DoD awards $40.6M sole-source contract for C-5 aircraft logistics support to Lockheed Martin

Contract Overview

Contract Amount: $40,569,292 ($40.6M)

Contractor: Lockheed Martin Corp

Awarding Agency: Department of Defense

Start Date: 2021-02-01

End Date: 2026-12-31

Contract Duration: 2,159 days

Daily Burn Rate: $18.8K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: CONTRACTOR LOGISTICS SUPPORT (CLS) FOR THE C-5 AIRCRAFT.

Place of Performance

Location: MARIETTA, COBB County, GEORGIA, 30063

State: Georgia Government Spending

Plain-Language Summary

Department of Defense obligated $40.6 million to LOCKHEED MARTIN CORP for work described as: CONTRACTOR LOGISTICS SUPPORT (CLS) FOR THE C-5 AIRCRAFT. Key points: 1. Contract awarded on a sole-source basis, limiting competitive pricing benefits. 2. Significant contract value for sustainment services, indicating critical support needs. 3. Long-term contract duration suggests a sustained requirement for C-5 fleet readiness. 4. Firm Fixed Price contract type shifts cost risk to the contractor. 5. No small business set-aside, potentially impacting small business participation. 6. Contractor is the original equipment manufacturer, suggesting specialized knowledge.

Value Assessment

Rating: fair

The contract value of $40.6 million over approximately five years for logistics support of the C-5 aircraft appears substantial. Benchmarking this against similar sustainment contracts for large military aircraft is challenging without more specific service details. However, given the sole-source nature and the contractor's role as the original equipment manufacturer, the pricing may reflect specialized expertise and proprietary data. Further analysis would require comparing the cost per flying hour or per maintenance action against industry averages for comparable platforms.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, Lockheed Martin Corp, was solicited. This approach is typically used when a single source possesses unique capabilities, proprietary data, or is the original equipment manufacturer, as is the case here with the C-5 aircraft. The lack of competition means that the government did not benefit from a bidding process that could drive down prices through market forces. The justification for sole-source procurement would need to be robust to ensure fair value.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive bidding. Without competing offers, there is less pressure on the contractor to offer the most cost-effective solution, potentially leading to higher overall expenditures for sustainment.

Public Impact

The U.S. Air Force benefits from continued operational readiness of its C-5M Super Galaxy fleet. This contract ensures the availability of critical airlift capabilities for global logistics and strategic deployment. The contract supports the maintenance and sustainment of a key strategic asset for national defense. Work is likely concentrated at locations where C-5 aircraft are based or maintained, potentially impacting the aerospace workforce in those regions.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially increasing costs for taxpayers.
Lack of small business participation may reduce opportunities for smaller firms in the aerospace sustainment sector.
High reliance on a single contractor for critical sustainment could pose long-term supply chain risks.
Contract duration extends over several years, requiring ongoing budget allocation and oversight.

Positive Signals

Contractor is the OEM, ensuring access to specialized knowledge and parts for the C-5.
Firm Fixed Price contract shifts cost overrun risk to the contractor.
Long-term award provides stability for sustainment operations and planning.
Contract supports a critical national defense asset, ensuring mission readiness.

Sector Analysis

The aerospace and defense industry is characterized by high R&D costs, complex supply chains, and significant government procurement. Sustainment and logistics support contracts, like this one for the C-5 aircraft, are crucial for maintaining the operational readiness of military fleets. The market for such services is often dominated by original equipment manufacturers due to proprietary knowledge and intellectual property. Comparable spending benchmarks for large military aircraft sustainment can vary widely based on platform age, complexity, and operational tempo.

Small Business Impact

This contract does not appear to include a small business set-aside, nor is there an indication of subcontracting goals for small businesses. As a sole-source award to a large prime contractor, the direct opportunities for small businesses may be limited unless they are part of Lockheed Martin's established supply chain. The absence of specific small business provisions could mean a missed opportunity to foster innovation and competition within the small business aerospace ecosystem for this critical sustainment effort.

