DoD's $134M Lockheed Martin contract for long-term sustainment faces scrutiny over sole-source award

Contract Overview

Contract Amount: $134,499,111 ($134.5M)

Contractor: Lockheed Martin Corp

Awarding Agency: Department of Defense

Start Date: 2024-02-01

End Date: 2026-10-31

Contract Duration: 1,003 days

Daily Burn Rate: $134.1K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Defense

Official Description: LONG TERM SUSTAINMENT

Place of Performance

Location: MARIETTA, COBB County, GEORGIA, 30063

State: Georgia Government Spending

Plain-Language Summary

Department of Defense obligated $134.5 million to LOCKHEED MARTIN CORP for work described as: LONG TERM SUSTAINMENT Key points: 1. The contract's value of $134.5 million over its period of performance suggests a significant investment in sustainment services. 2. Awarded to Lockheed Martin, a major defense contractor, this contract highlights the concentration of large-scale service agreements within established industry players. 3. The 'NOT COMPETED' status raises immediate questions about the justification for a sole-source award and potential missed opportunities for competitive pricing. 4. Performance context is limited without specific deliverables, but sustainment contracts are critical for maintaining operational readiness of defense assets. 5. This contract falls within the Engineering Services sector, a vital component of the defense industrial base. 6. The Cost Plus Incentive Fee (CPIF) pricing structure aims to balance contractor incentives with cost control, but requires careful monitoring.

Value Assessment

Rating: questionable

Benchmarking the value of this $134.5 million contract is challenging without detailed service descriptions and performance metrics. However, the sole-source nature of the award prevents direct price comparison with potential competitors. The CPIF structure, while designed to incentivize efficiency, can lead to cost overruns if not rigorously managed. Without a competitive bidding process, it's difficult to ascertain if the government is receiving optimal value for money compared to what might have been achieved through open competition.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not open to competition from other potential bidders. The justification for such an award typically involves unique capabilities, proprietary technology, or urgent needs where only one source can fulfill the requirement. The absence of competition limits the government's ability to leverage market forces to drive down costs and ensure the most advantageous terms.

Taxpayer Impact: Sole-source awards mean taxpayers may not benefit from the cost savings typically achieved through competitive bidding. This can result in higher overall expenditure for the government.

Public Impact

The primary beneficiaries are the Department of Defense, specifically the Air Force, which relies on these sustainment services for operational readiness. The contract delivers essential engineering and support services crucial for maintaining complex defense systems. The geographic impact is centered around the operational locations of the supported assets, likely within the United States. The contract supports specialized engineering and technical roles within Lockheed Martin, contributing to the defense workforce.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition raises concerns about potential overpricing and reduced value for taxpayer funds.
The sole-source award requires strong justification to ensure it was truly necessary and not a missed opportunity for competitive sourcing.
CPIF contracts can be complex to manage and require diligent oversight to control costs effectively.
The long-term nature of sustainment contracts necessitates ongoing performance monitoring to ensure continued value.

Positive Signals

Award to a major defense contractor like Lockheed Martin suggests access to established expertise and infrastructure for critical sustainment.
The CPIF structure, if managed well, can align contractor incentives with government cost-saving goals.
Sustainment contracts are vital for maintaining the readiness and longevity of expensive defense assets, ensuring return on investment for taxpayer-funded equipment.

Sector Analysis

The Engineering Services sector (NAICS 541330) is a critical component of the defense industrial base, providing specialized technical expertise for complex systems. This contract represents a significant portion of spending within this niche, focusing on the long-term support and maintenance of defense assets. Comparable spending benchmarks are difficult to establish without specific details on the systems being sustained, but large-scale sustainment contracts for major platforms often run into hundreds of millions or even billions of dollars over their lifecycle.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Furthermore, the prime contractor is Lockheed Martin, a large corporation. While large prime contractors are often required to subcontract a portion of their work to small businesses, the specific subcontracting plan and its impact on the small business ecosystem are not detailed here. Without set-aside provisions or clear subcontracting goals, the direct benefit to small businesses from this specific award may be limited.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Air Force's contracting and program management offices. The Cost Plus Incentive Fee structure necessitates robust financial oversight to track costs and ensure incentive targets are met appropriately. Transparency is dependent on the agency's reporting practices and the availability of contract performance data. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Defense Logistics Agency (DLA) Sustainment Programs
Air Force Materiel Command (AFMC) Sustainment Contracts
Naval Sea Systems Command (NAVSEA) Ship Maintenance Contracts
Army Aviation and Missile Command (AMCOM) Logistics Support

Risk Flags

Sole-source award justification required.
Potential for cost overruns in CPIF contract.
Lack of competitive benchmarking.
Long-term sustainment requires continuous performance monitoring.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $134.5 million to LOCKHEED MARTIN CORP. 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 (Department of the Air Force).

