DoD's $6.1M Lockheed Martin contract for aircraft manufacturing shows no competition, raising cost concerns

Contract Overview

Contract Amount: $6,132,749 ($6.1M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2019-10-31

End Date: 2028-02-29

Contract Duration: 3,043 days

Daily Burn Rate: $2.0K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: RAMP PROJECT AVS30R SINGLE SWITCH RESET IMPLEMENTATION

Place of Performance

Location: FORT WORTH, TARRANT County, TEXAS, 76108

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $6.1 million to LOCKHEED MARTIN CORPORATION for work described as: RAMP PROJECT AVS30R SINGLE SWITCH RESET IMPLEMENTATION Key points: 1. The contract's sole-source nature limits price discovery and potentially inflates costs. 2. Lack of competition suggests potential risks in contractor performance and innovation. 3. The extended duration of nearly 8.5 years warrants close monitoring for cost overruns. 4. Aircraft manufacturing is a high-value sector where competitive bidding is crucial for efficiency. 5. The contract's value, while significant, needs benchmarking against similar sole-source procurements.

Value Assessment

Rating: questionable

Benchmarking the value of this $6.1 million contract is challenging due to its sole-source nature and specific technical requirements within aircraft manufacturing. Without competitive bids, it's difficult to ascertain if the pricing reflects fair market value. The Cost Plus Fixed Fee (CPFF) contract type can incentivize cost overruns if not managed rigorously, especially over its long duration. Further analysis would require access to detailed cost breakdowns and comparisons with similar sole-source procurements for specialized aircraft components or services.

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 among multiple vendors. This approach is typically used when only one vendor possesses the necessary capabilities, technology, or security clearances. The lack of competition means that the Department of Defense did not benefit from the price reductions and service improvements that typically arise from a competitive bidding process. This can lead to higher costs for the government.

Taxpayer Impact: Taxpayers may be paying a premium for this aircraft manufacturing service due to the absence of competitive pressure to drive down prices. The government's negotiating position is weakened without alternative sources.

Public Impact

The primary beneficiary is Lockheed Martin Corporation, the sole-source contractor. The contract supports the sustainment and modification of specific aircraft systems for the Department of the Air Force. The geographic impact is primarily within Texas, where the contractor's operations are located. This contract likely supports a specialized workforce within the aerospace and defense sector, contributing to high-skilled employment.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially leading to higher costs.
Long contract duration (nearly 8.5 years) increases risk of cost escalation and scope creep.
Cost Plus Fixed Fee (CPFF) contract type can incentivize higher spending if not closely monitored.
Lack of transparency in sole-source procurements can obscure true value for money.
Dependence on a single contractor can create supply chain vulnerabilities.

Positive Signals

Contract awarded to a major defense contractor with extensive experience in aircraft manufacturing.
The specific nature of the work may require specialized expertise only available from the incumbent.
The contract aims to ensure the continued operational readiness of critical Air Force assets.
The fixed fee component of the CPFF contract provides some level of cost predictability.

Sector Analysis

The aerospace and defense sector is characterized by high barriers to entry, complex supply chains, and significant government investment. Aircraft manufacturing, a sub-sector, involves the design, production, and maintenance of aircraft. This contract fits within the broader defense industrial base, supporting the Air Force's fleet sustainment. Comparable spending benchmarks are difficult to establish for sole-source, specialized aircraft modifications, but the overall defense procurement budget runs into hundreds of billions annually.

Small Business Impact

This contract does not appear to include a small business set-aside. Given the sole-source nature and the prime contractor being Lockheed Martin, a large aerospace company, the likelihood of significant subcontracting opportunities for small businesses is uncertain and depends on the specific work packages. There is no explicit indication of a focus on integrating small businesses into this particular procurement.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Air Force's contracting and program management offices. Given it's a sole-source award, the emphasis would be on ensuring the contractor meets the defined cost, schedule, and performance requirements. Transparency may be limited due to the non-competitive nature. Inspector General (IG) jurisdiction would apply if any fraud, waste, or abuse is suspected.

Related Government Programs

Aircraft Sustainment Programs
Air Force Logistics and Maintenance Contracts
Defense Industrial Base Contracts
Sole-Source Defense Procurements

Risk Flags

Sole-source award
Long contract duration
Cost-plus contract type

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $6.1 million to LOCKHEED MARTIN CORPORATION. RAMP PROJECT AVS30R SINGLE SWITCH RESET IMPLEMENTATION

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 $6.1 million.

