DoD awards $170.7M to Lockheed Martin for F-22 CNI ATS, citing sole-source justification

Contract Overview

Contract Amount: $17,073,981 ($17.1M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2023-09-29

End Date: 2026-09-29

Contract Duration: 1,096 days

Daily Burn Rate: $15.6K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: F-22 COMMUNICATION NAVIGATION AND IDENTIFICATION (CNI) CLOCK COUPLER MODULE (CCM) AND PULSE PREPROCESSOR MODULE (PPM) AUTOMATED TEST SYSTEMS (ATS)

Place of Performance

Location: FORT WORTH, TARRANT County, TEXAS, 76108

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $17.1 million to LOCKHEED MARTIN CORPORATION for work described as: F-22 COMMUNICATION NAVIGATION AND IDENTIFICATION (CNI) CLOCK COUPLER MODULE (CCM) AND PULSE PREPROCESSOR MODULE (PPM) AUTOMATED TEST SYSTEMS (ATS) Key points: 1. Contract awarded to incumbent provider for specialized F-22 components. 2. Sole-source award raises questions about potential cost efficiencies and market alternatives. 3. Long-term contract duration suggests a need for sustained support for critical aircraft systems. 4. Focus on automated test systems indicates a drive for efficiency and reduced maintenance downtime. 5. Geographic concentration in Texas for manufacturing and support. 6. Contract type (Cost Plus Fixed Fee) may incentivize cost overruns if not closely monitored.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging due to its specialized nature and sole-source award. The Cost Plus Fixed Fee structure, while common for complex R&D or unique systems, carries inherent risks of cost escalation. Without competitive bids, it's difficult to definitively assess if the pricing reflects optimal value for money. However, the long duration and specific technical requirements suggest a potentially high barrier to entry for competitors, which could justify the pricing to some extent.

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 specific contractor possesses unique capabilities, proprietary technology, or is the sole provider of essential components. The lack of competition means there was no opportunity for price discovery through a bidding process, potentially leading to higher costs than if multiple vendors had competed.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive pressure. The government relies on robust negotiation and oversight to ensure fair pricing in sole-source situations.

Public Impact

The primary beneficiary is the U.S. Air Force, ensuring the continued operational readiness of the F-22 Raptor fleet. Services delivered include the provision and maintenance of critical communication, navigation, and identification automated test systems. Geographic impact is concentrated in Texas, where Lockheed Martin's facilities are located for manufacturing and support. Workforce implications include the retention of specialized engineering and technical jobs within Lockheed Martin.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potential innovation from other firms.
Cost Plus Fixed Fee contract type can lead to higher costs if not managed diligently.
Long contract duration increases exposure to potential cost overruns and scope creep.
Lack of transparency in pricing due to non-competitive nature.

Positive Signals

Ensures continued support for a critical national defense asset (F-22).
Leverages incumbent contractor's specialized knowledge and existing infrastructure.
Focus on automated test systems can improve efficiency and reduce long-term maintenance costs.
Contract provides stability for a key defense contractor and its specialized workforce.

Sector Analysis

The aerospace and defense sector is characterized by high barriers to entry, significant R&D investment, and long product lifecycles. Contracts for advanced military aircraft components, like those for the F-22, often involve proprietary technology and require specialized manufacturing capabilities. Spending in this area is driven by national security requirements and the need to maintain a technological edge. Comparable spending benchmarks are difficult to establish due to the unique nature of F-22 systems, but overall DoD spending on aircraft manufacturing and sustainment runs into billions annually.

Small Business Impact

This contract does not appear to involve a small business set-aside, as indicated by the prime contractor being Lockheed Martin Corporation. There is no explicit mention of subcontracting goals for small businesses within the provided data. The impact on the small business ecosystem is likely indirect, potentially through Lockheed Martin's own supply chain, but direct set-aside opportunities are absent.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Air Force's contracting and program management offices. Accountability measures would be embedded within the Cost Plus Fixed Fee contract terms, requiring detailed cost reporting and performance metrics. Transparency is limited due to the sole-source nature, but contract awards and basic details are publicly available. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

F-22 Raptor Sustainment Programs
DoD Aircraft Component Manufacturing
Aerospace Automated Test Systems
Lockheed Martin Defense Contracts
Air Force Communication Systems

Risk Flags

Sole-source award
Cost Plus Fixed Fee contract type
Potential for cost overruns
Lack of competitive bidding

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $17.1 million to LOCKHEED MARTIN CORPORATION. F-22 COMMUNICATION NAVIGATION AND IDENTIFICATION (CNI) CLOCK COUPLER MODULE (CCM) AND PULSE PREPROCESSOR MODULE (PPM) AUTOMATED TEST SYSTEMS (ATS)

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 $17.1 million.