What is the total obligated amount?

The obligated amount is $134.5 million.

What is the period of performance?

Start: 2024-02-01. End: 2026-10-31.

What specific defense systems or platforms does this contract cover, and what is Lockheed Martin's historical performance in sustaining them?

The provided data does not specify the exact defense systems or platforms covered by this $134.5 million contract for 'LONG TERM SUSTAINMENT'. Lockheed Martin is a major defense contractor with extensive experience across various platforms, including aircraft (e.g., F-35, C-130), missiles, and space systems. Their historical performance in sustainment varies by program; some programs have seen high levels of operational readiness and cost-efficiency, while others have faced challenges related to cost growth, schedule delays, or performance issues. A detailed review of Lockheed Martin's performance on similar sustainment contracts, particularly for the specific systems this award pertains to, would be necessary to fully assess their track record in this instance. This would involve examining metrics such as on-time delivery, system availability rates, maintenance turnaround times, and adherence to budget.

How does the $134.5 million value compare to similar long-term sustainment contracts for comparable defense assets?

The $134.5 million value for this long-term sustainment contract is substantial, reflecting the complexity and duration of support required for advanced defense systems. However, without knowing the specific platforms or systems being sustained, a direct comparison is difficult. Sustainment contracts for major aircraft programs, naval vessels, or complex ground systems can range from tens of millions to billions of dollars over their lifecycles. For instance, sustainment contracts for fighter jets or strategic bombers often exceed hundreds of millions annually. This contract's value should be assessed relative to the number of assets supported, the criticality of those assets, the scope of services (e.g., depot maintenance, supply chain management, engineering support), and the contract duration (approximately 2.6 years based on the provided dates). If this contract supports a large fleet or a particularly high-value, complex system, its value might be considered within the expected range for such services.

What are the primary risks associated with a sole-source award for sustainment services, and how are they mitigated in this contract?

The primary risks associated with a sole-source award for sustainment services include potential overpricing due to the lack of competitive pressure, reduced incentive for the contractor to innovate or improve efficiency, and a lack of transparency in cost justification. Taxpayers may end up paying more than necessary. Mitigation strategies typically involve robust government oversight, detailed cost analysis (e.g., should-cost reviews), negotiation of favorable contract terms, and the use of performance-based metrics and incentives. In this Cost Plus Incentive Fee (CPIF) contract, the incentive fee component is intended to motivate Lockheed Martin to control costs and achieve performance targets. However, the effectiveness of these mitigations hinges on the government's diligence in monitoring costs, performance, and ensuring the justification for the sole-source award remains valid throughout the contract's life.

What specific performance metrics or Key Performance Indicators (KPIs) are included in this contract to measure the effectiveness of the sustainment services?

The provided data does not detail the specific performance metrics or Key Performance Indicators (KPIs) included in this contract. However, typical KPIs for long-term sustainment contracts often include metrics related to system availability (e.g., percentage of time assets are operational), reliability (e.g., Mean Time Between Failures - MTBF), maintenance turnaround time (e.g., average time to repair), supply chain responsiveness (e.g., on-time delivery of parts), and adherence to maintenance schedules. For a Cost Plus Incentive Fee (CPIF) contract, these KPIs are crucial as they directly influence the incentive fee earned by the contractor. The effectiveness of the sustainment services is measured by the contractor's ability to meet or exceed these predefined performance targets, ensuring the defense assets remain mission-capable.

How does this contract align with the Department of Defense's broader strategy for long-term sustainment and readiness of its assets?

This contract aligns with the Department of Defense's (DoD) overarching strategy to ensure the long-term readiness and operational availability of its complex weapon systems and platforms. Sustainment is a critical lifecycle phase that directly impacts mission success and the return on investment for expensive defense assets. By awarding a contract for 'LONG TERM SUSTAINMENT' to a major contractor like Lockheed Martin, the DoD aims to secure specialized expertise and maintain the operational effectiveness of its equipment. However, the sole-source nature of this award raises questions about whether it represents the most cost-effective approach within the DoD's broader strategy, which often emphasizes competition to drive value. The DoD's strategy typically involves balancing the need for specialized support with the imperative to manage costs through competitive sourcing where feasible.

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

Solicitation ID: FA850421R0002

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: $135,987,529

Exercised Options: $135,987,529

Current Obligation: $134,499,111

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA850422D0001

IDV Type: IDC

Timeline