substantial investment is required to maintain the KC-10 fleet's readiness.

How does the awarded amount of $26.5 million compare to the estimated value or previous contract awards for similar KC-10 engine services?

Comparing the $26.5 million award requires access to prior contract data for KC-10 engine maintenance. If previous contracts for similar scope and duration were awarded at significantly lower or higher amounts, it would indicate a potential shift in market pricing, contractor performance, or the scope of work. For instance, if a prior contract for a similar period was $20 million, this award might suggest increased costs due to inflation, more extensive required modifications, or a less competitive bidding environment. Conversely, if previous contracts were higher, this award could represent better value. The firm-fixed-price nature of this contract also implies that the government has a clearer understanding of the total cost upfront compared to cost-plus contracts.

What are the key performance indicators (KPIs) used to assess the contractor's performance under this contract?

Key performance indicators (KPIs) for an engine maintenance contract typically focus on technical performance, schedule adherence, and cost control. For the KC-10 engine services, KPIs likely include metrics such as engine Mean Time Between Failures (MTBF), Mean Time To Repair (MTTR), on-time delivery of overhauled engines, adherence to technical specifications and quality standards (e.g., zero defects), and compliance with safety regulations. The government, through DCMA, would monitor these KPIs to ensure the contractor is meeting contractual obligations. Failure to meet critical KPIs could result in penalties, corrective action requests, or impact future contract awards.

What is Lockheed Martin Corporation's track record with Department of Defense engine maintenance contracts, particularly for large transport or tanker aircraft?

Lockheed Martin Corporation is a major defense contractor with extensive experience in aerospace manufacturing and sustainment, including engine maintenance for various military platforms. They have a long history of supporting complex aircraft systems for the DoD. While specific details on their performance for KC-10 engines would require a deep dive into past contract performance reports (e.g., Contractor Performance Assessment Reporting System - CPARS), their position as a prime contractor suggests a generally established capability. Their involvement often spans the lifecycle of aircraft, from production to long-term sustainment, indicating a significant capacity to handle large-scale maintenance and overhaul programs.

What are the potential risks associated with relying on a single contractor, Lockheed Martin, for such critical KC-10 engine services?

Relying on a single contractor, even a large one like Lockheed Martin, for critical KC-10 engine services presents several potential risks. These include a lack of competitive pressure on pricing and innovation over the long term, potential supply chain vulnerabilities if the contractor faces production or labor issues, and a reduced ability for the government to switch providers if performance degrades. There's also a risk of vendor lock-in, where the government becomes highly dependent on the contractor's proprietary knowledge and processes. Mitigation strategies often involve robust contract oversight, clear performance standards, and potentially developing organic government capabilities or fostering alternative sources where feasible.

How does the firm-fixed-price (FFP) contract type influence risk allocation and potential cost savings for the government in this engine maintenance scenario?

The firm-fixed-price (FFP) contract type allocates most of the cost risk to the contractor, Lockheed Martin, in this KC-10 engine maintenance contract. This means that Lockheed Martin is obligated to complete the work for the agreed-upon price, regardless of their actual costs. This structure provides the government with significant cost certainty and predictability, as the total expenditure is known upfront. Potential cost savings for the government arise because the contractor has a strong incentive to manage their costs efficiently and avoid overruns to maximize their profit. However, if the scope of work changes significantly, a change order process would be initiated, potentially impacting the total cost.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Other Aircraft Parts and Auxiliary Equipment Manufacturing

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp

Address: 1 LOCKHEED BLVD BLDG 10, FORT WORTH, TX, 76108

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $26,531,172

Exercised Options: $26,531,172

Current Obligation: $26,531,172

Actual Outlays: $3,365,450

Subaward Activity

Number of Subawards: 6

Total Subaward Amount: $5,231,955

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: FA810517D0002

IDV Type: IDC

Timeline