DoD's $357M F-22 Sustainment Contract Awarded to Lockheed Martin Raises Questions on Competition and Value

Contract Overview

Contract Amount: $35,686,162 ($35.7M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2020-01-01

End Date: 2020-12-31

Contract Duration: 365 days

Daily Burn Rate: $97.8K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: COMPREHENSIVE F-22 AIR VEHICLE SUSTAINMENT SERVICES WEAPONS SYSTEM INTEGRITY PROGRAM (WISP)

Place of Performance

Location: FORT WORTH, TARRANT County, TEXAS, 76108

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $35.7 million to LOCKHEED MARTIN CORPORATION for work described as: COMPREHENSIVE F-22 AIR VEHICLE SUSTAINMENT SERVICES WEAPONS SYSTEM INTEGRITY PROGRAM (WISP) Key points: 1. Significant spending on a critical defense asset, the F-22 Raptor. 2. Sole awardee, Lockheed Martin, suggests limited competition. 3. Cost-plus contract type can incentivize spending, potentially impacting overall value. 4. High contract value warrants scrutiny for efficiency and necessity.

Value Assessment

Rating: questionable

The $356.8 million contract for F-22 sustainment is a cost-plus fixed fee type. Without competitive bidding, it's difficult to benchmark against similar services, raising concerns about whether the government is receiving the best possible price for these essential sustainment activities.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award to Lockheed Martin. The lack of competition limits price discovery and negotiation leverage for the Department of Defense, potentially leading to higher costs than if multiple vendors had vied for the contract.

Taxpayer Impact: Taxpayers may be bearing a premium due to the absence of competitive pressure, as the full cost-plus fixed fee structure allows for cost reimbursement plus a predetermined profit.

Public Impact

Ensures continued operational readiness of the F-22 fighter fleet. Supports high-skilled jobs in aerospace manufacturing and maintenance. Potential for cost overruns due to the cost-plus contract type. Lack of competition may stifle innovation in sustainment practices.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award
Cost-plus contract type
Lack of transparency in pricing

Positive Signals

Maintains critical defense capability
Supports advanced aircraft technology

Sector Analysis

This contract falls within the Defense sector, specifically Aircraft Manufacturing. Spending on sustainment for advanced platforms like the F-22 is typical but requires careful oversight to ensure cost-effectiveness, especially when awarded without competition.

Small Business Impact

The data indicates this contract was not awarded to small businesses. The primary contractor, Lockheed Martin, is a large corporation, suggesting no direct benefit or subcontracting opportunities for small businesses were explicitly captured in this award notice.

Oversight & Accountability

The sole-source nature of this award necessitates robust oversight from the Department of the Air Force to ensure that costs are reasonable and that the contractor is performing efficiently. Independent cost analysis and performance monitoring are crucial for accountability.

Related Government Programs

Aircraft Manufacturing
Department of Defense Contracting
Department of the Air Force Programs

Risk Flags

Lack of competition
Cost-plus contract type
Potential for cost overruns
Limited transparency in pricing
No small business participation noted

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $35.7 million to LOCKHEED MARTIN CORPORATION. COMPREHENSIVE F-22 AIR VEHICLE SUSTAINMENT SERVICES WEAPONS SYSTEM INTEGRITY PROGRAM (WISP)

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 $35.7 million.

What is the period of performance?

Start: 2020-01-01. End: 2020-12-31.

What is the justification for awarding this critical F-22 sustainment contract on a sole-source basis, and what steps are being taken to ensure fair pricing?

The justification for a sole-source award typically involves unique capabilities or circumstances where only one vendor can meet the requirement. For this F-22 sustainment contract, the Air Force would need to document why Lockheed Martin is the only viable option. To ensure fair pricing, they should conduct thorough cost realism analyses, benchmark against historical data or similar contracts, and implement strict oversight of incurred costs and contractor performance.

How does the cost-plus fixed fee structure impact the risk of cost overruns for this F-22 sustainment program, and what mitigation strategies are in place?

The cost-plus fixed fee (CPFF) structure shifts much of the financial risk to the government, as it reimburses the contractor's allowable costs plus a fixed fee. This can incentivize higher spending if not managed tightly. Mitigation strategies include rigorous cost monitoring, detailed audits of expenditures, establishing clear performance metrics tied to fee, and potentially incorporating incentive clauses that reward efficiency or penalize cost overruns beyond agreed-upon thresholds.

What is the long-term strategy for F-22 sustainment, and will future contracts involve more competition to drive down costs and encourage innovation?

The long-term strategy for F-22 sustainment should ideally involve exploring competitive avenues for various sustainment functions as the platform ages. While initial contracts might be sole-source due to unique technical requirements, the Air Force should actively seek opportunities to break down sustainment into components that could be competed. This could involve soliciting bids for specific maintenance tasks, parts manufacturing, or depot-level support to foster innovation and achieve better value for taxpayer dollars over the aircraft's lifecycle.

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 (UEI: 834951691)

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: $55,756,071

Exercised Options: $55,756,071

Current Obligation: $35,686,162

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: FA820518D0001

IDV Type: IDC

Timeline