DoD's $41M B-2 Defense Management System Repair Contract Awarded to Lockheed Martin

Contract Overview

Contract Amount: $41,092,469 ($41.1M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2018-07-09

End Date: 2021-09-20

Contract Duration: 1,169 days

Daily Burn Rate: $35.2K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: REPAIR OF B-2 DEFENSE MANAGEMENT SYSTEM

Place of Performance

Location: OWEGO, TIOGA County, NEW YORK, 13827

State: New York Government Spending

Plain-Language Summary

Department of Defense obligated $41.1 million to LOCKHEED MARTIN CORPORATION for work described as: REPAIR OF B-2 DEFENSE MANAGEMENT SYSTEM Key points: 1. Contract awarded to incumbent for critical B-2 system repair, suggesting potential lack of competition. 2. High contract value for specialized repair indicates significant reliance on contractor expertise. 3. Fixed-price contract type aims to control costs, but requires careful monitoring of scope creep. 4. Long duration of the contract (nearly 4 years) suggests a sustained need for these services. 5. Awarded by the Department of the Air Force, highlighting its importance to strategic air command. 6. The specific nature of the repair suggests a niche market with limited alternative providers.

Value Assessment

Rating: fair

The contract value of approximately $41 million for the repair of the B-2 Defense Management System appears substantial. Benchmarking this against similar specialized defense system repair contracts is challenging due to the unique nature of the B-2 platform. However, the firm fixed-price structure suggests an attempt to manage costs. Without more granular data on the specific repairs performed and their complexity, a definitive value-for-money assessment is difficult, but the award to the incumbent raises questions about potential cost efficiencies that might have been achieved through broader competition.

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. This is often justified for highly specialized equipment where only one contractor possesses the necessary knowledge, tooling, or proprietary information to perform the required services. In this case, Lockheed Martin, as the likely original equipment manufacturer or a highly specialized maintainer of the B-2's defense management system, was the only viable option. The lack of competition means that price discovery through market forces was absent.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as there is no competitive pressure to drive down prices. While justified in some cases for unique capabilities, it necessitates robust oversight to ensure fair pricing.

Public Impact

The primary beneficiaries are the U.S. Air Force's B-2 bomber fleet, ensuring operational readiness of a critical defense asset. Services delivered include the repair and maintenance of the B-2's complex defense management system, vital for its survivability and mission effectiveness. The geographic impact is national, supporting a key component of the U.S. strategic nuclear triad. Workforce implications include the need for highly skilled technicians and engineers with specialized knowledge of the B-2 system.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potentially increases costs for taxpayers.
Lack of competition may reduce incentives for the contractor to innovate or improve efficiency.
High reliance on a single contractor for critical system maintenance poses a supply chain risk.

Positive Signals

Award to incumbent likely ensures continuity of essential services for a critical defense platform.
Firm fixed-price contract provides cost certainty for the government, assuming scope is well-defined.
Specialized nature of the repair indicates a high level of technical expertise is being leveraged.

Sector Analysis

The aerospace and defense sector is characterized by high barriers to entry, significant R&D investment, and long product lifecycles. Contracts for maintaining and repairing advanced military platforms like the B-2 bomber fall into a specialized niche. Spending in this area is driven by national security requirements and the need to sustain aging but critical assets. Comparable spending benchmarks are difficult to establish due to the unique nature of the B-2 and its systems, but the overall defense maintenance and repair market is substantial.

Small Business Impact

This contract does not appear to have a small business set-aside component, nor is there explicit information regarding subcontracting opportunities for small businesses. Given the specialized nature of the B-2 defense management system repair, it is likely that the prime contractor, Lockheed Martin, performs the majority of the work in-house or through highly specialized, potentially large, subcontractors. This limits direct opportunities for small businesses within this specific contract's scope.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Air Force's contracting and program management offices. As a sole-source award, scrutiny would focus on ensuring the necessity of the sole-source justification and the reasonableness of the pricing. Transparency is generally maintained through contract award databases, but detailed performance metrics and cost breakdowns may be less publicly accessible for classified or sensitive defense systems. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

B-2 Bomber Sustainment Programs
Air Force Aircraft Maintenance and Repair
Defense Electronics Repair
Strategic Systems Maintenance

Risk Flags

Sole-source award may lead to higher costs.
Lack of competition limits market-driven efficiencies.
High dependency on a single contractor for critical system.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $41.1 million to LOCKHEED MARTIN CORPORATION. REPAIR OF B-2 DEFENSE MANAGEMENT SYSTEM

Who is the contractor on this award?

