DoD awards $328M to Lockheed Martin for C-5 contractor logistics support, a sole-source contract

Contract Overview

Contract Amount: $32,844,125 ($32.8M)

Contractor: Lockheed Martin Corp

Awarding Agency: Department of Defense

Start Date: 2019-02-01

End Date: 2023-01-31

Contract Duration: 1,460 days

Daily Burn Rate: $22.5K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: C-5 CONTRACTOR LOGISTICS SUPPORT (CLS)

Place of Performance

Location: MARIETTA, COBB County, GEORGIA, 30063

State: Georgia Government Spending

Plain-Language Summary

Department of Defense obligated $32.8 million to LOCKHEED MARTIN CORP for work described as: C-5 CONTRACTOR LOGISTICS SUPPORT (CLS) Key points: 1. Contract awarded on a sole-source basis, limiting price competition. 2. The contract covers contractor logistics support for the C-5 aircraft fleet. 3. Performance period spans nearly four years, indicating a long-term need. 4. The contract type is Cost Plus Fixed Fee, which can incentivize cost overruns. 5. No small business set-aside was utilized for this significant award. 6. The contract value represents a substantial investment in aircraft sustainment.

Value Assessment

Rating: questionable

Benchmarking the value of this sole-source contract is challenging due to the lack of competitive bids. The Cost Plus Fixed Fee (CPFF) structure, while common for complex services, carries inherent risks of cost escalation. Without comparable sole-source awards or detailed cost breakdowns, it's difficult to definitively assess if the $328 million represents fair and reasonable pricing. Further analysis of the fixed fee and estimated costs would be necessary for a more robust value assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. This approach is typically used when only one vendor possesses the necessary capabilities or when urgency precludes a full competition. The lack of competition means that price discovery through market forces was not leveraged, potentially leading to higher costs for the government.

Taxpayer Impact: Taxpayers may face higher costs due to the absence of competitive bidding. The government did not benefit from potential cost savings that could have arisen from a competitive procurement process.

Public Impact

The U.S. Air Force benefits from sustained operational readiness of the C-5 Galaxy fleet. Services include logistics support, maintenance, and sustainment for critical air mobility aircraft. The geographic impact is national, supporting a key strategic asset for global deployment. Workforce implications include sustainment of specialized technical and logistical jobs within Lockheed Martin and its supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure on pricing.
Cost Plus Fixed Fee contract type can incentivize higher costs.
Lack of transparency in cost build-up for sole-source awards.
Potential for contractor to pass through inefficiencies.
No small business participation noted.

Positive Signals

Ensures continued operational readiness of a critical strategic asset.
Leverages specialized expertise of the original equipment manufacturer.
Provides a stable sustainment solution for a complex aircraft.
Contract duration allows for long-term planning and resource allocation.

Sector Analysis

This contract falls within the aerospace and defense sector, specifically focusing on aircraft sustainment and logistics support. The market for military aircraft maintenance and support is dominated by original equipment manufacturers (OEMs) like Lockheed Martin due to proprietary knowledge and specialized tooling. Spending on aircraft sustainment is a significant portion of the Department of Defense's overall budget, reflecting the high cost of maintaining aging fleets and ensuring readiness.

Small Business Impact

This contract did not include a small business set-aside, nor is there an indication of significant subcontracting opportunities for small businesses within the provided data. As a sole-source award to a large prime contractor, the direct impact on the small business ecosystem is likely minimal unless specific subcontracting plans are mandated and executed. Further investigation into subcontracting goals would be needed to fully assess the impact.

Oversight & Accountability

Oversight for this contract is likely managed by the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor performance and compliance. The CPFF contract type necessitates close monitoring of costs and performance to ensure value for money. Transparency is limited by the sole-source nature, but contract modifications, performance reports, and financial audits would serve as key accountability measures. Inspector General involvement would be triggered by specific allegations of fraud, waste, or abuse.

