DoD Awards $75.6M C-130J Sustainment Contract to Lockheed Martin, Raising Concerns Over Competition

Contract Overview

Contract Amount: $75,613,958 ($75.6M)

Contractor: Lockheed Martin Corp

Awarding Agency: Department of Defense

Start Date: 2019-08-01

End Date: 2024-07-31

Contract Duration: 1,826 days

Daily Burn Rate: $41.4K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Defense

Official Description: C-130J LONG TERM SUSTAINMENT

Place of Performance

Location: MARIETTA, COBB County, GEORGIA, 30063

State: Georgia Government Spending

Plain-Language Summary

Department of Defense obligated $75.6 million to LOCKHEED MARTIN CORP for work described as: C-130J LONG TERM SUSTAINMENT Key points: 1. Significant long-term sustainment contract awarded to incumbent. 2. Lack of competition may lead to suboptimal pricing. 3. Potential for cost overruns due to cost-plus contract type. 4. Engineering services sector sees substantial sole-source award.

Value Assessment

Rating: questionable

The contract's cost-plus incentive fee structure, combined with a lack of competition, raises questions about value for money. Benchmarking against similar sustainment contracts for large aircraft platforms is difficult without competitive data.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award to Lockheed Martin. The absence of competition limits price discovery and potentially allows for higher costs than might be achieved in an open market.

Taxpayer Impact: Taxpayers may bear higher costs due to the lack of competitive pressure on pricing for this critical aircraft sustainment.

Public Impact

Ensures continued operational readiness of the C-130J Super Hercules fleet. Supports critical airlift capabilities for national defense and humanitarian missions. Sustains jobs within Lockheed Martin and its supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award
Cost-plus contract type
Long-term duration

Positive Signals

Essential for fleet readiness
Supports critical mission capabilities

Sector Analysis

This award falls within the Engineering Services sector, specifically supporting aerospace and defense platforms. Defense sustainment contracts are often long-term and can represent significant portions of agency budgets, especially for major weapon systems like the C-130J.

Small Business Impact

The contract does not indicate any specific set-asides for small businesses. As a sole-source award to a large prime contractor, opportunities for small business participation may be limited to subcontracting roles.

Oversight & Accountability

The Department of Defense, through the Defense Contract Management Agency, is responsible for overseeing this contract. However, the lack of competition limits the agency's ability to ensure the most cost-effective outcome through market forces.

Related Government Programs

Engineering Services
Department of Defense Contracting
Defense Contract Management Agency Programs

Risk Flags

Lack of competition
Cost-plus contract type
Potential for cost overruns
Limited transparency in pricing
No small business participation noted

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $75.6 million to LOCKHEED MARTIN CORP. C-130J 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 $75.6 million.

What is the period of performance?

Start: 2019-08-01. End: 2024-07-31.

What is the projected cost savings if this contract had been competed?

Quantifying exact savings from a hypothetical competition is challenging. However, competitive bidding typically drives down prices by 10-30% or more, depending on market dynamics and the number of bidders. Without competition, the government relies on negotiation and oversight to control costs, which may be less effective.

What are the risks associated with a sole-source, cost-plus contract for long-term sustainment?

The primary risks include inflated costs due to the contractor having less incentive to control expenses, potential for scope creep, and reduced innovation. The government bears a greater burden in monitoring costs and performance to mitigate these risks, which requires significant resources and expertise.

How does this contract ensure the long-term effectiveness of the C-130J fleet?

This contract is crucial for maintaining the operational readiness and availability of the C-130J fleet by providing necessary engineering support, parts, and maintenance. Its long-term nature aims to ensure consistent support throughout the aircraft's service life, thereby preserving its effectiveness for military operations.

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: COST PLUS INCENTIVE FEE (V)

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: $75,613,958

Exercised Options: $75,613,958

Current Obligation: $75,613,958

Actual Outlays: $17,092,997

Subaward Activity

Number of Subawards: 105

Total Subaward Amount: $4,447,489

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA850416D0001

IDV Type: IDC

Timeline