DoD awards $104M to Lockheed Martin for F-22 sustainment, raising questions on competition and value

Contract Overview

Contract Amount: $103,981,497 ($104.0M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2021-10-01

End Date: 2024-11-14

Contract Duration: 1,140 days

Daily Burn Rate: $91.2K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: COMPREHENSIVE F-22 AIR VEHICLE SUSTAINMENT SERVICES.

Place of Performance

Location: FORT WORTH, TARRANT County, TEXAS, 76108

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $104.0 million to LOCKHEED MARTIN CORPORATION for work described as: COMPREHENSIVE F-22 AIR VEHICLE SUSTAINMENT SERVICES. Key points: 1. Contract awarded on a sole-source basis, limiting price discovery and potentially increasing costs. 2. Significant contract value for sustainment services suggests a critical role for the F-22 fleet. 3. Lack of competition is a key risk indicator for potential overspending. 4. Performance context is limited due to the sole-source nature of the award. 5. This contract positions Lockheed Martin as a key provider for advanced fighter jet sustainment. 6. The cost-plus-fixed-fee structure may incentivize cost increases, requiring robust oversight.

Value Assessment

Rating: questionable

The contract value of $104 million for F-22 sustainment services is substantial. Without competitive bidding, it is difficult to benchmark the pricing against market rates or similar contracts. The cost-plus-fixed-fee (CPFF) contract type, while common for complex sustainment, can lead to higher costs if not managed effectively. The absence of a competitive process means potential savings for taxpayers are likely foregone.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning no other vendors were solicited or considered. This approach is typically used when a single source possesses unique capabilities or when urgency precludes a competitive process. The lack of competition means that taxpayers do not benefit from the price reductions that can arise from a bidding war among multiple qualified contractors.

Taxpayer Impact: The sole-source award limits the government's ability to secure the best possible price, potentially leading to higher expenditures for taxpayers compared to a competitively awarded contract.

Public Impact

The primary beneficiaries are the U.S. Air Force and its F-22 Raptor fleet, ensuring operational readiness. Services delivered include comprehensive sustainment, maintenance, and support for the advanced fighter aircraft. Geographic impact is national, supporting Air Force bases where F-22s are stationed. Workforce implications include continued employment for specialized technical and engineering personnel at Lockheed Martin.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potential cost savings.
Cost-plus-fixed-fee structure may not sufficiently incentivize cost control.
Lack of transparency in pricing due to non-competitive nature.
Potential for scope creep without robust oversight.

Positive Signals

Ensures continued operational readiness of a critical national defense asset (F-22).
Leverages specialized expertise of the original equipment manufacturer (Lockheed Martin).
Provides necessary support for a complex and advanced weapons system.

Sector Analysis

The aerospace and defense sector is characterized by high R&D costs, long product lifecycles, and significant government procurement. Sustainment services for advanced fighter jets like the F-22 are a critical component of this sector, ensuring the longevity and effectiveness of multi-billion dollar weapon systems. Market size for aircraft sustainment is substantial, with major defense contractors dominating the landscape. This contract fits within the broader category of aerospace MRO (Maintenance, Repair, and Overhaul) services.

Small Business Impact

This contract does not appear to involve small business set-asides, as it was awarded to Lockheed Martin Corporation, a large prime contractor. There is no explicit information regarding subcontracting plans for small businesses within this specific award notice. The focus is on direct sustainment by the prime, potentially limiting opportunities for small businesses in the supply chain for this particular contract.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and program management offices. Given the sole-source nature and CPFF structure, rigorous oversight of costs, performance, and adherence to scope will be crucial. Transparency may be limited due to the non-competitive award, but internal DoD audits and program reviews would be expected to ensure accountability.

Related Government Programs

F-22 Raptor Program
Air Force Combat Air Superiority Programs
Advanced Fighter Aircraft Sustainment
Aerospace Defense Contracting

Risk Flags

Sole-source award
Cost-plus contract type
Lack of competitive benchmarking
High value sustainment contract

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $104.0 million to LOCKHEED MARTIN CORPORATION. COMPREHENSIVE F-22 AIR VEHICLE SUSTAINMENT SERVICES.