Related Government Programs

C-17 Globemaster III Sustainment
Air Mobility Command Logistics Support
Aircraft Fleet Readiness Programs
Defense Logistics Agency Support Contracts

Risk Flags

Sole-source award
Cost Plus Fixed Fee contract type
Lack of competitive bidding
Potential for cost overruns

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $32.8 million to LOCKHEED MARTIN CORP. C-5 CONTRACTOR LOGISTICS SUPPORT (CLS)

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 $32.8 million.

What is the period of performance?

Start: 2019-02-01. End: 2023-01-31.

What is Lockheed Martin's track record with similar sole-source logistics support contracts for major DoD aircraft?

Lockheed Martin has a long history of providing contractor logistics support (CLS) for major U.S. military aircraft platforms, including the C-5, C-130, F-16, and F-35. Many of these contracts, particularly for legacy platforms or highly specialized systems, have been awarded on a sole-source or limited-competition basis due to the unique technical expertise and proprietary data held by the OEM. While this ensures continuity and leverages deep product knowledge, it also raises concerns about cost control and the potential for reduced price competition, as seen in this C-5 CLS award. The DoD often relies on robust oversight and negotiation strategies to mitigate these risks in sole-source scenarios.

How does the $328 million contract value compare to historical spending on C-5 logistics support?

Historical spending data for C-5 contractor logistics support prior to this $328 million award would be crucial for a direct comparison. However, given the aging C-5 fleet and the increasing complexity of maintaining older aircraft, it is plausible that sustainment costs have been rising. The nearly four-year duration of this contract suggests a significant, ongoing requirement. Without specific historical figures for comparable periods (e.g., previous 4-year contracts or annual spending), it's difficult to definitively state if this award represents an increase or decrease in spending trends. However, the substantial dollar amount indicates a continued high level of investment in keeping the C-5 fleet operational.

What are the primary risks associated with a Cost Plus Fixed Fee (CPFF) contract for aircraft logistics?

The primary risk with a Cost Plus Fixed Fee (CPFF) contract, such as this one for C-5 logistics support, is that the contractor has less incentive to control costs compared to fixed-price contracts. While the 'fixed fee' provides a guaranteed profit margin, the 'cost plus' element means the government reimburses the contractor for allowable costs incurred. If costs increase, the contractor's profit (the fixed fee) remains the same, but the total government expenditure rises. This can lead to cost overruns if the contractor is not diligent in managing expenses or if unforeseen technical issues arise. Effective government oversight is critical to scrutinize costs and ensure efficiency.

What is the expected impact of this contract on the operational readiness of the C-5 Galaxy fleet?

This contract is expected to significantly enhance and maintain the operational readiness of the C-5 Galaxy fleet. The C-5 is a critical strategic airlift asset for the U.S. Air Force, capable of transporting exceptionally large and heavy equipment over intercontinental distances. By providing comprehensive contractor logistics support, including maintenance, repair, and supply chain management, this award ensures that the aircraft are available and mission-capable when needed. Sustained readiness is vital for global power projection, humanitarian aid delivery, and supporting military operations worldwide.

Given the sole-source nature, what mechanisms are in place to ensure fair pricing and prevent contractor overreach?

In sole-source procurements, ensuring fair pricing relies heavily on robust government negotiation, cost analysis, and oversight. The Department of Defense typically employs technical experts to review contractor cost proposals, validate assumptions, and benchmark against industry standards where possible. Price negotiation strategies aim to achieve a reasonable profit margin for the contractor while minimizing costs to the government. Continuous monitoring of performance and costs throughout the contract's life, often by agencies like the Defense Contract Management Agency (DCMA), helps identify inefficiencies or potential overcharges. Audits and reviews by the Government Accountability Office (GAO) or the DoD Inspector General can also provide additional layers of scrutiny.

Industry Classification

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

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: COST PLUS FIXED FEE (U)

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: $32,962,235

Exercised Options: $32,962,235

Current Obligation: $32,844,125

Subaward Activity

Number of Subawards: 27

Total Subaward Amount: $2,562,327

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA852516D0003

IDV Type: IDC

Timeline