DoD Awards $25.6M for U-2 PDM Induction to Lockheed Martin, Raising Concerns Over Competition
Contract Overview
Contract Amount: $25,653,439 ($25.7M)
Contractor: Lockheed Martin Corporation
Awarding Agency: Department of Defense
Start Date: 2022-01-26
End Date: 2024-08-30
Contract Duration: 947 days
Daily Burn Rate: $27.1K/day
Competition Type: NOT COMPETED
Pricing Type: COST PLUS FIXED FEE
Sector: Defense
Official Description: U-2 PDM INDUCTION OF A/C 1067
Place of Performance
Location: PALMDALE, LOS ANGELES County, CALIFORNIA, 93599
Plain-Language Summary
Department of Defense obligated $25.7 million to LOCKHEED MARTIN CORPORATION for work described as: U-2 PDM INDUCTION OF A/C 1067 Key points: 1. Significant contract value awarded to a single large corporation. 2. Lack of competition raises questions about price discovery and potential overspending. 3. High-risk contract type (Cost Plus Fixed Fee) can incentivize cost overruns. 4. Aircraft manufacturing sector often dominated by a few large players.
Value Assessment
Rating: questionable
The Cost Plus Fixed Fee contract type, combined with a lack of competition, suggests potential for inflated pricing. Benchmarking against similar aircraft maintenance or upgrade contracts would be necessary to assess true value.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was awarded sole-source, meaning no other vendors were considered. This significantly limits price discovery and may lead to higher costs for taxpayers as the contractor faces no competitive pressure to offer the best price.
Taxpayer Impact: The absence of competition for this significant award means taxpayers may be paying more than necessary for the U-2 PDM induction services.
Public Impact
Taxpayers may be overpaying due to the lack of competitive bidding. The sole-source nature of the award could set a precedent for future sole-source contracts. The long duration of the contract (947 days) amplifies the potential financial impact of non-competitive pricing.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award
- Cost-plus contract type
- Lack of transparency in pricing
Positive Signals
- Awarded to a known, established defense contractor
- Contract supports critical national defense asset (U-2)
Sector Analysis
This contract falls within the aircraft manufacturing sector, which is often characterized by high barriers to entry and a limited number of large, established prime contractors. Spending in this sector can be substantial, requiring careful oversight.
Small Business Impact
The contract was awarded to Lockheed Martin Corporation, a large prime contractor. There is no indication that small businesses were involved in this specific award, either as subcontractors or prime bidders.
Oversight & Accountability
The sole-source nature of this award warrants increased oversight to ensure fair pricing and prevent potential waste. Accountability mechanisms should be robust given the lack of competitive pressure.
Related Government Programs
- Aircraft Manufacturing
- Department of Defense Contracting
- Department of the Air Force Programs
Risk Flags
- Sole-source award limits competition and price discovery.
- Cost Plus Fixed Fee contract type increases risk of cost overruns.
- Potential for contractor to lack incentive for cost control.
- Lack of transparency regarding the justification for sole-sourcing.
- Long contract duration amplifies financial risk.
Tags
aircraft-manufacturing, department-of-defense, ca, delivery-order, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $25.7 million to LOCKHEED MARTIN CORPORATION. U-2 PDM INDUCTION OF A/C 1067
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 $25.7 million.
What is the period of performance?
Start: 2022-01-26. End: 2024-08-30.
What is the justification for awarding this contract sole-source, given the potential for competitive bidding in aircraft manufacturing?
The justification for a sole-source award typically involves factors such as unique capabilities, urgent need, or lack of viable alternatives. However, for a PDM induction, it is crucial to scrutinize whether these conditions truly apply or if a competitive process could have yielded better value and pricing for the government.
How does the Cost Plus Fixed Fee (CPFF) contract type impact the risk of cost overruns and taxpayer expense?
CPFF contracts shift a significant portion of the financial risk to the government. While the contractor's profit is fixed, they are reimbursed for all allowable costs. This can incentivize less cost-consciousness, as the contractor may not be as motivated to control expenses, potentially leading to higher overall costs for the taxpayer.
What measures are in place to ensure the effectiveness and value for money of this sole-source contract for U-2 PDM induction?
Given the sole-source nature and CPFF structure, robust oversight is critical. This includes stringent auditing of costs, clear performance metrics, and regular reviews to ensure the contractor is meeting objectives efficiently. Independent cost analysis and benchmarking against similar programs are essential to validate value.
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: $27,539,657
Exercised Options: $27,539,657
Current Obligation: $25,653,439
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
Start Date: 2022-01-26
Current End Date: 2024-08-30
Potential End Date: 2024-08-30 00:00:00
Last Modified: 2024-09-17
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