Lockheed Martin awarded $72.6M for C-130J Center Wing Box, a sole-source aircraft manufacturing contract

Contract Overview

Contract Amount: $72,616,908 ($72.6M)

Contractor: Lockheed Martin Corp

Awarding Agency: Department of Defense

Start Date: 2014-04-25

End Date: 2024-04-21

Contract Duration: 3,649 days

Daily Burn Rate: $19.9K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: C-130J CENTER WING BOX

Place of Performance

Location: MARIETTA, COBB County, GEORGIA, 30063

State: Georgia Government Spending

Plain-Language Summary

Department of Defense obligated $72.6 million to LOCKHEED MARTIN CORP for work described as: C-130J CENTER WING BOX Key points: 1. This contract represents a significant investment in maintaining the operational readiness of the C-130J Super Hercules fleet. 2. The sole-source nature of this award warrants scrutiny regarding potential price inflation and lack of competitive pressure. 3. Long-term sustainment of critical aircraft components like the wing box is essential for national defense capabilities. 4. The extended duration of the contract suggests a focus on long-term program support and lifecycle management. 5. Performance context is crucial to understand if the awarded price reflects fair market value for specialized aircraft manufacturing. 6. The contract falls within the broader Defense Contract Management Agency's oversight of aircraft manufacturing.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without specific cost breakdowns or comparisons to similar sole-source procurements for aircraft components. The total award of $72.6 million over approximately 10 years suggests a substantial but potentially variable annual expenditure. Without competitive bidding, it's difficult to definitively assess if the pricing is optimal. However, the firm fixed-price nature provides some cost certainty for the government, assuming the initial price was negotiated effectively.

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 Corp., was solicited. This approach is typically used when a specific contractor possesses unique capabilities or intellectual property essential for the product. While it ensures access to specialized expertise, it bypasses the competitive process, potentially leading to higher costs for the government compared to a multi-bidder scenario. The lack of competition limits price discovery and negotiation leverage.

Taxpayer Impact: Taxpayers may face higher costs due to the absence of competitive pressure, as the government relies on negotiation rather than market forces to determine fair pricing.

Public Impact

The primary beneficiaries are the U.S. Air Force and allied nations operating the C-130J Super Hercules, ensuring the continued airworthiness of these vital transport aircraft. The contract delivers critical aircraft components, specifically the center wing box, which is a structural element essential for flight. The geographic impact is national, supporting the sustainment of a key military asset across various operational bases. Workforce implications include the continued employment of skilled engineers, technicians, and manufacturing personnel at Lockheed Martin facilities involved in aircraft production.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potential cost savings for taxpayers.
Long contract duration could lead to cost overruns if not managed diligently.
Lack of transparency in sole-source negotiations makes value assessment difficult.

Positive Signals

Firm fixed-price contract provides cost certainty for the government.
Ensures continued availability of critical components for a key military aircraft.
Long-term contract supports sustained operational readiness of the C-130J fleet.

Sector Analysis

The aircraft manufacturing sector is characterized by high barriers to entry, significant capital investment, and a limited number of prime contractors capable of producing complex military aircraft. Lockheed Martin is a dominant player in this space, particularly with its C-130J program. This contract fits within the sustainment and production segment of the defense industrial base, where specialized components are crucial for maintaining fleet readiness. Comparable spending benchmarks would likely involve other sole-source or limited-competition contracts for major aircraft structural components.

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 direct impact on small businesses is likely limited to subcontracting opportunities. The extent to which Lockheed Martin utilizes small businesses for parts or services related to the center wing box production will determine the indirect impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract is managed by the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor performance and compliance. The firm fixed-price nature of the contract provides a degree of accountability by capping the government's financial liability. Transparency is limited due to the sole-source nature, but contract modifications and performance reports would be subject to internal government review and potentially Inspector General oversight if specific concerns arise.