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 $104.0 million.

What is the period of performance?

Start: 2021-10-01. End: 2024-11-14.

What is the historical spending trend for F-22 sustainment services with Lockheed Martin?

Historical spending data for F-22 sustainment services with Lockheed Martin is extensive, reflecting the long operational life of the aircraft. While specific figures for this contract are $103,981,496.9, past awards for similar sustainment efforts have also been in the tens to hundreds of millions of dollars annually. The total lifecycle cost for the F-22 program, including sustainment, is projected to be in the hundreds of billions. Analyzing year-over-year spending trends would reveal fluctuations based on fleet readiness requirements, modernization efforts, and depot-level maintenance schedules. The current award represents a significant portion of annual sustainment funding, underscoring the ongoing need for comprehensive support for this advanced platform.

How does the cost-plus-fixed-fee (CPFF) structure compare to other contract types for aircraft sustainment?

The Cost-Plus-Fixed-Fee (CPFF) contract type, used here, reimburses the contractor for allowable costs plus a fixed fee representing profit. This structure is often employed for complex services where the scope of work is not precisely defined or is subject to change, such as sustainment. Compared to Firm-Fixed-Price (FFP) contracts, CPFF offers less cost certainty for the government but allows for flexibility. However, FFP contracts generally provide better price competition and incentivize contractor efficiency. Other types like Cost-Plus-Incentive-Fee (CPIF) can align contractor and government interests by adjusting profit based on performance targets. For sustainment, the choice depends on the balance between flexibility, risk, and cost control desired by the procuring agency.

What are the key performance indicators (KPIs) typically used to measure the success of F-22 sustainment services?

Key Performance Indicators (KPIs) for F-22 sustainment services typically focus on fleet readiness, aircraft availability, and maintenance turnaround times. Specific metrics might include the Mission Capable (MC) rate, which measures the percentage of aircraft available for their primary mission, and the Non-Mission Capable (NMC) rate, indicating aircraft undergoing maintenance. Mean Time Between Failures (MTBF) for critical components and Mean Time To Repair (MTTR) for common issues are also vital. Additionally, adherence to scheduled maintenance intervals, the effectiveness of depot-level repairs, and the successful implementation of any required upgrades or modifications are closely monitored. Performance against these KPIs directly impacts the Air Force's operational capability.

What is Lockheed Martin's track record in providing sustainment services for advanced fighter aircraft?

Lockheed Martin Corporation has an extensive and well-established track record in providing sustainment services for advanced fighter aircraft, including the F-22 Raptor, F-35 Lightning II, and F-16 Fighting Falcon. As the prime contractor for many of these platforms, they possess unique institutional knowledge, proprietary data, and specialized facilities essential for their upkeep. Their experience spans decades, encompassing everything from routine maintenance and component repair to complex upgrades and lifecycle support. While their expertise is undeniable, the scale and cost of these sustainment contracts are significant, necessitating robust government oversight to ensure value for money and adherence to performance standards.

Are there any alternative sustainment providers for the F-22 that could have been considered?

For the F-22 Raptor, Lockheed Martin is the sole original equipment manufacturer (OEM) and prime contractor responsible for its design, development, and initial production. Consequently, they possess the most comprehensive and unique expertise, data, and tooling required for its sustainment. While some third-party MRO providers might offer specific component repairs or specialized services, the overall sustainment package, particularly for highly integrated and classified systems like those on the F-22, is overwhelmingly reliant on the OEM. Therefore, a truly open competition for comprehensive F-22 sustainment is practically infeasible, often leading to sole-source or limited-source awards to Lockheed Martin.

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

Solicitation ID: FA820522R0405

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: $103,981,497

Exercised Options: $103,981,497

Current Obligation: $103,981,497

Subaward Activity

Number of Subawards: 12

Total Subaward Amount: $751,477

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