Air Force awards $39.8M contract to Lockheed Martin for digital receiver module redesign

Contract Overview

Contract Amount: $39,809,362 ($39.8M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2025-09-30

End Date: 2030-09-30

Contract Duration: 1,826 days

Daily Burn Rate: $21.8K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: REDESIGN FOR THE DIGITAL RECEIVER MODULE (DRM)

Place of Performance

Location: FORT WORTH, TARRANT County, TEXAS, 76108

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $39.8 million to LOCKHEED MARTIN CORPORATION for work described as: REDESIGN FOR THE DIGITAL RECEIVER MODULE (DRM) Key points: 1. Contract awarded on a sole-source basis, limiting price competition. 2. Long-term contract duration of five years suggests a significant program need. 3. Cost-plus-fixed-fee structure may incentivize cost overruns. 4. Focus on aircraft manufacturing indicates a critical defense capability. 5. Awarded to a large, established defense contractor with a history of similar work. 6. Geographic location of performance in Texas may have local economic implications.

Value Assessment

Rating: questionable

Benchmarking the value of this specific contract is challenging due to its sole-source nature and specialized technical requirements. The cost-plus-fixed-fee (CPFF) pricing structure, while common for R&D or uncertain scope projects, carries inherent risks of cost escalation. Without competitive bids, it's difficult to ascertain if the fixed fee represents a fair return for the contractor or if the overall cost ceiling is optimized for value. Further analysis would require understanding the detailed cost breakdown and comparing it to industry standards for similar engineering and redesign efforts.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded using a sole-source justification, meaning the Department of the Air Force did not conduct a competitive bidding process. This approach is typically reserved for situations where only one responsible source can provide the required supplies or services, or in cases of urgent need. The lack of competition means that taxpayers did not benefit from the price discovery that typically occurs in an open market, potentially leading to higher costs than if multiple vendors had vied for the contract.

Taxpayer Impact: The absence of competition means taxpayers may be paying a premium for this redesign, as there was no market pressure to drive down costs. This also limits transparency into the reasonableness of the pricing.

Public Impact

The primary beneficiaries are the Department of the Air Force, which will receive an updated digital receiver module for its aircraft. This contract supports the modernization and sustainment of critical Air Force aviation platforms. The services delivered include engineering, design, and potentially prototyping for the DRM. Workforce implications include specialized engineering and technical roles within Lockheed Martin, primarily in Texas.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits transparency and potential cost savings.
Cost-plus-fixed-fee structure can lead to cost overruns if not closely managed.
Long contract duration may indicate potential for scope creep or evolving requirements.
Lack of competition reduces opportunities for small businesses to participate.

Positive Signals

Award to a prime contractor with extensive experience in defense systems.
Contract supports modernization of critical Air Force technology.
Clear end date provides a defined project scope.
Performance located in Texas may leverage existing regional expertise.

Sector Analysis

The aerospace and defense sector is characterized by high R&D investment, long product development cycles, and significant government procurement. Contracts like this, focused on component redesign and modernization, are crucial for maintaining technological superiority. The market for specialized aircraft components is often dominated by a few large, established players like Lockheed Martin, due to the complexity and security requirements. Spending in this sub-sector is driven by evolving threats and the need to upgrade aging platforms.

Small Business Impact

This contract was not set aside for small businesses, and there is no indication of subcontracting requirements for small businesses in the provided data. The sole-source nature of the award further limits opportunities for small businesses to participate in this specific contract. While Lockheed Martin may engage small businesses in other capacities, this particular award does not appear to directly benefit the small business ecosystem.

Oversight & Accountability

Oversight for this contract will likely fall under the Department of the Air Force's 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 is limited by the sole-source nature, but audit rights and reporting requirements typical of CPFF contracts should be in place. The Inspector General of the Department of Defense may also have jurisdiction for audits and investigations.

Related Government Programs

Aircraft Manufacturing
Avionics Systems
Defense Electronics
Digital Systems Modernization
Air Force Procurement

Risk Flags

Sole-source award
Cost-plus-fixed-fee pricing structure
Lack of small business participation

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $39.8 million to LOCKHEED MARTIN CORPORATION. REDESIGN FOR THE DIGITAL RECEIVER MODULE (DRM)

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 $39.8 million.

