DoD's F-22 sustainment contract awarded to Lockheed Martin for $19.1M, raising value-for-money questions

Contract Overview

Contract Amount: $19,137,540 ($19.1M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2018-12-11

End Date: 2019-12-19

Contract Duration: 373 days

Daily Burn Rate: $51.3K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: F-22 WEAPON SYSTEM SUSTAINMENT

Place of Performance

Location: FORT WORTH, TARRANT County, TEXAS, 76108

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $19.1 million to LOCKHEED MARTIN CORPORATION for work described as: F-22 WEAPON SYSTEM SUSTAINMENT Key points: 1. The contract's sole-source nature limits competitive pressure, potentially impacting cost-effectiveness. 2. Performance context is crucial, as sustainment costs can fluctuate significantly based on operational tempo. 3. Risk indicators include the long-term reliance on a single provider for a critical defense asset. 4. Sector positioning highlights the defense industry's reliance on established prime contractors for complex systems. 5. Value-for-money is difficult to assess without comparable sole-source sustainment contracts for similar advanced aircraft.

Value Assessment

Rating: questionable

Assessing the value-for-money for this sole-source contract is challenging without transparent pricing benchmarks. The cost-plus-fixed-fee structure can incentivize cost increases, though the fixed fee provides some cost certainty. Comparing this to other sole-source sustainment contracts for advanced fighter jets would be necessary for a more robust assessment. The total award amount of $19.1M for a one-year period suggests a significant investment in maintaining the F-22 fleet.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning Lockheed Martin was the only bidder. This approach is often used for specialized sustainment of complex weapon systems where the original equipment manufacturer holds unique knowledge and capabilities. However, the lack of competition means there was no opportunity for price discovery through a bidding process, which can lead to higher costs for the government.

Taxpayer Impact: The absence of competition for this critical defense sustainment contract means taxpayers may be paying a premium, as there was no market pressure to drive down prices.

Public Impact

The U.S. Air Force benefits from the continued operational readiness of the F-22 Raptor fighter aircraft. Services delivered include maintenance, repair, and logistics support essential for the F-22 weapon system. Geographic impact is primarily within the United States, supporting Air Force bases where F-22s are stationed. Workforce implications include the employment of skilled technicians and engineers at Lockheed Martin facilities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing.
Cost-plus-fixed-fee contract type can incentivize higher spending.
Lack of transparency in pricing for sole-source sustainment.

Positive Signals

Ensures sustainment of a critical national security asset (F-22).
Leverages incumbent contractor's specialized knowledge of the F-22 system.
Contract provides a defined period of support, allowing for planning.

Sector Analysis

The aerospace and defense sector is characterized by high barriers to entry and long product life cycles. Sustainment contracts for advanced platforms like the F-22 are crucial for maintaining operational readiness and represent a significant portion of defense spending. This contract fits within the broader category of aircraft manufacturing and support services, where prime contractors often hold sole-source positions for specialized maintenance due to proprietary knowledge and technical expertise.

Small Business Impact

This contract does not appear to have a small business set-aside. Given the sole-source nature and the specialized requirements for F-22 weapon system sustainment, it is unlikely that small businesses would be primary contractors. Subcontracting opportunities for small businesses may exist, but their extent and impact on the small business ecosystem are not detailed in the provided data.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Air Force's contracting and program management offices. Accountability measures would be tied to contract performance metrics and adherence to the cost-plus-fixed-fee structure. Transparency is limited due to the sole-source nature, but contract modifications and financial reporting would be subject to internal DoD oversight and potentially the Government Accountability Office (GAO) if protests or audits occur.

Related Government Programs

F-22 Raptor Program
Aircraft Weapon Systems Sustainment
Aerospace Manufacturing and Support
Department of Defense Logistics

Risk Flags

Sole-source award
Cost-plus-fixed-fee contract type
Lack of competitive bidding

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $19.1 million to LOCKHEED MARTIN CORPORATION. F-22 WEAPON SYSTEM SUSTAINMENT

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 $19.1 million.