What is the period of performance?

Start: 2019-10-31. End: 2028-02-29.

What is Lockheed Martin Corporation's track record with similar sole-source contracts for the Department of the Air Force?

Lockheed Martin Corporation, as a major defense contractor, has a long history of performing sole-source contracts with the Department of the Air Force and other military branches. These contracts often involve complex systems, specialized manufacturing, and sustainment services where unique capabilities or existing platform integration necessitate a single provider. While specific performance metrics for this RAMP PROJECT AVS30R contract are not detailed here, the company's overall track record includes both successful, large-scale programs and instances of cost overruns or schedule delays common in complex defense projects. Evaluating their performance on similar sole-source agreements would require analyzing contract completion reports, past performance reviews, and any associated contract disputes or modifications.

How does the $6.1 million value compare to similar aircraft manufacturing contracts, especially sole-source ones?

Directly comparing the $6.1 million value of this specific contract is challenging without more granular data on the scope of work (e.g., specific aircraft type, nature of modifications or resets, quantity). However, within the broader aircraft manufacturing and sustainment sector, $6.1 million represents a moderate-sized contract. Sole-source contracts in this domain can vary dramatically in value, from smaller component repairs to multi-billion dollar platform development or upgrade programs. The key concern with sole-source pricing is the lack of competitive benchmarking. While $6.1 million might be reasonable for the defined scope, without competition, it's difficult to definitively state it represents optimal value for money compared to what could have been achieved through a competitive process.

What are the primary risks associated with a sole-source, Cost Plus Fixed Fee (CPFF) contract for aircraft manufacturing over an 8.5-year period?

The primary risks associated with this contract structure are multifaceted. Firstly, the sole-source nature eliminates competitive pressure, potentially leading to higher costs and reduced incentives for efficiency. Secondly, the CPFF structure, while providing a fixed profit margin, can incentivize the contractor to incur more costs, as the fee is a percentage of the total costs. This risk is amplified over the long 8.5-year duration, increasing the potential for cost escalation beyond initial estimates. Effective oversight, robust cost controls, and clear performance metrics are crucial to mitigate these risks. Without them, the government could face significant cost overruns and potentially suboptimal performance.

What does the 'Aircraft Manufacturing' (NAICS 336411) sector context imply for this contract?

The NAICS code 336411, 'Aircraft Manufacturing,' places this contract within a highly specialized and capital-intensive industry. This sector is dominated by a few large, established players like Lockheed Martin due to the immense R&D, infrastructure, and skilled labor required. Contracts within this sector often involve proprietary technology, stringent quality control, and long production cycles. The high barriers to entry and the critical nature of defense aerospace mean that sole-source procurements are not uncommon, particularly for sustainment, upgrades, or specialized components tied to existing platforms. However, it also underscores the importance of rigorous government oversight to ensure fair pricing and performance, even when competition is limited.

How does the contract's duration (3043 days) impact its overall risk profile and value assessment?

The contract's duration of 3043 days, approximately 8.5 years, significantly impacts its risk profile and value assessment. Long-term contracts increase the potential for unforeseen economic changes (inflation, material cost fluctuations), technological obsolescence, and shifts in program requirements. For a CPFF contract, a longer duration provides more opportunities for costs to accumulate, potentially exceeding initial projections if oversight is not consistently stringent. From a value perspective, the extended period necessitates careful planning and management to ensure the services remain relevant and cost-effective throughout its life. It also means that the government is committed to this specific solution and contractor for an extended period, reducing flexibility.

What are the implications of this contract being awarded in Texas (ST: TX)?

The contract being performed in Texas (ST: TX) indicates a contribution to the state's significant aerospace and defense industrial base. Texas has a substantial presence in aerospace manufacturing and related services, supported by a skilled workforce and numerous defense installations. Awarding this contract to a facility in Texas likely means job creation and economic activity within the state's defense sector. For the Department of Defense, the geographic location might be influenced by existing infrastructure, contractor facilities, or strategic considerations related to the specific aircraft or operational base. It doesn't inherently change the contract's risk profile but highlights the regional economic impact.

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: $6,132,749

Exercised Options: $6,132,749

Current Obligation: $6,132,749

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