What is the period of performance?

Start: 2025-09-30. End: 2030-09-30.

What is Lockheed Martin's track record with similar digital receiver module contracts for the Air Force?

Lockheed Martin Corporation has a long and extensive history of providing complex systems and components for U.S. Air Force aircraft, including avionics and electronic warfare systems. While specific contract details for 'Digital Receiver Module (DRM) redesign' are not publicly itemized in this summary, the company's portfolio includes numerous contracts for aircraft manufacturing, system integration, and technology upgrades. Their experience with advanced electronics and communication systems suggests a strong capability to undertake this type of redesign. Historical performance data, often available through contract databases like FPDS, would provide a more granular view of their success rates, delivery performance, and cost management on comparable projects. Given their status as a major defense contractor, they are generally considered to have a robust track record, though specific project outcomes can vary.

How does the $39.8 million value compare to similar DRM redesign contracts?

Directly comparing the $39.8 million value of this specific DRM redesign contract to similar public contracts is challenging due to the specialized nature of the component and the sole-source award. Typically, competitive bids for complex electronic system redesigns can vary widely based on the scope of work, required technological advancements, and the specific aircraft platform. Contracts for R&D or significant redesigns of critical components often fall into the multi-million dollar range. Without knowing the exact scope of the 'redesign' (e.g., minor updates vs. a complete overhaul, specific performance improvements targeted), it's difficult to benchmark. However, for a sole-source award to a major defense contractor like Lockheed Martin, this figure appears within a plausible range for significant engineering and development efforts on advanced military hardware.

What are the primary risks associated with a Cost Plus Fixed Fee (CPFF) contract for this type of work?

The primary risk associated with a Cost Plus Fixed Fee (CPFF) contract for a DRM redesign is the potential for cost overruns. In a CPFF structure, the contractor is reimbursed for allowable costs incurred, plus a predetermined fixed fee representing profit. While the fee is fixed, the total cost is not. If the contractor's costs exceed initial estimates, the government bears the burden of these increased costs, up to the contract ceiling. This can incentivize less cost-conscious behavior from the contractor, as their profit margin (the fixed fee) remains constant regardless of the actual costs incurred. Effective oversight, detailed cost tracking, and robust negotiation of the initial cost estimates and fee are crucial to mitigate these risks.

What is the expected program effectiveness and impact of this DRM redesign?

The expected program effectiveness of this DRM redesign is to enhance the performance, reliability, and potentially the capabilities of the digital receiver module within Air Force aircraft. Modernizing such a critical component can lead to improved signal processing, better data throughput, increased resistance to electronic warfare, and potentially reduced maintenance requirements. The impact is expected to be a more capable and resilient avionics suite, contributing to the overall mission effectiveness of the aircraft platforms utilizing the DRM. This upgrade is likely part of a broader strategy to maintain technological superiority and address obsolescence in aging aircraft systems.

How has Air Force spending on aircraft manufacturing and avionics components trended historically?

Historically, the U.S. Air Force has consistently allocated significant portions of its budget to aircraft manufacturing and the procurement of advanced avionics and electronic systems. Spending in these areas is driven by the need to maintain a modern air fleet, replace aging platforms, and counter evolving threats. Trends show a continuous investment in upgrading existing aircraft with new technologies, including digital systems, as well as procuring new, technologically advanced platforms. While specific figures fluctuate annually based on strategic priorities and budget allocations, the procurement of sophisticated components like digital receiver modules represents a stable and critical area of defense spending.

What are the implications of awarding this contract solely to Lockheed Martin for future competition in this niche?

Awarding this contract solely to Lockheed Martin, particularly on a sole-source basis, has several implications for future competition in this niche. Firstly, it means that other potential suppliers or integrators of similar digital receiver modules were not given an opportunity to compete, potentially stifling innovation and market entry. Secondly, it reinforces Lockheed Martin's position as a key provider in this specific area, potentially creating a barrier for competitors seeking to gain a foothold. While sole-source awards are justified under specific circumstances (e.g., unique capabilities, urgent needs), their repeated use can lead to market concentration and reduced competitive pressure over time, potentially impacting long-term pricing and technological diversity.

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: $80,000,000

Exercised Options: $80,000,000

Current Obligation: $39,809,362

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