What is the period of performance?

Start: 2018-12-11. End: 2019-12-19.

What is Lockheed Martin's track record with F-22 sustainment contracts?

Lockheed Martin Corporation, as the original equipment manufacturer (OEM) for the F-22 Raptor, has a long-standing and exclusive track record in sustaining the F-22 weapon system. They have been the primary provider of logistics, maintenance, repair, and upgrade services since the aircraft's inception. Their deep institutional knowledge and proprietary data are critical for the F-22's continued operational readiness. This sole-source relationship is typical for highly specialized, complex defense platforms where the OEM possesses unique expertise and intellectual property that cannot be easily replicated by other firms.

How does the $19.1M award compare to previous F-22 sustainment spending?

The provided data indicates a $19.1 million award for the period of December 2018 to December 2019. To compare this to previous spending, one would need historical data on prior F-22 sustainment contracts awarded to Lockheed Martin. Typically, sustainment costs for advanced fighter jets can fluctuate year-over-year based on operational tempo, required maintenance, and any planned upgrades or modifications. Without access to a multi-year spending history for the F-22 program, it is difficult to determine if this $19.1 million figure represents an increase, decrease, or stable level of investment compared to prior periods.

What are the primary risks associated with this sole-source sustainment contract?

The primary risk associated with this sole-source contract is the lack of competitive pressure, which can lead to inflated costs and reduced efficiency. Taxpayers may be overpaying for sustainment services because there is no market mechanism to ensure competitive pricing. Another risk is vendor lock-in; the government becomes highly dependent on Lockheed Martin for critical F-22 support, potentially limiting its leverage in future negotiations. Furthermore, if Lockheed Martin experiences financial difficulties or strategic shifts, it could impact the F-22's sustainment, posing a risk to national security readiness.

How effective is the cost-plus-fixed-fee (CPFF) contract type for weapon system sustainment?

The Cost-Plus-Fixed-Fee (CPFF) contract type aims to provide a balance between cost control and contractor incentive. The government agrees to pay the contractor's allowable costs plus a fixed fee, which represents the contractor's profit. This structure can be effective when the scope of work is not precisely defined, as is often the case with complex sustainment. The fixed fee provides the contractor with an incentive to control costs, as their profit is predetermined. However, it can also lead to cost overruns if the initial cost estimates are inaccurate, and the government bears the risk of allowable cost increases. For sustainment, it offers a degree of predictability in profit while allowing for flexibility in addressing unforeseen maintenance needs.

What is the strategic importance of sustaining the F-22 weapon system?

The F-22 Raptor is a critical component of U.S. air superiority, designed to engage and defeat advanced air threats. Its stealth capabilities, speed, and advanced avionics make it a unique and indispensable asset in modern air combat. Sustaining the F-22 weapon system is paramount for maintaining air dominance, deterring potential adversaries, and ensuring the readiness of U.S. air power. The aircraft's advanced technology requires specialized and continuous support to remain operational and effective, making sustainment contracts like this one vital for national security.

Are there any alternative sustainment strategies for the F-22 that could be explored?

Exploring alternative sustainment strategies for the F-22 could involve several approaches, though they are challenging due to the aircraft's complexity and Lockheed Martin's OEM status. One possibility is to introduce more competition for specific support elements, such as depot-level maintenance or component repair, if feasible and cost-effective. Another strategy could be to incentivize Lockheed Martin to develop more performance-based logistics (PBL) contracts, where payment is tied to availability and performance outcomes rather than just costs incurred. Additionally, the Air Force could invest in organic (in-house) sustainment capabilities for certain tasks, though this requires significant investment in infrastructure and personnel.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft 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: COST PLUS FIXED FEE (U)

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: $19,137,540

Exercised Options: $19,137,540

Current Obligation: $19,137,540

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: FA820518D0001

IDV Type: IDC

Timeline