What is the period of performance?

Start: 2023-09-29. End: 2026-09-29.

What is Lockheed Martin Corporation's track record with F-22 program contracts?

Lockheed Martin Corporation is the prime contractor for the F-22 Raptor and has a long-standing history of developing, producing, and sustaining the aircraft. Their track record includes managing complex weapon systems, integrating advanced technologies, and fulfilling sustainment requirements for the F-22 fleet. This specific contract for Communication Navigation and Identification (CNI) Clock Coupler Module (CCM) and Pulse Preprocessor Module (PPM) Automated Test Systems (ATS) builds upon their established role. While generally positive in terms of delivery, the company, like other major defense contractors, has faced scrutiny over cost and schedule performance on large programs, necessitating robust government oversight.

How does the $170.7 million award compare to similar contracts for aircraft test systems?

Direct comparison of this $170.7 million award for F-22 CNI ATS is difficult due to the highly specialized nature of the components and the sole-source award. Contracts for general aviation test equipment might be significantly lower, while those for entire aircraft system development or major upgrades could be substantially higher. The value reflects the unique technological requirements and the limited production base for F-22 specific components. Benchmarking against other sole-source awards for highly specialized military avionics test systems would provide a more relevant, though still limited, comparison point.

What are the primary risks associated with this Cost Plus Fixed Fee (CPFF) contract?

The primary risks with a Cost Plus Fixed Fee (CPFF) contract, such as this one, revolve around cost control. The contractor is reimbursed for allowable costs plus a predetermined fixed fee representing profit. This structure can incentivize contractors to incur higher costs, as their fee remains constant regardless of the actual expenses. Key risks include potential cost overruns, scope creep (uncontrolled changes or growth in project scope), and the need for rigorous government oversight to scrutinize incurred costs and ensure efficiency. Without strong management, the 'fixed fee' may not adequately compensate for the government's exposure to escalating costs.

How effective is the sole-source justification in ensuring value for taxpayers?

The effectiveness of a sole-source justification in ensuring value for taxpayers is inherently limited compared to a competitive process. While sole-sourcing is sometimes necessary for unique capabilities or essential components, it removes the price discovery mechanism inherent in bidding. Taxpayers rely heavily on the government's negotiation skills and stringent oversight to achieve fair pricing. In this case, the justification implies that Lockheed Martin is the only viable source, suggesting that the value is derived from their unique expertise and existing infrastructure rather than market competition. The government must ensure that the negotiated price reflects this unique value without the benefit of competitive pressure.

What are the historical spending patterns for F-22 sustainment and component support?

Historical spending on F-22 sustainment and component support has been substantial, reflecting the aircraft's advanced technology, operational demands, and relatively small fleet size. The F-22 program, from development through sustainment, has consistently represented a significant portion of the Air Force's budget. Sustainment costs are driven by the need for specialized maintenance, upgrades, and replacement parts for a complex fifth-generation fighter. Annual sustainment budgets for the F-22 fleet typically run into hundreds of millions of dollars, encompassing everything from depot maintenance to individual component replacements like the CNI ATS modules covered in this contract.

What are the implications of the 1096-day contract duration for program stability and cost?

The 1096-day (approximately 3-year) duration of this contract provides significant program stability for both the Air Force and Lockheed Martin. For the Air Force, it ensures a consistent supply and support chain for critical F-22 components, reducing the risk of operational disruptions. For Lockheed Martin, it offers predictable revenue and allows for efficient resource planning. From a cost perspective, a longer duration can sometimes lead to economies of scale and potentially lower per-unit costs over time, assuming stable requirements. However, it also extends the period during which costs are incurred, increasing the overall financial commitment and the potential exposure to inflation or unforeseen technical challenges.

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

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: $17,073,981

Exercised Options: $17,073,981

Current Obligation: $17,073,981

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