DoD awards $133M to Lockheed Martin for F-22 sustainment, raising questions on competition and value

Contract Overview

Contract Amount: $133,027,692 ($133.0M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2023-10-01

End Date: 2027-09-30

Contract Duration: 1,460 days

Daily Burn Rate: $91.1K/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 $133.0 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 portion of contract value allocated to labor, suggesting a focus on personnel services. 3. Long-term contract duration (4 years) indicates a sustained need for F-22 support. 4. High dollar value suggests critical importance of F-22 fleet readiness for national defense. 5. Lack of competition may indicate specialized nature of F-22 sustainment or limited contractor pool. 6. Performance-based contract type (Cost Plus Fixed Fee) allows for cost overruns, requiring close oversight.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to its sole-source nature and specialized focus on F-22 sustainment. The Cost Plus Fixed Fee (CPFF) structure, while common for complex defense systems, inherently carries a higher risk of cost overruns compared to fixed-price contracts. Without competitive bids, it's difficult to ascertain if the $133 million represents a fair market price for the services rendered. The pricing will heavily depend on the efficiency and cost controls implemented by Lockheed Martin, necessitating robust government oversight.

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 justified when only one vendor possesses the necessary specialized knowledge, technology, or capability to perform the required services. For the F-22 program, Lockheed Martin is the original equipment manufacturer and likely holds unique expertise in its sustainment. The lack of competition means taxpayers did not benefit from potential cost savings that could arise from a competitive bidding process.

Taxpayer Impact: The absence of competition means taxpayers are likely paying a premium, as there was no market pressure to drive down prices. This necessitates stringent oversight to ensure costs remain reasonable.

Public Impact

The primary beneficiaries are the U.S. Air Force and national security, ensuring the continued operational readiness of the F-22 Raptor fleet. Services delivered include comprehensive sustainment, maintenance, repair, and logistics support for the F-22 air vehicle. Geographic impact is national, supporting F-22 operations across various Air Force bases. Workforce implications include continued employment for highly skilled technicians and engineers at Lockheed Martin facilities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially leading to higher costs.
CPFF contract type can incentivize cost overruns if not managed tightly.
Long-term nature of the contract may reduce flexibility for future cost-saving opportunities.
Dependence on a single contractor for critical sustainment poses a supply chain risk.

Positive Signals

Awardee is the original equipment manufacturer, possessing unique expertise for F-22 sustainment.
Contract aims to ensure high readiness rates for a critical national defense asset.
Long-term contract provides stability for sustainment operations and planning.
Focus on comprehensive sustainment suggests a commitment to maintaining the F-22's advanced capabilities.

Sector Analysis

The aerospace and defense sector is characterized by high barriers to entry, complex technological requirements, and significant government investment. Sustainment services for advanced platforms like the F-22 are highly specialized, often dominated by the original equipment manufacturers. The total addressable market for aircraft sustainment is substantial, with governments worldwide investing heavily in maintaining their fleets. This contract fits within the broader defense MRO (Maintenance, Repair, and Overhaul) market, where long-term relationships and specialized expertise are paramount.

Small Business Impact

This contract does not appear to include specific small business set-asides. Given the specialized nature of F-22 sustainment and the sole-source award to Lockheed Martin, it is unlikely that significant subcontracting opportunities for small businesses will be mandated or readily available within this specific contract. The focus is on the prime contractor's unique capabilities. Future contracts or broader sustainment efforts might offer more opportunities for small businesses in supporting roles.

Oversight & Accountability

Oversight for this contract will primarily fall under the Department of the Air Force's contracting and program management offices. Given the CPFF structure, rigorous financial oversight and auditing will be crucial to monitor costs and prevent overruns. The Defense Contract Audit Agency (DCAA) and the Department of Defense Inspector General (DoDIG) may also play roles in ensuring compliance and investigating any potential irregularities. Transparency will depend on the reporting requirements stipulated in the contract.

Related Government Programs

F-22 Raptor Program
Air Force Weapon System Sustainment
Advanced Fighter Aircraft Maintenance
Aerospace Defense Contracting
Lockheed Martin Defense Contracts

Risk Flags

Sole-source award
Cost Plus Fixed Fee contract type
Lack of competitive bidding
High dollar value for sustainment services

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $133.0 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 $133.0 million.

