DoD Awards $31.7M for U-2 PDM Induction to Lockheed Martin, Raising Cost Concerns

Contract Overview

Contract Amount: $31,692,054 ($31.7M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2021-06-09

End Date: 2024-08-15

Contract Duration: 1,163 days

Daily Burn Rate: $27.3K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: U-2 PDM INDUCTION OF A/C 1074

Place of Performance

Location: PALMDALE, LOS ANGELES County, CALIFORNIA, 93599

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $31.7 million to LOCKHEED MARTIN CORPORATION for work described as: U-2 PDM INDUCTION OF A/C 1074 Key points: 1. High contract value for aircraft modification. 2. Sole-source award to incumbent prime contractor. 3. Potential for cost overruns with Cost Plus Fixed Fee structure. 4. Aircraft manufacturing sector, specific to high-end military platforms.

Value Assessment

Rating: questionable

The $31.7 million award for U-2 PDM induction appears high given the nature of the work, especially without competitive bidding. Benchmarking against similar modification contracts for legacy aircraft is difficult without more data, but the lack of competition suggests potential for inflated pricing.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded sole-source to Lockheed Martin Corporation, the original manufacturer. This limits price discovery and negotiation leverage for the government, potentially leading to higher costs than if the contract had been competed.

Taxpayer Impact: Taxpayer funds are directly impacted by the lack of competition, as the government may be paying a premium for services that could have been procured at a lower cost through a competitive process.

Public Impact

Air Force's continued reliance on aging U-2 aircraft. Significant investment in maintaining specialized, high-altitude reconnaissance capabilities. Potential impact on future modernization budgets due to ongoing sustainment costs.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award
Cost-plus contract type
Lack of competition
High contract value

Positive Signals

Award to incumbent contractor
Addresses critical aircraft sustainment need

Sector Analysis

This contract falls within the Defense sector, specifically aircraft manufacturing and sustainment. Spending benchmarks for major aircraft modifications are highly variable, but sole-source awards for specialized work on legacy platforms often represent a significant portion of the overall sustainment budget.

Small Business Impact

The contract was awarded to Lockheed Martin Corporation, a large prime contractor. There is no indication of subcontracting opportunities for small businesses in the provided data, suggesting limited direct small business participation.

Oversight & Accountability

The Department of the Air Force is responsible for oversight. The Cost Plus Fixed Fee contract type requires careful monitoring of costs and performance to ensure value for money and prevent contractor overcharging.

Related Government Programs

Aircraft Manufacturing
Department of Defense Contracting
Department of the Air Force Programs

Risk Flags

Sole-source award limits competition.
Cost-plus contract type increases cost overrun risk.
High value for aircraft modification.
Lack of small business participation noted.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $31.7 million to LOCKHEED MARTIN CORPORATION. U-2 PDM INDUCTION OF A/C 1074

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 $31.7 million.

What is the period of performance?

Start: 2021-06-09. End: 2024-08-15.

What specific PDM induction tasks are included in this $31.7 million award, and how do they align with the U-2's operational requirements?

The specific tasks for the U-2 PDM (Program Depot Maintenance) induction are not detailed in the provided data. However, PDM typically involves comprehensive inspections, repairs, and upgrades to extend the aircraft's service life and maintain its operational readiness. This includes structural integrity checks, system overhauls, and potential avionics modernization, all crucial for the U-2's continued role in high-altitude reconnaissance.

Given the sole-source nature and cost-plus contract, what are the primary risks to the government regarding cost control and potential overruns?

The primary risks stem from the lack of competitive pressure and the cost-plus structure. Without competing bids, Lockheed Martin faces less incentive to offer the lowest possible price. The cost-plus nature means the government reimburses allowable costs plus a fixed fee, increasing the risk of cost overruns if the contractor's cost management is inefficient or if unforeseen issues arise during maintenance.

How does this investment in maintaining the U-2 fleet impact the Air Force's long-term strategy for intelligence, surveillance, and reconnaissance (ISR) capabilities?

This investment signifies the Air Force's continued reliance on the U-2 for specific ISR missions where its unique capabilities remain critical, despite its age. It suggests that planned replacements or alternative platforms may not yet fully meet all requirements, or that the U-2's operational lifespan is being extended significantly. This spending impacts future ISR modernization budgets, potentially delaying or altering the acquisition of next-generation ISR assets.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft 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

Address: 1011 LOCKHEED WAY, PALMDALE, CA, 93599

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: $31,692,054

Exercised Options: $31,692,054

Current Obligation: $31,692,054

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: FA852819D0015

IDV Type: IDC

Timeline