DoD awards $183M+ aircraft manufacturing contract to Lockheed Martin, raising questions about competition and value

Contract Overview

Contract Amount: $183,376,228 ($183.4M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2005-02-23

End Date: 2012-09-28

Contract Duration: 2,774 days

Daily Burn Rate: $66.1K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Place of Performance

Location: OWEGO, TIOGA County, NEW YORK, 13827

State: New York Government Spending

Plain-Language Summary

Department of Defense obligated $183.4 million to LOCKHEED MARTIN CORPORATION for work described as: Key points: 1. The contract's value, exceeding $183 million, warrants scrutiny for its alignment with market benchmarks. 2. Sole-source or limited competition awards can lead to higher prices and reduced innovation. 3. The long duration of the contract (2774 days) suggests a need for ongoing performance monitoring. 4. Fixed-price contracts can shift risk to the contractor, but require careful scope definition. 5. The absence of small business set-asides may limit opportunities for smaller firms in this sector. 6. The contract's focus on aircraft manufacturing places it within a critical defense industry segment.

Value Assessment

Rating: questionable

Benchmarking the value of this $183M+ aircraft manufacturing contract is challenging without specific details on the aircraft type and scope of work. However, given the 'NOT COMPETED' status, there's a risk that the pricing may not reflect the most advantageous terms achievable through a competitive process. The firm fixed-price structure suggests a defined scope, but the lack of competitive bids prevents a direct comparison to market rates or similar contracts awarded through open competition. Further analysis would require understanding the specific defense needs and the availability of alternative solutions.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a 'NOT COMPETED' basis, indicating a sole-source or limited competition procurement. This approach is typically used when only one responsible source can fulfill the requirement, or in cases of urgent need. The lack of multiple bidders means that price discovery through market forces was bypassed. While this can be justified under specific circumstances, it limits the government's ability to secure the best possible price and terms through a competitive bidding process.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive pressure. The government did not benefit from the potential cost savings and innovation that typically arise from a robust bidding environment.

Public Impact

The primary beneficiaries are the Department of Defense, receiving critical aircraft manufacturing capabilities. The contract supports the production and potential sustainment of specific aircraft platforms. The geographic impact is primarily centered around Lockheed Martin's facilities in New York. This contract likely supports a significant number of jobs within the aerospace and defense manufacturing workforce.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated costs for taxpayers.
Sole-source awards can reduce incentives for contractor efficiency and innovation.
Long contract duration requires robust oversight to ensure continued value and performance.
Absence of small business participation limits broader economic impact and opportunities.

Positive Signals

Firm fixed-price contract shifts some cost risk to the contractor.
Award to a major defense contractor suggests alignment with established capabilities.
Contract supports critical national defense needs in aircraft manufacturing.

Sector Analysis

The aerospace and defense sector is characterized by high barriers to entry, significant R&D investment, and long product development cycles. Aircraft manufacturing, a key sub-sector, is dominated by a few large, established players due to the complexity and capital intensity involved. This contract, valued at over $183 million, fits within the typical spending patterns for major defense procurement. Comparable spending benchmarks would depend heavily on the specific aircraft type and quantity, but large-scale defense manufacturing contracts often run into hundreds of millions or even billions of dollars.

Small Business Impact

The data indicates that this contract was not subject to small business set-asides (ss: false, sb: false). This suggests that the primary contractor, Lockheed Martin, is a large business, and there were no specific provisions to reserve a portion of the work for small businesses. While large prime contractors often engage small businesses as subcontractors, the absence of a direct set-aside means that opportunities for small businesses to compete for the prime contract itself were not prioritized in this procurement. This could limit the direct economic impact on the small business ecosystem for this specific award.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contract management and administration functions, potentially involving the Defense Contract Management Agency (DCMA). Given the 'NOT COMPETED' status and firm fixed-price nature, oversight would focus on ensuring contract compliance, monitoring performance against milestones, verifying deliverables, and managing any contract modifications. Transparency is generally maintained through contract databases, but detailed performance metrics and cost breakdowns may be less accessible for sole-source awards. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Aircraft Procurement, Air Force
Combat Vehicles and Related Equipment
Missiles, Guided Missiles and Related Equipment
Aircraft Components and Accessories
Defense Industrial Base

Risk Flags

Lack of Competition
Potential for Cost Overruns
Limited Transparency
Long Contract Duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $183.4 million to LOCKHEED MARTIN CORPORATION. See the official description on USAspending.

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 $183.4 million.

What is the period of performance?

Start: 2005-02-23. End: 2012-09-28.

