Lockheed Martin awarded $278M contract for aircraft accessories and components, primarily for airframes

Contract Overview

Contract Amount: $27,805,303 ($27.8M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2004-05-17

End Date: 2011-03-11

Contract Duration: 2,489 days

Daily Burn Rate: $11.2K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 200408!000060!5700!GD80 !OC-ALC/LHD (B52) !FA810704C0010 !A!N! !N! ! !20040517!20040930!002232973!002232973!834951691!N!LOCKHEED MARTIN CORPORATION !1801 STATE RT 17C !OWEGO !NY!13827!55882!107!36!OWEGO !TIOGA !NEW YORK !+000004878118!N!N!000000000000!1680!MSL AIRCRAFT ACCESSORIES AND COMPONENTS !A1A!AIRFRAMES AND SPARES !000 !* !336411!E! !3! ! ! ! ! !99990909!B! ! !A! !D!N!J!2!001!N!1B!A!Y!Z! ! !N!C!N! ! ! !A!A!A!A!000!A!B!N! ! ! !Y! ! !0001! !

Place of Performance

Location: OWEGO, TIOGA County, NEW YORK, 13827

State: New York Government Spending

Plain-Language Summary

Department of Defense obligated $27.8 million to LOCKHEED MARTIN CORPORATION for work described as: 200408!000060!5700!GD80 !OC-ALC/LHD (B52) !FA810704C0010 !A!N! !N! ! !20040517!20040930!002232973!002232973!834951691!N!LOCKHEED MARTIN CORPORATION !1801 STATE RT 17C !OWEGO !NY!13827!55882!107!36!OWEGO !TIOG… Key points: 1. Contract awarded on a firm-fixed-price basis, indicating clear cost expectations. 2. Sole-source award suggests potential lack of competition, impacting price discovery. 3. Long contract duration of 2489 days (approx. 6.8 years) implies significant program commitment. 4. Awarded by the Department of Defense, highlighting its role in national security. 5. Contract value of $278M positions it as a substantial investment in aviation sustainment. 6. Focus on aircraft accessories and components points to critical support for existing fleets.

Value Assessment

Rating: fair

The contract value of $278,053,030 for aircraft accessories and components appears substantial. Without specific benchmarks for similar sole-source awards or detailed cost breakdowns, a precise value-for-money assessment is challenging. However, the firm-fixed-price structure aims to control costs. The long duration suggests a need for sustained supply, but also raises questions about potential overpricing if market conditions change significantly over the contract's life. Further analysis would require comparing unit costs for specific components against industry standards or other government contracts.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. This typically occurs when a specific contractor possesses unique capabilities, proprietary technology, or is the sole provider of a necessary item. The lack of competition means that the government did not benefit from the price reductions and innovation that can arise from a competitive bidding process. This approach can lead to higher prices than might be achieved in a fully competed environment.

Taxpayer Impact: For taxpayers, a sole-source award means there is a reduced likelihood of achieving the lowest possible price for the goods or services. The government relies on negotiation and oversight to ensure fair pricing, which may not be as effective as market-driven competition.

Public Impact

The primary beneficiaries are the Department of Defense and its various branches, ensuring the continued operational readiness of aircraft fleets. Services delivered include the provision of essential aircraft accessories and components, crucial for maintenance, repair, and operational sustainment. The geographic impact is national, supporting military aviation operations across various bases and potentially overseas deployments. Workforce implications include sustained employment at Lockheed Martin facilities involved in manufacturing and supplying these components, as well as potential impacts on supporting industries.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially leading to higher costs for taxpayers.
Long contract duration increases exposure to potential price escalations or changes in market demand.
Lack of detailed public information on specific components and their pricing makes independent value assessment difficult.

Positive Signals

Firm-fixed-price contract provides cost certainty for the government.
Award to a major defense contractor like Lockheed Martin suggests established capabilities and reliability.
Focus on essential aircraft components ensures critical support for military aviation readiness.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on aircraft components. The market for such components is characterized by high technical requirements, stringent quality control, and often long production cycles. Major defense contractors like Lockheed Martin dominate this space due to their established infrastructure, R&D capabilities, and existing relationships with government agencies. Comparable spending benchmarks would involve analyzing other large-scale sustainment contracts for military aircraft, which often run into hundreds of millions or billions of dollars over their lifecycles.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by the 'ss' field being false. Furthermore, the prime contractor is Lockheed Martin Corporation, a large aerospace company. While large prime contractors are often required to subcontract a portion of their work to small businesses, the specific subcontracting plan and its impact on the small business ecosystem are not detailed in the provided data. Without this information, it's difficult to assess the extent to which this contract benefits small businesses.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contract management and inspection agencies, such as the Defense Contract Management Agency (DCMA). Accountability measures are embedded in the firm-fixed-price contract terms, requiring Lockheed Martin to deliver specified components at the agreed-upon price. Transparency is limited due to the sole-source nature and the proprietary information typically involved in defense manufacturing. Inspector General (IG) jurisdiction would apply to investigations of fraud, waste, or abuse related to the contract.

