DoD awards $143M F-22 sustainment contract to Lockheed Martin, raising questions on competition and value

Contract Overview

Contract Amount: $142,893,478 ($142.9M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2024-10-01

End Date: 2027-09-30

Contract Duration: 1,094 days

Daily Burn Rate: $130.6K/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 $142.9 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. Long-term sustainment contract indicates a critical need for ongoing F-22 fleet support. 3. High value suggests significant investment in maintaining aging but vital air superiority assets. 4. Performance period of nearly three years allows for sustained operational support. 5. Focus on sustainment highlights the challenges of maintaining legacy aircraft fleets. 6. Lack of competition may indicate specialized knowledge or unique capabilities required.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to its sole-source nature and the specialized requirements of F-22 sustainment. Without competitive bids, it's difficult to ascertain if the pricing reflects optimal value for money. The Cost Plus Fixed Fee (CPFF) contract type allows for cost reimbursement plus a fixed fee, which can incentivize cost control but also carries risks if initial cost estimates are inaccurate. Further analysis would require access to detailed cost breakdowns and historical pricing for similar specialized aerospace sustainment services.

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 is available or when a compelling justification exists for not seeking competition. The lack of multiple bidders means there was no opportunity for price competition, which could lead to higher costs for the government compared to a fully competed contract. The justification for this sole-source award would need to be thoroughly reviewed to ensure it aligns with federal procurement regulations.

Taxpayer Impact: Taxpayers may face higher costs due to the absence of competitive pressure to drive down prices. The government's ability to negotiate favorable terms is diminished without alternative offers.

Public Impact

The U.S. Air Force benefits from the continued operational readiness of its F-22 Raptor fleet. Services delivered ensure the airworthiness and combat capability of critical air superiority aircraft. Geographic impact is primarily national, supporting Air Force bases and operations across the U.S. Workforce implications include continued employment for specialized aerospace engineers, technicians, and support staff at Lockheed Martin facilities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing, potentially leading to overpayment.
CPFF contract type can lead to cost overruns if not closely managed.
Long-term sustainment contracts can create vendor lock-in.
Aging F-22 fleet may present unique and escalating maintenance challenges.
Lack of transparency in sole-source justification requires scrutiny.

Positive Signals

Ensures continued operational capability of a critical national defense asset.
Leverages specialized expertise of the original equipment manufacturer (Lockheed Martin).
Provides stability for a highly skilled workforce dedicated to F-22 sustainment.
Long-term contract allows for predictable planning and resource allocation for fleet readiness.

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 requiring original equipment manufacturer (OEM) expertise. The market for such services is typically concentrated among a few large prime contractors. Spending on aircraft sustainment is a substantial portion of the overall defense budget, reflecting the high cost of maintaining advanced military hardware throughout its lifecycle.

Small Business Impact

This contract does not appear to include specific small business set-aside provisions. Given the sole-source nature and the specialized requirements of F-22 sustainment, it is unlikely that significant subcontracting opportunities for small businesses would be mandated or readily available, unless Lockheed Martin voluntarily incorporates them into its supply chain. The focus is on the prime contractor's capabilities, potentially limiting direct benefits to the small business ecosystem in this specific award.

Oversight & Accountability

Oversight for this contract will likely be managed by the Department of the Air Force contracting and program management offices. The Cost Plus Fixed Fee structure necessitates rigorous financial oversight to monitor costs and ensure the fixed fee remains appropriate. Transparency may be limited due to the sole-source nature, but contract performance reviews and audits by the Defense Contract Audit Agency (DCAA) and potentially the Inspector General would be standard accountability measures.

Related Government Programs

F-22 Raptor Program
Air Force Combat Airpower
Aerospace Sustainment Services
Defense Logistics Agency (DLA) Support
Aircraft Maintenance and Repair

Risk Flags

Sole-source award
Lack of competition
Potential for cost overruns (CPFF)

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $142.9 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 $142.9 million.

What is the period of performance?

Start: 2024-10-01. End: 2027-09-30.

What is Lockheed Martin's track record with F-22 sustainment and other complex aircraft programs?

Lockheed Martin Corporation, as the original equipment manufacturer (OEM) for the F-22 Raptor, possesses extensive and unique expertise in its sustainment. The company has a long history of supporting advanced military aircraft, including the F-16, F-35, and C-130 families. Their track record with the F-22 specifically involves managing the complex logistics, maintenance, repair, and upgrade requirements necessary to keep the fleet operationally ready. This includes addressing aging airframe issues, engine support, avionics, and software updates. While generally considered a capable provider for such specialized needs, like any large defense contractor, they have faced scrutiny over cost and schedule on various programs. However, for F-22 sustainment, their position as the OEM makes them the primary, if not sole, viable option for comprehensive support.

How does the Cost Plus Fixed Fee (CPFF) contract type compare to other pricing arrangements for sustainment services?

The Cost Plus Fixed Fee (CPFF) contract type is often used for complex projects where the scope of work is not precisely defined at the outset, or when the contractor's performance is difficult to measure objectively. In this arrangement, the government reimburses the contractor for all allowable costs incurred and pays a predetermined fixed fee representing profit. Compared to Firm-Fixed-Price (FFP) contracts, CPFF offers less cost certainty for the government, as costs can fluctuate. However, it can provide greater flexibility and ensure the contractor is incentivized to perform the necessary work, even if unforeseen challenges arise. It differs from Cost Plus Incentive Fee (CPIF) or Cost Plus Award Fee (CPAF) contracts, which include mechanisms to adjust the fee based on performance against targets, potentially offering better value if cost and performance goals are met.

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

The primary risk associated with a sole-source award for critical defense sustainment is the lack of price competition. Without competing bids, the government loses the opportunity to leverage market forces to achieve the lowest possible price. This can lead to inflated costs for services and parts. Additionally, sole-source awards can reduce the incentive for the contractor to innovate or improve efficiency, as there is no direct competitive pressure. There's also a risk of vendor lock-in, where the government becomes overly reliant on a single provider, making it difficult and costly to switch suppliers in the future. Ensuring the justification for the sole-source award is robust and that robust oversight is in place becomes paramount to mitigate these risks.

What is the historical spending trend for F-22 sustainment and how does this contract fit?

Historical spending on F-22 sustainment has been substantial, reflecting the complexity and operational demands of maintaining a fleet of advanced, albeit aging, fighter aircraft. The F-22 program has consistently required significant annual funding for maintenance, repair, and upgrades to ensure its readiness and technological relevance. This $143 million contract for comprehensive air vehicle sustainment services over approximately three years appears to be a continuation or a significant component of the ongoing sustainment effort. While specific year-over-year spending figures fluctuate based on program needs and contract actions, this award represents a substantial, multi-year investment consistent with the high operational costs associated with supporting a premier air superiority platform like the F-22.

How does the geographic location of contract performance (Texas) impact sustainment operations?

The contract performance location in Texas (ST: TX) likely relates to Lockheed Martin's F-22 program management and sustainment facilities, potentially at the Lockheed Martin Aeronautics facility in Fort Worth. This location is significant as it is a major hub for advanced aerospace manufacturing and sustainment operations. Having sustainment activities concentrated in a specific region with established infrastructure and a skilled workforce can streamline operations, reduce logistical complexities, and facilitate close collaboration between program management, engineering, and maintenance personnel. It also means that the economic benefits, such as job creation and supplier engagement, are concentrated within that geographic area, supporting the regional aerospace ecosystem.

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: FA820524R0705

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: $142,893,478

Exercised Options: $142,893,478

Current Obligation: $142,893,478

Subaward Activity

Number of Subawards: 1

Total Subaward Amount: $368,000

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