DoD awards $107M to Lockheed Martin for F-22 sustainment, raising questions on competition and value

Contract Overview

Contract Amount: $106,892,691 ($106.9M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2022-10-01

End Date: 2026-12-31

Contract Duration: 1,552 days

Daily Burn Rate: $68.9K/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 $106.9 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 highlights the ongoing investment in aging aircraft. 3. Lack of competition raises concerns about whether the government secured the best possible pricing. 4. Performance period extends over four years, indicating a long-term commitment to F-22 support. 5. The contract type (Cost Plus Fixed Fee) can incentivize cost overruns if not closely managed. 6. Focus on sustainment suggests a mature platform with ongoing operational needs.

Value Assessment

Rating: questionable

The $106.9 million award for F-22 sustainment services to Lockheed Martin appears high given the lack of competition. 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, carries inherent risks of cost escalation if not rigorously overseen. The government must ensure robust cost controls and performance metrics are in place to maximize value for taxpayer dollars.

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 solicited. This approach is typically used when only one responsible source can provide the required services. However, it bypasses the competitive process, which is designed to drive down prices and encourage innovation. The lack of competition means the government did not benefit from multiple proposals and the associated price negotiations.

Taxpayer Impact: Sole-source awards limit the government's ability to secure the lowest possible price, potentially leading to higher costs for taxpayers. Without competitive pressure, there is less incentive for the contractor to offer the most cost-effective solutions.

Public Impact

The U.S. Air Force benefits from continued operational readiness of the F-22 Raptor fleet. Services include maintenance, repair, and logistics support for the F-22 air vehicle. The contract supports jobs within Lockheed Martin's aerospace and defense sector, primarily in Texas. Ensures the longevity and effectiveness of a critical national defense asset.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and value for money.
Cost Plus Fixed Fee contract type can lead to cost overruns without strict oversight.
Long-term sustainment contracts can become entrenched, making future competition difficult.
Aging aircraft require significant and potentially unpredictable maintenance costs.

Positive Signals

Lockheed Martin is the original equipment manufacturer, possessing unique technical knowledge.
Sustainment is critical for maintaining the operational capability of a key strategic asset.
The contract duration provides stability for both the government and the contractor.

Sector Analysis

This contract falls within the aerospace and defense sector, specifically focusing on aircraft sustainment. The market for military aircraft maintenance and support is dominated by original equipment manufacturers like Lockheed Martin due to specialized knowledge and proprietary data. Spending on aircraft sustainment is a significant portion of defense budgets, reflecting the high cost of operating and maintaining advanced military platforms. Comparable spending benchmarks are difficult to establish precisely due to the unique nature of each aircraft and its support requirements.

Small Business Impact

This contract does not appear to include specific small business set-asides. As a sole-source award to a large prime contractor, the primary impact on small businesses would be through potential subcontracting opportunities. It is crucial for the prime contractor to actively seek out and engage small businesses for subcontracting roles to ensure broader economic participation and compliance with subcontracting goals.

Oversight & Accountability

Oversight for this contract will primarily reside with the Department of the Air Force contracting and program management offices. Robust oversight will involve monitoring contractor performance against contract requirements, scrutinizing cost submissions under the CPFF structure, and ensuring compliance with all terms and conditions. Transparency is facilitated through contract reporting mechanisms, though the sole-source nature limits public visibility into the competitive negotiation process.

Related Government Programs

F-22 Raptor Program
Air Force Sustainment Contracts
Aerospace Defense Services
Aircraft Maintenance and Repair

Risk Flags

Sole Source Award
Cost Plus Fixed Fee Contract Type
Lack of Competition
Aging Aircraft Fleet

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $106.9 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 $106.9 million.

What is the period of performance?

Start: 2022-10-01. End: 2026-12-31.

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 providing sustainment services for this platform. They have been involved since the aircraft's inception, managing its complex logistics, maintenance, repair, and upgrade requirements. Their historical performance is critical to the F-22's operational readiness. However, the lack of competitive bidding in recent awards means that while their technical capability is established, the cost-effectiveness of their services in the current market is less transparent. The government relies heavily on their unique expertise, but must maintain stringent oversight to ensure fair pricing and efficient service delivery over the contract's duration.

How does the pricing of this contract compare to similar sustainment contracts for other advanced fighter jets?

Directly comparing the pricing of this $106.9 million F-22 sustainment contract to similar contracts for other advanced fighter jets is challenging due to several factors. Each aircraft platform has unique sustainment needs, operational tempos, and component lifecycles, leading to vastly different cost structures. Furthermore, the contract type (Cost Plus Fixed Fee) and the sole-source nature of this award obscure direct price benchmarking. Contracts for platforms like the F-35 or F-15, especially those awarded competitively, might offer different cost profiles. Without competitive bids for the F-22 sustainment, it's difficult to definitively state if this contract represents optimal value compared to industry norms for comparable high-end fighter support.

What are the primary risks associated with a sole-source award for critical aircraft sustainment?

The primary risks associated with a sole-source award for critical aircraft sustainment, such as this F-22 contract, revolve around cost and performance. Without competition, the government loses the leverage to negotiate the lowest possible price, potentially leading to inflated costs for taxpayers. There is also a reduced incentive for the sole provider to innovate or improve efficiency, as they face no direct competitive threat. Furthermore, reliance on a single source can create vulnerabilities if that contractor experiences financial difficulties, operational disruptions, or fails to meet performance standards. The government must implement rigorous oversight, including detailed cost analysis and performance monitoring, to mitigate these risks.

How effective is the Cost Plus Fixed Fee (CPFF) contract type for managing sustainment services?

The Cost Plus Fixed Fee (CPFF) contract type can be effective for managing sustainment services, particularly for complex, long-term requirements where the scope of work may evolve or is difficult to define precisely upfront. It allows the government to leverage the contractor's expertise while providing a degree of cost certainty through the fixed fee. However, CPFF contracts carry inherent risks. The contractor is incentivized to incur costs to increase their profit margin (the fee is fixed, but the base cost on which it's calculated increases), potentially leading to cost overruns if not managed diligently. Effective oversight, including detailed cost audits and performance metrics, is crucial to ensure the government receives good value and the contractor remains cost-conscious.

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

Historical spending on F-22 sustainment has been substantial, reflecting the advanced technology and operational demands of the fifth-generation fighter. The U.S. Air Force has consistently allocated significant funds to maintain the readiness of its F-22 fleet, which is critical for air superiority missions. This $106.9 million award for a period of approximately four years fits within the established pattern of significant, ongoing investment required for the sustainment of such a high-performance, complex aircraft. While specific annual figures fluctuate based on operational needs and contract actions, the overall trend indicates a sustained, multi-million dollar annual expenditure for F-22 support, underscoring the long-term commitment to this platform.

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: FA820523R0505

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: $106,892,691

Exercised Options: $106,892,691

Current Obligation: $106,892,691

Subaward Activity

Number of Subawards: 8

Total Subaward Amount: $209,732

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