Related Government Programs

C-130J Super Hercules Sustainment
Aircraft Component Manufacturing
Defense Logistics and Readiness
Aerospace Industry Contracts

Risk Flags

Sole-source award
Lack of competition
Long contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $72.6 million to LOCKHEED MARTIN CORP. C-130J CENTER WING BOX

Who is the contractor on this award?

The obligated recipient is LOCKHEED MARTIN CORP.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $72.6 million.

What is the period of performance?

Start: 2014-04-25. End: 2024-04-21.

What is Lockheed Martin's track record with C-130J component manufacturing and delivery?

Lockheed Martin Corporation has been the prime contractor for the C-130J Super Hercules program since its inception. Their track record with manufacturing and delivering critical components, including the center wing box, is extensive. Historically, the company has been responsible for the design, production, and sustainment of this aircraft for numerous U.S. and international operators. While specific delivery performance metrics for this particular contract (awarded in 2014) are not detailed here, Lockheed Martin's long-standing role suggests a deep understanding of the program's requirements. However, like any large defense contractor, they have faced scrutiny over cost, schedule, and performance on various programs throughout their history. For this specific contract, the sole-source nature implies a reliance on their established capabilities.

How does the $72.6 million award compare to historical spending on C-130J center wing boxes?

Direct historical spending comparisons for the C-130J center wing box are difficult without access to detailed procurement histories for this specific component across different contract vehicles. The $72.6 million figure represents the total value of this definitive contract, which spans from April 2014 to April 2024 (approximately 10 years). This suggests an average annual expenditure of roughly $7.26 million. However, this average may not reflect actual year-to-year spending, which could fluctuate based on demand and production schedules. Without knowing the number of wing boxes procured under this contract and their individual costs, a precise historical comparison is challenging. It is also important to note that this is a sole-source award, which inherently limits direct price comparisons to competitive procurements.

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

The primary risk associated with this sole-source contract is the potential for inflated pricing due to the lack of competitive bidding. Without competing offers, Lockheed Martin may have less incentive to offer the lowest possible price, and the government's negotiation leverage is diminished. Another risk is the potential for schedule delays or performance issues, although the firm fixed-price nature aims to mitigate cost overruns if such issues arise. Furthermore, reliance on a single supplier for a critical component can create supply chain vulnerabilities. The long duration of the contract also introduces risks related to technological obsolescence or changes in operational requirements over the decade.

How effective is the firm fixed-price contract type in managing costs for this component?

The firm fixed-price (FFP) contract type is generally considered effective in managing costs for the government, especially for well-defined products like aircraft components where the scope of work is clear. Under an FFP contract, the contractor assumes the majority of the risk for cost overruns. This incentivizes the contractor to control costs and perform efficiently to maximize profit. For the government, it provides a high degree of cost certainty, as the final price is fixed at the outset, barring any contract modifications. However, the effectiveness of FFP is highly dependent on the initial price negotiation. If the baseline price is too high due to the sole-source nature, the cost certainty may be at a suboptimal level for the government.

What is the strategic importance of the C-130J center wing box to the U.S. military?

The center wing box is a critical structural component of the C-130J Super Hercules aircraft, connecting the main wings to the fuselage. Its integrity is paramount for the aircraft's ability to withstand the stresses of flight, including takeoff, landing, and maneuvering under various load conditions. The C-130J is a versatile tactical airlifter used extensively by the U.S. Air Force and other military branches for troop and cargo transport, medical evacuation, and special operations missions. Ensuring the continued availability and airworthiness of these aircraft through the reliable supply of essential components like the center wing box is vital for maintaining operational readiness, global reach, and the execution of critical military operations.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft Manufacturing

Product/Service Code: AEROSPACE CRAFT AND STRUCTURAL COMPONENTS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 86 SOUTH COBB DR, MARIETTA, GA, 30063

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: $84,415,929

Exercised Options: $72,616,908

Current Obligation: $72,616,908

Subaward Activity

Number of Subawards: 39

Total Subaward Amount: $3,009,862

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline