DoD's $153M U-2 Support Contract Awarded to Lockheed Martin Raises Concerns Over Competition
Contract Overview
Contract Amount: $153,327,755 ($153.3M)
Contractor: Lockheed Martin Corporation
Awarding Agency: Department of Defense
Start Date: 2022-04-01
End Date: 2026-04-30
Contract Duration: 1,490 days
Daily Burn Rate: $102.9K/day
Competition Type: NOT COMPETED
Pricing Type: COST PLUS FIXED FEE
Sector: Defense
Official Description: FY22 U-2 SUPPORT AND SUSTAINMENT PROGRAMMED DEPOT MAINTENANCE (ORDERING PERIOD 4)
Place of Performance
Location: PALMDALE, LOS ANGELES County, CALIFORNIA, 93599
Plain-Language Summary
Department of Defense obligated $153.3 million to LOCKHEED MARTIN CORPORATION for work described as: FY22 U-2 SUPPORT AND SUSTAINMENT PROGRAMMED DEPOT MAINTENANCE (ORDERING PERIOD 4) Key points: 1. The contract is a sole-source award, limiting competitive pricing opportunities. 2. Lockheed Martin, the incumbent, is the sole provider for this specialized aircraft. 3. The cost-plus-fixed-fee structure may incentivize higher costs without strict oversight. 4. This spending falls within the Defense sector, specifically aircraft manufacturing.
Value Assessment
Rating: questionable
The contract's cost-plus-fixed-fee structure, combined with a lack of competition, makes it difficult to benchmark against similar contracts. The total award amount of $153.3M over four years suggests a significant investment for specialized support.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was not competed, indicating a sole-source award to Lockheed Martin Corporation. This lack of competition limits price discovery and potentially leads to higher costs for the government.
Taxpayer Impact: Taxpayers may be overpaying due to the absence of competitive bidding, as the government relies solely on one provider for this critical sustainment.
Public Impact
Continued operation of the aging U-2 fleet relies on this sole-source sustainment. Potential for increased costs impacts the overall defense budget allocated to aircraft maintenance. Lack of competition could stifle innovation in sustainment strategies.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award
- Cost-plus-fixed-fee contract type
- Lack of transparency in pricing
- Potential for cost overruns
Positive Signals
- Ensures continued operational capability of the U-2 fleet
- Leverages incumbent's specialized knowledge
Sector Analysis
This contract falls under the Defense sector, specifically supporting the sustainment of the U-2 reconnaissance aircraft. Spending benchmarks for specialized aircraft support can vary widely, but sole-source awards often represent a higher cost.
Small Business Impact
There is no indication of small business participation in this sole-source contract, which is typical for highly specialized, incumbent-held defense contracts.
Oversight & Accountability
The cost-plus-fixed-fee structure necessitates robust oversight from the Department of the Air Force to ensure costs are reasonable and allocable, and that the fixed fee is justified.
Related Government Programs
- Aircraft Manufacturing
- Department of Defense Contracting
- Department of the Air Force Programs
Risk Flags
- Sole-source award limits competitive pricing.
- Cost-plus-fixed-fee structure can lead to cost overruns.
- Lack of transparency in cost build-up.
- Potential for contractor to inflate costs.
- Aging aircraft sustainment can be inherently expensive.
Tags
aircraft-manufacturing, department-of-defense, ca, delivery-order, 100m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $153.3 million to LOCKHEED MARTIN CORPORATION. FY22 U-2 SUPPORT AND SUSTAINMENT PROGRAMMED DEPOT MAINTENANCE (ORDERING PERIOD 4)
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 $153.3 million.
What is the period of performance?
Start: 2022-04-01. End: 2026-04-30.
What is the justification for the sole-source award, and were alternative competitive strategies considered?
The justification for a sole-source award typically stems from unique capabilities or proprietary technology held by a single contractor. For the U-2, Lockheed Martin's long history and specialized knowledge of the platform likely form the basis. However, the government should rigorously document why competition was not feasible and explore options for future competition or market research.
How is the 'fixed fee' component of the contract determined and managed to ensure fair profit?
The fixed fee in a Cost Plus Fixed Fee (CPFF) contract is negotiated at the outset and represents the contractor's profit. Its determination should be based on factors like contract complexity, risk, and performance expectations. Robust oversight is crucial to ensure this fee remains fair and doesn't incentivize unnecessary cost escalation, especially when the direct costs are reimbursed.
What measures are in place to validate the 'costs' incurred under this CPFF contract?
Under a CPFF contract, the government reimburses the contractor's allowable costs. Validation requires stringent auditing and review processes by the Defense Contract Audit Agency (DCAA) or equivalent. This includes verifying that costs are reasonable, allocable to the contract, and comply with federal acquisition regulations to prevent overcharging.
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
Solicitation ID: FA852821R0010
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: $158,489,398
Exercised Options: $158,489,398
Current Obligation: $153,327,755
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: 2022-04-01
Current End Date: 2026-04-30
Potential End Date: 2026-04-30 00:00:00
Last Modified: 2025-09-22
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)