DoD's $295M F-22 Sustainment Contract Awarded to Lockheed Martin Amidst Limited Competition

Contract Overview

Contract Amount: $29,485,983 ($29.5M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2019-10-11

End Date: 2027-12-31

Contract Duration: 3,003 days

Daily Burn Rate: $9.8K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: F-22 SUSTAINMENT: RAMP RETROFIT AND COMBINED TEST FLEET

Place of Performance

Location: FORT WORTH, TARRANT County, TEXAS, 76108

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $29.5 million to LOCKHEED MARTIN CORPORATION for work described as: F-22 SUSTAINMENT: RAMP RETROFIT AND COMBINED TEST FLEET Key points: 1. Contract awarded on a cost-plus-fixed-fee basis, indicating potential for cost overruns. 2. Sole-source award limits opportunities for competitive pricing and innovation. 3. Long contract duration (over 8 years) suggests a sustained need for F-22 sustainment. 4. Focus on ramp retrofit and test fleet operations highlights critical maintenance requirements. 5. Contractor's established role in F-22 production suggests deep institutional knowledge. 6. Lack of competition raises concerns about optimal value for taxpayer dollars.

Value Assessment

Rating: questionable

This contract's value is difficult to benchmark due to its sole-source nature and the specialized requirements of F-22 sustainment. The cost-plus-fixed-fee structure, while common for complex defense systems, can lead to higher final costs than fixed-price contracts if not managed tightly. Without competitive bids, it's challenging to definitively assess if the pricing reflects fair market value for the services rendered.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one bidder, Lockheed Martin Corporation, was considered. This approach is typically justified when a single contractor possesses unique capabilities or intellectual property essential for the requirement, such as in the case of highly specialized aircraft sustainment. The absence of competition means that price discovery through market forces was not utilized.

Taxpayer Impact: Sole-source awards can result in higher costs for taxpayers as there is no competitive pressure to drive down prices. This necessitates robust government oversight to ensure costs are reasonable.

Public Impact

The U.S. Air Force benefits from continued operational readiness of the F-22 Raptor fleet. Services include critical ramp retrofits and combined test fleet operations, ensuring aircraft maintainability. The primary geographic impact is within the United States, supporting Air Force bases. This contract supports a highly specialized workforce within the aerospace and defense sector, particularly those with expertise in F-22 aircraft.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially leading to higher costs.
Cost-plus-fixed-fee structure carries inherent risk of cost escalation if not closely monitored.
Long-term nature of the contract may reduce flexibility for future cost-saving opportunities.
Lack of transparency in pricing due to sole-source competition.
Dependence on a single contractor for critical sustainment functions.

Positive Signals

Contractor has extensive experience with the F-22 platform, ensuring specialized knowledge.
Focus on sustainment ensures continued operational capability of a key strategic asset.
Clear definition of services (ramp retrofit, test fleet) provides specific deliverables.
Long contract duration allows for stable planning and execution of sustainment activities.

Sector Analysis

The F-22 Raptor is a fifth-generation stealth tactical fighter aircraft, representing a significant investment in advanced air superiority capabilities. Its sustainment requires highly specialized technical expertise and access to proprietary data, often limiting the pool of qualified contractors. The aerospace and defense sector, particularly aircraft manufacturing and maintenance, is characterized by high barriers to entry and significant government investment. This contract fits within the broader defense spending category for aircraft sustainment and modernization.

Small Business Impact

This contract does not appear to include specific small business set-asides, nor is there an indication of significant subcontracting opportunities for small businesses based on the provided data. As a sole-source award to a large prime contractor, the direct impact on the small business ecosystem is likely minimal unless the prime contractor actively engages small businesses for specialized support services not captured in the primary contract details.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Air Force and the Department of Defense's contracting and program management offices. Accountability measures would be tied to the terms of the Cost Plus Fixed Fee contract, requiring detailed reporting from Lockheed Martin on costs incurred and progress made. Transparency may be limited due to the sole-source nature, but contract performance reviews and audits by government agencies would be standard oversight mechanisms. Inspector General involvement is possible for investigations into fraud, waste, or abuse.

Related Government Programs

F-22 Raptor Operations and Support
Air Force Aircraft Maintenance Contracts
Defense Contractor Sustainment Services
Advanced Tactical Aircraft Programs

Risk Flags

Sole-source award
Cost-plus-fixed-fee contract type
Long contract duration
Critical defense asset sustainment

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $29.5 million to LOCKHEED MARTIN CORPORATION. F-22 SUSTAINMENT: RAMP RETROFIT AND COMBINED TEST FLEET

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 $29.5 million.