The obligated recipient is LOCKHEED MARTIN CORPORATION.

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 $41.1 million.

What is the period of performance?

Start: 2018-07-09. End: 2021-09-20.

What is Lockheed Martin's track record with B-2 system maintenance and repair?

Lockheed Martin is the prime contractor for the B-2 Spirit stealth bomber and has a long-standing relationship with the U.S. Air Force for its sustainment, including maintenance and repair of its complex systems. Their track record is intrinsically tied to the operational history of the B-2. Given their role as the original manufacturer and primary systems integrator, they possess the most comprehensive knowledge and historical data regarding the defense management system's performance, failure modes, and repair requirements. This deep institutional knowledge is a key factor often cited in justifying sole-source awards for such critical and specialized components, ensuring continuity and minimizing risks associated with transferring such sensitive maintenance tasks to other entities.

How does the $41 million contract value compare to historical spending on B-2 defense management system repairs?

Direct historical spending comparisons for this specific 'REPAIR OF B-2 DEFENSE MANAGEMENT SYSTEM' contract are not readily available in the provided data. However, the B-2 program itself is one of the most expensive aircraft programs in history, with high operating and sustainment costs due to its advanced technology and complexity. Annual sustainment costs for the B-2 fleet have historically been in the hundreds of millions of dollars. A single contract of $41 million for a specific system's repair over a period of nearly four years appears consistent with the high-value, specialized nature of maintaining such a unique strategic asset. Without access to detailed historical contract line items for this specific system, a precise year-over-year comparison is not feasible.

What are the primary risks associated with a sole-source award for critical defense system repair?

The primary risks associated with a sole-source award for critical defense system repair include potential overpricing due to the absence of competition, reduced incentive for the contractor to innovate or improve efficiency, and a heightened dependency on a single supplier. For taxpayers, this can translate to higher costs. From an operational standpoint, a sole-source situation can create vulnerabilities if the contractor experiences financial difficulties, operational disruptions, or decides to exit the market. Furthermore, it limits the government's ability to explore alternative solutions or leverage competitive market dynamics to secure better terms or technological advancements.

How effective is the firm fixed-price contract type in managing costs for this type of specialized repair?

The firm fixed-price (FFP) contract type is generally considered effective for managing costs when the scope of work is well-defined and unlikely to change significantly. For specialized repairs like the B-2 defense management system, FFP provides cost certainty to the government, as the contractor assumes the risk of cost overruns. However, its effectiveness hinges on the accuracy of the initial cost estimates and the clarity of the contract's specifications. If unforeseen technical challenges arise or the scope expands, the FFP structure can lead to disputes or potentially higher prices if change orders are necessary. Robust government oversight is crucial to ensure the scope remains controlled and the price remains fair.

What is the potential impact of this contract on the broader defense electronics repair market?

This contract, being a sole-source award to Lockheed Martin for a highly specific B-2 system, has a limited direct impact on the broader defense electronics repair market. It reinforces Lockheed Martin's dominant position within the B-2 ecosystem. The market for repairing highly specialized, proprietary defense systems is often segmented, with few companies possessing the requisite security clearances, technical expertise, and intellectual property access. While this contract doesn't foster broad competition, it ensures the continued availability of essential repair services for a critical national asset, indirectly supporting the specialized segment of the defense industrial base that caters to such unique platforms.

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: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp (UEI: 834951691)

Address: 1801 STATE RT 17 C, OWEGO, NY, 13827

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: $41,092,469

Exercised Options: $41,092,469

Current Obligation: $41,092,469

Subaward Activity

Number of Subawards: 74

Total Subaward Amount: $15,892,195

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA811913D0001

IDV Type: IDC

Timeline