Related Government Programs

Aircraft Parts and Auxiliary Equipment Manufacturing
Defense Logistics and Sustainment Programs
Air Force Aircraft Maintenance and Repair Contracts
Aerospace Component Supply Chain Management

Risk Flags

Sole-source award may limit price competition.
Long contract duration increases risk exposure.
Lack of detailed cost breakdown hinders value assessment.
Potential for vendor lock-in due to sole-source nature.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $27.8 million to LOCKHEED MARTIN CORPORATION. 200408!000060!5700!GD80 !OC-ALC/LHD (B52) !FA810704C0010 !A!N! !N! ! !20040517!20040930!002232973!002232973!834951691!N!LOCKHEED MARTIN CORPORATION !1801 STATE RT 17C !OWEGO !NY!13827!55882!107!36!OWEGO !TIOGA !NEW YORK !+000004878118!N!N!000000000000!1680!MSL AIRCRAFT ACCESSORIES AND COMPONENTS !A1A!AIRFRAMES AND SPARES !000 !* !336411!E! !3! ! ! ! ! !999

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 $27.8 million.

What is the period of performance?

Start: 2004-05-17. End: 2011-03-11.

What is Lockheed Martin Corporation's track record with the Department of Defense for similar aircraft component contracts?

Lockheed Martin Corporation has an extensive and long-standing track record with the Department of Defense, serving as a primary contractor for numerous aircraft platforms and associated sustainment programs. Their history includes the production of major airframes (like the F-35, F-16, C-130), as well as a vast array of components, systems, and support services. For aircraft accessories and components specifically, Lockheed Martin has consistently been awarded large-value contracts due to their integrated capabilities, from design and manufacturing to lifecycle support. Their performance is often characterized by complex, high-stakes programs where reliability and technical expertise are paramount. While specific performance metrics for this particular contract are not detailed, their overall relationship with the DoD is one of deep integration and significant contract volume, reflecting a history of delivering critical aviation hardware and services.

How does the $278 million contract value compare to other government spending on aircraft accessories and components?

The $278 million contract value for aircraft accessories and components is substantial, placing it among significant investments in defense sustainment. To benchmark this value effectively, one would need to compare it against the average contract size for similar sole-source awards within the 'Aircraft Manufacturing' (NAICS 336411) or related product service codes (PSCs) over a comparable period. Government spending on aircraft parts and components is a continuous and large-scale activity, often involving billions of dollars annually across all military branches. A $278 million contract, especially one with a long duration (nearly 7 years), represents a considerable portion of annual spending for specific types of components or for a particular fleet's sustainment needs. Without access to aggregated spending data for this specific category and competition type, it's difficult to definitively state if it's high or low, but it signifies a major commitment to ensuring the availability of critical aircraft parts.

What are the primary risks associated with this sole-source contract for aircraft components?

The primary risks associated with this sole-source contract are centered around cost and potential lack of innovation. Since the contract was not competed, there is a heightened risk that the government may be paying a premium compared to what could have been achieved through competitive bidding. The sole-source nature implies that Lockheed Martin may have unique access or control over the required components, reducing the government's leverage in price negotiations. Furthermore, the absence of competition can stifle innovation, as the contractor may have less incentive to develop more cost-effective or technologically advanced solutions. Another risk is vendor lock-in, where the government becomes dependent on a single supplier, making it difficult and costly to switch providers in the future. Finally, the long duration of the contract (2489 days) increases the risk of cost overruns due to unforeseen market fluctuations or changes in material costs over the extended period.

How effective is the firm-fixed-price (FFP) contract type in managing costs for aircraft components over a long duration?

The Firm-Fixed-Price (FFP) contract type is generally effective in providing cost certainty for the government, especially for well-defined requirements like aircraft components. Under an FFP agreement, the contractor assumes the risk of cost overruns, and the government pays a set price regardless of the contractor's actual costs. This structure incentivizes the contractor to manage their expenses efficiently. For a long-duration contract like this one (2489 days), the FFP structure helps lock in the price, protecting the government from potential inflation or rising material costs over the contract's life. However, the effectiveness can be diminished if the initial price is not accurately estimated or if significant unforeseen changes occur that necessitate contract modifications. In a sole-source scenario, the government's ability to negotiate a fair initial FFP is crucial, as there's no competitive pressure to drive the price down.

What are the historical spending patterns for aircraft accessories and components by the Department of Defense?

Historical spending patterns by the Department of Defense (DoD) on aircraft accessories and components are characterized by consistent, high-volume procurement driven by the need to maintain a large and complex military aviation fleet. The DoD allocates significant portions of its budget to sustainment, which includes spare parts, repair services, and upgrades for aircraft ranging from fighter jets and bombers to transport planes and helicopters. Spending in this category is often influenced by factors such as the age of the fleet, operational tempo, geopolitical demands, and the introduction of new aircraft platforms. Contracts for components can range from small, individual part orders to multi-billion dollar sustainment programs covering entire fleets over decades. The trend has generally been towards longer-term sustainment contracts and performance-based logistics (PBL) arrangements aimed at improving readiness and reducing costs, though traditional component supply contracts remain prevalent. The data indicates a continuous need for these parts, making it a stable, albeit substantial, area of defense expenditure.

Industry Classification

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

Product/Service Code: AEROSPACE CRAFT COMPONENTS AND ACCESSORIES

Competition & Pricing

Extent Competed: NOT COMPETED

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Contractor Details

Parent Company: Lockheed Martin Corp (UEI: 834951691)

Address: 1801 STATE RT 17C, OWEGO, NY, 23

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Cost or Pricing Data: NO

Timeline