What is the period of performance?

Start: 2019-10-11. End: 2027-12-31.

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

Lockheed Martin Corporation, as the original equipment manufacturer (OEM) for the F-22 Raptor, has an extensive and established track record in its sustainment. The company has been the primary contractor for F-22 sustainment activities since the aircraft's inception. This includes a long history of providing maintenance, repair, and overhaul (MRO) services, as well as managing the supply chain for spare parts. Their deep institutional knowledge of the F-22's complex systems, including its stealth technology and advanced avionics, makes them uniquely positioned to handle sustainment requirements. Past performance data, often detailed in contract award justifications and performance evaluations, would typically highlight their ability to meet technical requirements and delivery schedules, though specific cost performance can vary across contracts.

How does the pricing structure (Cost Plus Fixed Fee) compare to other F-22 sustainment contracts?

The Cost Plus Fixed Fee (CPFF) pricing structure is common for complex, long-duration defense contracts where the scope of work may evolve or where precise cost estimation is challenging upfront, such as in sustainment and upgrade programs. For F-22 sustainment, it's likely that previous contracts also utilized CPFF or similar cost-reimbursement structures due to the specialized nature of the aircraft and the need for flexibility. While CPFF provides the contractor with a guaranteed profit margin (the fixed fee) regardless of actual costs, it places a significant burden on the government to meticulously audit and control costs. Compared to fixed-price contracts, CPFF generally offers less incentive for the contractor to minimize costs, potentially leading to higher overall expenditures if not managed rigorously. Benchmarking specific dollar amounts is difficult without access to detailed historical contract data and the specific services rendered under each agreement.

What are the primary risks associated with this sole-source contract for the F-22 program?

The primary risk associated with this sole-source contract is the lack of competitive pressure, which can lead to inflated costs for taxpayers. Without competing bids, there is less incentive for Lockheed Martin to optimize efficiency or offer the most competitive pricing. Another significant risk is vendor lock-in; the government becomes heavily reliant on a single provider for critical sustainment services, potentially limiting future flexibility and negotiation leverage. Furthermore, the Cost Plus Fixed Fee structure introduces the risk of cost overruns, as the contractor is reimbursed for incurred costs plus a predetermined fee. Effective government oversight, including rigorous cost auditing and performance monitoring, is crucial to mitigate these risks. The long duration of the contract also presents a risk if technological advancements or changes in operational requirements emerge that are not adequately addressed by the current agreement.

How effective is the Air Force in overseeing sole-source contracts for major weapon systems like the F-22?

The effectiveness of the Air Force in overseeing sole-source contracts for major weapon systems like the F-22 can vary. The Air Force employs program management offices (PMOs), contracting officers, and financial auditors to provide oversight. Key oversight mechanisms include detailed contract clauses, performance metrics, regular reporting requirements, and audits of contractor costs. For sole-source contracts, the emphasis is heavily placed on ensuring the reasonableness of costs and the necessity of the services procured. However, the inherent lack of competition means that the government's leverage is primarily through contract administration rather than market forces. Success often depends on the expertise of the contracting team, the robustness of the auditing process, and the contractor's willingness to cooperate transparently. Inspector General investigations also serve as a critical, albeit reactive, oversight function.

What are the historical spending patterns for F-22 sustainment, and how does this contract fit?

Historical spending on F-22 sustainment has been substantial, reflecting the complexity and advanced nature of the aircraft. The total cost of ownership for the F-22 program, including sustainment, has been a subject of significant discussion and analysis over its lifecycle. This particular contract, valued at approximately $295 million, represents a segment of the overall sustainment spending for the F-22 fleet, focusing on specific activities like ramp retrofits and test fleet operations over its duration (ending in late 2027). It aligns with the ongoing need to maintain the operational readiness and technological relevance of the F-22 fleet. Annual sustainment costs for the F-22 have historically run into hundreds of millions of dollars, making this contract a component within that larger budgetary context. The trend has generally been towards ensuring the longevity and effectiveness of this strategic asset through continuous maintenance and upgrades.

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

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: $29,485,983

Exercised Options: $29,485,983

Current Obligation: $29,485,983

Subaward Activity

Number of Subawards: 1

Total Subaward Amount: $2,095,266

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