DoD awards $40.2M for C-130J sustainment to Lockheed Martin, raising concerns about competition
Contract Overview
Contract Amount: $40,215,831 ($40.2M)
Contractor: Lockheed Martin Corp
Awarding Agency: Department of Defense
Start Date: 2016-08-03
End Date: 2018-01-31
Contract Duration: 546 days
Daily Burn Rate: $73.7K/day
Competition Type: NOT COMPETED
Pricing Type: FIRM FIXED PRICE
Sector: Defense
Official Description: IGF::OT::IGF C-130J WEAPON SYSTEM LONG TERM SUSTAINMENT
Place of Performance
Location: MARIETTA, COBB County, GEORGIA, 30063
State: Georgia Government Spending
Plain-Language Summary
Department of Defense obligated $40.2 million to LOCKHEED MARTIN CORP for work described as: IGF::OT::IGF C-130J WEAPON SYSTEM LONG TERM SUSTAINMENT Key points: 1. Significant contract value for long-term weapon system support. 2. Sole-source award to incumbent contractor limits competitive pricing. 3. Potential for cost overruns due to lack of competitive pressure. 4. Defense sector spending on aircraft sustainment is substantial.
Value Assessment
Rating: questionable
The contract's firm fixed price structure is positive, but the lack of competition makes it difficult to assess if the $40.2M price is optimal compared to potential alternatives. Benchmarking against similar sustainment contracts for large aircraft would be beneficial.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was not competed, indicating a sole-source award to Lockheed Martin. This approach bypasses the competitive process, potentially leading to higher prices and reduced innovation as there is no market pressure to drive efficiency.
Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive bidding, as the government did not explore potentially lower-cost options.
Public Impact
Ensures continued operational readiness of the C-130J fleet. Supports critical military airlift capabilities. Potential for higher costs impacts overall defense budget allocation.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award
- Lack of competition
- Potential for price escalation
Positive Signals
- Firm fixed price contract
- Ensures system sustainment
Sector Analysis
This contract falls within the Defense sector, specifically focusing on aircraft weapon system sustainment. Spending in this area is critical for maintaining military readiness but often involves high costs due to specialized requirements and limited contractor pools.
Small Business Impact
This contract was awarded to Lockheed Martin, a large prime contractor. There is no indication of subcontracting opportunities for small businesses in the provided data, suggesting limited direct impact on the small business sector for this specific award.
Oversight & Accountability
The sole-source nature of this award warrants close oversight to ensure fair pricing and prevent potential waste. The Department of Defense should document the justification for not competing this requirement thoroughly.
Related Government Programs
- Engineering Services
- Department of Defense Contracting
- Defense Contract Management Agency Programs
Risk Flags
- Sole-source award limits competition.
- Potential for higher costs due to lack of market pressure.
- Limited transparency on pricing justification.
- No clear small business participation outlined.
Tags
engineering-services, department-of-defense, ga, delivery-order, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $40.2 million to LOCKHEED MARTIN CORP. IGF::OT::IGF C-130J WEAPON SYSTEM LONG TERM SUSTAINMENT
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 $40.2 million.
What is the period of performance?
Start: 2016-08-03. End: 2018-01-31.
What is the justification for the sole-source award of this critical sustainment contract?
The justification for a sole-source award typically stems from unique capabilities, proprietary technology, or the need for continuity with an existing system. For the C-130J, Lockheed Martin is the original equipment manufacturer, possessing unique knowledge and tooling essential for long-term sustainment. However, the government should still ensure this justification is robust and that pricing is fair through rigorous negotiation and independent cost analysis.
How does the lack of competition impact the long-term cost-effectiveness of C-130J sustainment?
The absence of competition inherently removes market pressure that drives down prices and encourages innovation. While a firm fixed price contract provides cost certainty, the baseline price may be higher than if multiple bidders competed. Over the contract's duration, this could lead to significant additional costs for taxpayers compared to a competitively awarded contract, potentially impacting the overall affordability of operating the C-130J fleet.
Are there mechanisms in place to ensure fair pricing and value for money despite the sole-source award?
Yes, even in sole-source procurements, agencies employ mechanisms to ensure fair pricing. This includes conducting thorough cost and price analyses, using historical data, obtaining certified cost or pricing data from the contractor, and engaging in robust negotiations. Independent government cost estimators and technical experts play a crucial role in validating the contractor's proposed costs and ensuring the final price represents reasonable value.
Industry Classification
NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services
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: 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: $40,215,831
Exercised Options: $40,215,831
Current Obligation: $40,215,831
Subaward Activity
Number of Subawards: 1
Total Subaward Amount: $41,917
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: YES
Parent Contract
Parent Award PIID: FA850416D0001
IDV Type: IDC
Timeline
Start Date: 2016-08-03
Current End Date: 2018-01-31
Potential End Date: 2018-01-31 00:00:00
Last Modified: 2021-12-07
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