What is the period of performance?

Start: 2023-10-01. End: 2027-09-30.

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

Lockheed Martin Corporation, as the original equipment manufacturer (OEM) of the F-22 Raptor, has a long-standing and exclusive track record in providing sustainment services for this advanced fighter jet. They have been the primary entity responsible for the aircraft's maintenance, repair, and upgrade programs since its inception. Historical data indicates consistent involvement in ensuring the F-22 fleet's operational readiness. While specific performance metrics for past contracts are often sensitive, the continued reliance on Lockheed Martin for these critical services suggests a generally satisfactory performance history in terms of technical capability and program execution, albeit within a non-competitive environment.

How does the $133 million value compare to similar F-22 sustainment contracts?

Direct comparison of this $133 million contract to 'similar' F-22 sustainment contracts is difficult due to the sole-source nature and the specific scope of services within this particular award. However, annual sustainment costs for advanced fighter fleets like the F-22 typically run into hundreds of millions of dollars when considering all aspects of maintenance, logistics, and support across the entire fleet. This $133 million award, covering a four-year period (approximately $33 million per year), appears to represent a specific component or phase of the overall F-22 sustainment effort. Without detailed breakdowns of services and duration for prior contracts, a precise value-for-money assessment against historical benchmarks remains challenging.

What are the primary risks associated with this sole-source contract?

The primary risk associated with this sole-source contract is the lack of competitive pressure, which can lead to inflated costs and reduced incentives for efficiency. Taxpayers may not be receiving the best possible value for their investment. Another significant risk is contractor dependency; the Air Force is reliant on Lockheed Martin's specialized knowledge and capabilities for F-22 sustainment. Any disruption in Lockheed Martin's ability to perform, whether due to financial issues, labor disputes, or strategic shifts, could severely impact the F-22 fleet's readiness. Furthermore, the Cost Plus Fixed Fee (CPFF) contract type carries inherent risks of cost overruns if not meticulously managed and overseen by the government.

How effective is the Cost Plus Fixed Fee (CPFF) structure for F-22 sustainment?

The Cost Plus Fixed Fee (CPFF) structure is often employed for complex, high-risk, or developmental contracts where the final costs are difficult to estimate accurately upfront. For F-22 sustainment, it allows the contractor (Lockheed Martin) to be reimbursed for allowable costs plus a predetermined fixed fee representing profit. This structure can be effective in ensuring that the contractor is motivated to perform the required work, even if unforeseen challenges arise, without being penalized for legitimate cost increases. However, its effectiveness is highly dependent on robust government oversight to control costs, scrutinize expenditures, and ensure the 'fixed fee' remains reasonable and doesn't escalate disproportionately with actual costs.

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

Historical spending on F-22 sustainment has been substantial, reflecting the complexity and advanced nature of the aircraft. Annual budgets for F-22 sustainment have historically ranged from several hundred million dollars to over a billion dollars, depending on the specific fiscal year and the scope of activities undertaken (e.g., depot maintenance, component repair, logistics support, software updates). These figures encompass the entire sustainment ecosystem managed by the Air Force and its contractors. The $133 million awarded here represents a portion of that ongoing, significant investment required to maintain the operational readiness of the F-22 fleet over its lifecycle.

What is the potential impact of this contract on future F-22 upgrades or modifications?

This contract focuses on 'air vehicle sustainment,' which typically covers maintenance, repair, and ensuring the current operational capability of the F-22. While sustainment activities can sometimes uncover needs or provide insights relevant to future upgrades, this specific contract is unlikely to directly fund or dictate major modifications or upgrades. Those are usually handled through separate, often competitively bid, development and modification contracts. However, the ongoing relationship and data generated through this sustainment contract could inform the requirements and potential contractor selection for future F-22 modernization programs, potentially favoring Lockheed Martin due to their established expertise.

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: $133,027,692

Exercised Options: $133,027,692

Current Obligation: $133,027,692

Subaward Activity

Number of Subawards: 1

Total Subaward Amount: $80,416

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