Oversight & Accountability

Oversight for this contract would primarily reside within the Department of the Air Force, likely managed by program executive offices and contracting officers responsible for airlift and sustainment. Accountability measures are embedded in the Firm Fixed Price contract terms, requiring Lockheed Martin to deliver specified logistics support within the agreed-upon price. Transparency may be limited due to the sole-source nature, but contract modifications and performance reports would be subject to review. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

C-17 Globemaster III Sustainment
Air Mobility Command Logistics Support
Aircraft Parts and Auxiliary Equipment Manufacturing
Aerospace Product Support Services
Defense Logistics Agency Aviation

Risk Flags

Sole-source award lacks competitive pricing pressure.
Potential for cost overruns if scope is not tightly managed.
Dependence on a single OEM for critical sustainment.
Limited visibility into specific service cost breakdowns.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $40.6 million to LOCKHEED MARTIN CORP. CONTRACTOR LOGISTICS SUPPORT (CLS) FOR THE C-5 AIRCRAFT.

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 $40.6 million.

What is the period of performance?

Start: 2021-02-01. End: 2026-12-31.

What is the historical spending trend for C-5 aircraft logistics support, and how does this award compare?

Historical spending data for C-5 logistics support prior to this specific award would provide crucial context. Without access to detailed historical contract databases, it's difficult to establish a precise trend. However, the $40.6 million awarded here represents a significant investment over its five-year duration, averaging over $8 million annually. This figure should be compared against previous years' spending on C-5 sustainment, factoring in inflation, changes in fleet size, operational tempo, and any major upgrades or modifications. If previous annual spending was significantly lower, this award might indicate increased sustainment needs or a shift in contract structure. Conversely, if it aligns with or is lower than historical averages adjusted for inflation, it could suggest cost efficiencies or stable requirements.

What specific logistics support services are included under this $40.6 million contract?

The contract broadly covers 'CONTRACTOR LOGISTICS SUPPORT (CLS) FOR THE C-5 AIRCRAFT.' This typically encompasses a range of services essential for maintaining the operational readiness of the aircraft. These services often include supply chain management, inventory control, spare parts provisioning, maintenance and repair services (both scheduled and unscheduled), technical support, engineering services, and potentially depot-level maintenance. The specific breakdown of services and their allocated costs within the $40.6 million is not detailed in the provided data. Understanding the precise scope is critical for evaluating the value proposition and ensuring all necessary support functions are adequately funded and performed.

What is Lockheed Martin's track record in providing logistics support for the C-5 or similar large military aircraft?

Lockheed Martin is the original equipment manufacturer (OEM) for the C-5 Galaxy and its modernized variant, the C-5M Super Galaxy. As the OEM, they possess unparalleled knowledge of the aircraft's design, systems, and maintenance requirements. Their track record in providing sustainment and logistics support for the C-5 is extensive, spanning decades. They have been responsible for major upgrades, such as the Avionics Modernization Program (AMP) and the Reliability Enhancement and Re-engining Program (RERP), which transformed the C-5 fleet. Their experience with other large military transport aircraft, like the C-130 Hercules, further demonstrates their capability in managing complex logistics support programs for strategic airlifters.

How does the firm-fixed-price contract type impact risk and cost certainty for this C-5 CLS contract?

A Firm Fixed Price (FFP) contract type is generally advantageous for the government when the scope of work is well-defined and the risk of cost overruns can be reasonably estimated. Under an FFP contract, Lockheed Martin is obligated to perform the specified logistics support services for the agreed-upon price of $40.6 million, regardless of their actual costs. This shifts the primary financial risk of cost overruns from the government to the contractor. If Lockheed Martin's costs exceed their estimates, their profit margin will decrease. Conversely, if they manage their costs efficiently, their profit will increase. This contract type provides cost certainty for the government, making budgeting more predictable, but it also means the contractor has a strong incentive to control costs, which can sometimes lead to compromises in service quality if not carefully monitored.

Are there any specific performance metrics or key performance indicators (KPIs) associated with this contract?

The provided data does not specify the performance metrics or Key Performance Indicators (KPIs) associated with this contract. However, for a critical logistics support contract like this, typical KPIs would likely include metrics related to aircraft availability rates, mission capable rates, on-time delivery of parts and services, turnaround times for maintenance actions, and adherence to technical orders. The effectiveness of the contractor's performance would be measured against these established benchmarks. The government would monitor these KPIs to ensure the C-5 fleet maintains the required operational readiness levels and that the contractor is meeting its contractual obligations. Failure to meet critical KPIs could result in contractually defined remedies or incentives.

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: 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: $40,569,292

Exercised Options: $40,569,292

Current Obligation: $40,569,292

Subaward Activity

Number of Subawards: 160

Total Subaward Amount: $15,191,426

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA852521D0003

IDV Type: IDC

Timeline