What specific type of aircraft is being manufactured under this contract, and what is its intended use?

The provided data does not specify the exact type of aircraft being manufactured under this contract, only that the North American Industry Classification System (NAICS) code is 336411, which pertains to 'Aircraft Manufacturing'. This broad category encompasses the production of various types of aircraft, including military planes, helicopters, and potentially components. The intended use is implicitly military, given the awarding agency is the Department of Defense. To determine the specific aircraft and its role (e.g., fighter jet, transport, reconnaissance), further investigation into contract line item numbers (CLINs) or associated documentation would be necessary. Without this detail, assessing the strategic value and necessity of the procurement remains incomplete.

How does the $183 million contract value compare to similar aircraft manufacturing contracts awarded by the DoD in the past five years?

Comparing the $183 million value requires context regarding the specific aircraft and scope. However, the DoD frequently awards contracts for aircraft manufacturing that range from tens of millions for specialized components or upgrades to billions for new platforms or large fleet procurements. For instance, contracts for fighter jets like the F-35 or bombers like the B-21 involve significantly higher figures. Contracts for smaller aircraft, upgrades, or sustainment services might fall within or below the $183 million range. The 'NOT COMPETED' nature of this award makes direct value comparison difficult, as competitive bids often drive prices down. A comprehensive benchmark would necessitate identifying comparable sole-source awards for similar aircraft types and quantities, which is often challenging due to data limitations.

What are the key performance indicators (KPIs) and milestones associated with this contract, and how is Lockheed Martin's performance being tracked?

The provided data does not detail the specific Key Performance Indicators (KPIs) or milestones for this contract. However, for a firm fixed-price contract in aircraft manufacturing, typical KPIs would likely include adherence to production schedules, quality control metrics (e.g., defect rates, adherence to specifications), delivery timelines, and potentially performance related to specific aircraft capabilities or testing outcomes. Performance tracking would be managed by the contracting officer and potentially the Defense Contract Management Agency (DCMA). This would involve regular progress reviews, site visits, acceptance testing of delivered units, and monitoring of financial performance. The long duration (2774 days) implies a phased approach with multiple milestones.

Given the 'NOT COMPETED' status, what justification did the DoD provide for not seeking offers from multiple sources?

The data explicitly states the contract type as 'NOT COMPETED', which implies that the Department of Defense invoked a justification for other than full and open competition. Common justifications include: (1) only one responsible source exists due to unique capabilities or proprietary technology; (2) an urgent and compelling need that precludes full competition; (3) a national security requirement; or (4) specific circumstances outlined in the Federal Acquisition Regulation (FAR) Part 6. Without access to the specific contract file or Justification and Approval (J&A) document, the precise reason remains unknown. However, for major defense platforms like aircraft, sole-sourcing is often justified by the need for specialized expertise, existing infrastructure, or interoperability with current systems, which Lockheed Martin, as a primary defense contractor, likely possesses.

What is Lockheed Martin's track record with the DoD on similar aircraft manufacturing contracts, particularly regarding cost overruns and schedule adherence?

Lockheed Martin is a major defense contractor with an extensive history of producing aircraft for the DoD, including well-known platforms like the F-16, F-22, F-35, and C-130 variants. Their track record is complex; while they are capable of delivering advanced military aircraft, they have also faced scrutiny for cost overruns and schedule delays on large, complex programs, most notably the F-35 Joint Strike Fighter program. The F-35 program, in particular, has experienced significant budget increases and schedule slips over its lifecycle. However, for other programs or specific contract types, their performance may vary. The firm fixed-price nature of this $183M contract suggests an attempt to control costs, but Lockheed's history indicates that vigilance regarding schedule and budget is crucial for the DoD.

What is the estimated total spending on aircraft manufacturing (NAICS 336411) by the DoD over the last three fiscal years, and how does this contract fit into that trend?

The provided data does not include historical spending trends for NAICS code 336411 by the DoD. However, aircraft manufacturing is a substantial component of the defense budget. Publicly available reports from agencies like the Congressional Budget Office (CBO) or defense spending analyses often show billions of dollars allocated annually to aircraft procurement and related manufacturing. This $183 million contract, while significant, likely represents a fraction of the DoD's total annual investment in this sector. Its placement within the overall trend would depend on whether it represents a new program start, a continuation of an existing production line, or a specialized component order. Without broader spending data, it's difficult to assess if this contract signifies an increase, decrease, or stable level of activity in this specific area.

Industry Classification

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

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: 1801 STATE ROUTE 17C, OWEGO, NY, 13827

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline