DoD's $151.5M U2 Support Contract Awarded to Lockheed Martin Faces Scrutiny
Contract Overview
Contract Amount: $151,516,486 ($151.5M)
Contractor: Lockheed Martin Corporation
Awarding Agency: Department of Defense
Start Date: 2016-04-01
End Date: 2021-01-18
Contract Duration: 1,753 days
Daily Burn Rate: $86.4K/day
Competition Type: NOT COMPETED
Pricing Type: COST PLUS FIXED FEE
Sector: Defense
Official Description: FY2016 AND 2017 U2 SUPPORT AND SERVICES AND PROGRAMMED DEPOT MAINTENANCE
Place of Performance
Location: PALMDALE, LOS ANGELES County, CALIFORNIA, 93599
Plain-Language Summary
Department of Defense obligated $151.5 million to LOCKHEED MARTIN CORPORATION for work described as: FY2016 AND 2017 U2 SUPPORT AND SERVICES AND PROGRAMMED DEPOT MAINTENANCE Key points: 1. Significant contract value ($151.5M) for U2 support and maintenance. 2. Sole-source award to Lockheed Martin raises questions about competition. 3. Long contract duration (2016-2021) warrants close monitoring. 4. Focus on programmed depot maintenance suggests critical operational support.
Value Assessment
Rating: questionable
The contract type is Cost Plus Fixed Fee, which can lead to cost overruns if not managed tightly. Benchmarking against similar sole-source support contracts is difficult without more data, but the lack of competition inherently limits price discovery.
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 significantly limits price discovery and potentially leads to higher costs for taxpayers compared to a competitive process.
Taxpayer Impact: The lack of competition for this substantial contract likely results in a higher cost to taxpayers than if multiple vendors had vied for the work.
Public Impact
Taxpayers may be overpaying due to the absence of competitive bidding. The long-term nature of the contract raises concerns about sustained value for money. Dependence on a single contractor for critical U2 support could pose a risk.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award
- Cost-plus contract type
- Long contract duration
- Lack of small business participation
Positive Signals
- Essential support for a key military asset (U2 aircraft)
- Contract awarded to incumbent/sole provider
Sector Analysis
This contract falls within the aerospace and defense sector, specifically focusing on aircraft parts and support services. Spending benchmarks for depot maintenance on legacy aircraft can vary widely, but sole-source awards often exceed competitive pricing.
Small Business Impact
The data indicates no specific small business participation in this contract. Given the sole-source nature and the prime contractor, opportunities for small businesses may have been limited or non-existent.
Oversight & Accountability
The sole-source nature of this award warrants increased oversight from the Department of Defense to ensure fair pricing and effective service delivery. Regular performance reviews and cost audits are crucial.
Related Government Programs
- Other Aircraft Parts and Auxiliary Equipment Manufacturing
- Department of Defense Contracting
- Department of the Air Force Programs
Risk Flags
- Lack of competition
- Potential for cost overruns (CPFF)
- Limited transparency in pricing
- No stated small business participation
- Long contract duration without clear competition
Tags
other-aircraft-parts-and-auxiliary-equip, department-of-defense, ca, delivery-order, 100m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $151.5 million to LOCKHEED MARTIN CORPORATION. FY2016 AND 2017 U2 SUPPORT AND SERVICES AND PROGRAMMED DEPOT MAINTENANCE
Who is the contractor on this award?
The obligated recipient is LOCKHEED MARTIN CORPORATION.
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 $151.5 million.
What is the period of performance?
Start: 2016-04-01. End: 2021-01-18.
What was the justification for awarding this contract on a sole-source basis, and were alternative competitive strategies considered?
The justification for a sole-source award typically stems from unique capabilities, proprietary technology, or urgent needs where only one contractor can fulfill the requirement. However, without detailed documentation, it's difficult to assess if alternative competitive strategies were thoroughly explored or if the justification holds up under scrutiny. This lack of competition is a primary driver of potential cost inefficiencies.
How does the cost-plus fixed fee structure impact the government's ability to control costs for U2 support services, especially in a sole-source scenario?
A Cost Plus Fixed Fee (CPFF) contract allows the contractor to recover all allowable costs plus a fixed fee representing profit. In a sole-source situation, the government lacks the leverage of competition to negotiate lower costs. This structure can incentivize contractors to incur higher costs, as their profit (the fixed fee) remains constant, potentially leading to reduced value for taxpayer money if not rigorously overseen.
What is the long-term strategy for U2 aircraft support, and will future requirements be subject to competition to ensure better value?
The long-term strategy for U2 support is critical for ensuring sustained operational readiness and cost-effectiveness. Future requirements should ideally be planned with competition in mind to leverage market forces and achieve better pricing. If the U2 fleet is nearing retirement, a sole-source extension might be justifiable, but for ongoing operations, a competitive approach is generally preferred for long-term value.
Industry Classification
NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Other Aircraft Parts and Auxiliary Equipment Manufacturing
Product/Service Code: AEROSPACE CRAFT AND STRUCTURAL COMPONENTS
Competition & Pricing
Extent Competed: NOT COMPETED
Solicitation Procedures: ONLY ONE SOURCE
Pricing Type: COST PLUS FIXED FEE (U)
Evaluated Preference: NONE
Contractor Details
Parent Company: Lockheed Martin Corp (UEI: 834951691)
Address: 1011 LOCKHEED WAY, PALMDALE, CA, 93599
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $151,516,540
Exercised Options: $151,516,540
Current Obligation: $151,516,486
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: YES
Parent Contract
Parent Award PIID: FA852814D0015
IDV Type: IDC
Timeline
Start Date: 2016-04-01
Current End Date: 2021-01-18
Potential End Date: 2021-01-18 00:00:00
Last Modified: 2020-06-11
More Contracts from Lockheed Martin Corporation
- Lrip LOT 12 Advance Acquisition Contract — $35.1B (Department of Defense)
- 200204!008532!1700!AF600 !naval AIR Systems Command !N0001902C3002 !A!N! !N! !20011026!20120430!008016958!008016958!834951691!n!lockheed Martin Corporation !lockheed Blvd !fort Worth !tx!76108!27000!439!48!fort Worth !tarrant !texas !+000026000000!n!n!018981928201!ac15!rdte/Aircraft-Eng/Manuf Develop !a1a!airframes and Spares !2ama!jast/Jsf !336411!E! !3! ! ! ! ! !99990909!B! ! !A! !a!n!r!2!002!n!1a!a!n!z! ! !N!C!N! ! ! !a!a!a!a!000!a!c!n! ! ! !Y! !N00019!0001! — $34.2B (Department of Defense)
- THE Purpose of This Modification IS to Award F-35A Lrip 15 Usaf Aircraft* Long Lead Funding — $30.1B (Department of Defense)
- THE Purpose of This Contract IS to Award Long Lead Funding for F-35A, F-35B, and F-35C Aircraft for U.S. Services, Non-Dod Partners, and FMS Customers — $24.5B (Department of Defense)
- Lrip 11 AAC — $12.3B (Department of Defense)
Other Department of Defense Contracts
- Federal Contract — $51.3B (Humana Government Business Inc)
- Lrip LOT 12 Advance Acquisition Contract — $35.1B (Lockheed Martin Corporation)
- SSN 802 and 803 Long Lead Time Material — $34.7B (Electric Boat Corporation)
- 200204!008532!1700!AF600 !naval AIR Systems Command !N0001902C3002 !A!N! !N! !20011026!20120430!008016958!008016958!834951691!n!lockheed Martin Corporation !lockheed Blvd !fort Worth !tx!76108!27000!439!48!fort Worth !tarrant !texas !+000026000000!n!n!018981928201!ac15!rdte/Aircraft-Eng/Manuf Develop !a1a!airframes and Spares !2ama!jast/Jsf !336411!E! !3! ! ! ! ! !99990909!B! ! !A! !a!n!r!2!002!n!1a!a!n!z! ! !N!C!N! ! ! !a!a!a!a!000!a!c!n! ! ! !Y! !N00019!0001! — $34.2B (Lockheed Martin Corporation)
- KC-X Modernization Program — $32.0B (THE Boeing Company)