Air Force awards $7.58B contract to Lockheed Martin for F-22 aircraft manufacturing and sustainment

Contract Overview

Contract Amount: $7,581,647,887 ($7.6B)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2005-12-23

End Date: 2016-02-27

Contract Duration: 3,718 days

Daily Burn Rate: $2.0M/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 200610!000027!5700!FA8611!ASC/YFK !FA861106C2899 !A!N! !N! ! !20051223!20060512!008016958!008016958!834951691!N!LOCKHEED MARTIN CORPORATION !LOCKHEED BLVD !FORT WORTH !TX!76108!49756!067!13!MARIETTA !COBB !GEORGIA !+000193874000!N!N!000193874000!1510!AIRCRAFT FIXED WING !A1A!AIRFRAMES AND SPARES !265 !F-22 !336411!E! !3! ! ! ! ! !99990909!B! ! !A! !D!N!J!1!001!N!1A!A!Y!A! ! !N!C!N! ! ! !Z!Z!A!A!000!A!C!N! ! ! !Y! ! !0001! !

Place of Performance

Location: FORT WORTH, TARRANT County, TEXAS, 76108

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $7.58 billion to LOCKHEED MARTIN CORPORATION for work described as: 200610!000027!5700!FA8611!ASC/YFK !FA861106C2899 !A!N! !N! ! !20051223!20060512!008016958!008016958!834951691!N!LOCKHEED MARTIN CORPORATION !LOCKHEED BLVD !FORT WORTH !TX!76108!49756!067!13!MARIETTA !COBB… Key points: 1. Contract awarded on a sole-source basis, raising questions about price competition. 2. Significant portion of contract value allocated to airframes and spares, indicating ongoing production or sustainment needs. 3. Long contract duration suggests a long-term commitment to the F-22 program. 4. High contract value indicates substantial investment in advanced fighter aircraft. 5. Geographic concentration of contractor in Texas, with potential implications for regional economic impact.

Value Assessment

Rating: questionable

The contract value of $7.58 billion for F-22 aircraft manufacturing and sustainment is substantial. Without comparable sole-source contracts for similar advanced fighter aircraft, a direct value-for-money assessment is difficult. However, the lack of competition inherently limits the government's ability to ensure the lowest possible price. Benchmarking against other sole-source defense contracts would be necessary for a more precise evaluation of pricing efficiency.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one bidder, Lockheed Martin Corporation, was considered. This approach is typically used when a unique capability or proprietary technology is involved, or when only one source is capable of meeting the requirement. The absence of competition means there was no direct price negotiation against alternative providers, potentially leading to higher costs for the government.

Taxpayer Impact: Taxpayers may have paid a premium due to the lack of competitive bidding. Without competing offers, it is difficult to ascertain if the price reflects fair market value.

Public Impact

The primary beneficiaries are the U.S. Air Force and national defense, through the acquisition and sustainment of F-22 fighter jets. Services delivered include the manufacturing of aircraft, specifically airframes and spares, and likely ongoing sustainment and support for the F-22 fleet. The geographic impact is concentrated around Lockheed Martin's facilities in Fort Worth, Texas, and Marietta, Georgia, supporting jobs and economic activity in those regions. Workforce implications include employment for highly skilled engineers, technicians, and manufacturing personnel involved in advanced aerospace production.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price discovery and potentially increases costs for taxpayers.
Long contract duration could lead to cost overruns if not managed effectively.
Reliance on a single contractor for critical defense assets poses a strategic risk.

Positive Signals

Contract ensures continued availability of advanced air superiority aircraft.
High value indicates significant investment in maintaining technological edge.
Contractor has a long-standing relationship with the Air Force for this platform.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on advanced fighter aircraft. The F-22 Raptor is a fifth-generation stealth fighter, representing a significant investment in high-technology military hardware. The market for such specialized defense systems is typically dominated by a few large prime contractors, with significant barriers to entry for new competitors. Comparable spending benchmarks would involve other major defense procurement programs for advanced aircraft.

Small Business Impact

The provided data does not indicate any specific small business set-asides or subcontracting plans for this contract. As a large sole-source award to a major defense contractor, it is possible that subcontracting opportunities may exist for smaller businesses within the aerospace supply chain, but this is not explicitly detailed in the given information.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Air Force's contracting and program management offices. The Inspector General of the Department of Defense would also have jurisdiction to investigate potential fraud, waste, or abuse. Transparency is generally limited for sole-source defense contracts, but contract modifications and performance reports are typically maintained internally and may be subject to Freedom of Information Act requests.

Related Government Programs

F-35 Lightning II Program
B-2 Spirit Program
Advanced Fighter Aircraft Procurement
Defense Manufacturing Contracts
Aerospace Sustainment Services

Risk Flags

Sole-source award
High contract value
Long contract duration
Critical defense asset

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $7.58 billion to LOCKHEED MARTIN CORPORATION. 200610!000027!5700!FA8611!ASC/YFK !FA861106C2899 !A!N! !N! ! !20051223!20060512!008016958!008016958!834951691!N!LOCKHEED MARTIN CORPORATION !LOCKHEED BLVD !FORT WORTH !TX!76108!49756!067!13!MARIETTA !COBB !GEORGIA !+000193874000!N!N!000193874000!1510!AIRCRAFT FIXED WING !A1A!AIRFRAMES AND SPARES !265 !F-22 !336411!E! !3! ! ! ! ! !999

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 $7.58 billion.

What is the period of performance?

Start: 2005-12-23. End: 2016-02-27.

What is Lockheed Martin Corporation's track record with the F-22 program and similar defense contracts?

Lockheed Martin Corporation has been the prime contractor for the F-22 Raptor program since its inception, responsible for its design, development, production, and sustainment. Their track record with this specific platform is extensive, encompassing decades of experience. The company also holds numerous other large defense contracts with the Department of Defense across various platforms, including other fighter jets, helicopters, and aerospace systems. This long history and specialized expertise with complex military aircraft suggest a deep understanding of the F-22's requirements and a proven capability to deliver on such demanding programs. However, past performance on other contracts, particularly regarding cost control and schedule adherence, would require separate detailed analysis.

How does the pricing of this F-22 contract compare to other advanced fighter jet procurements, considering it was sole-sourced?

Direct price comparison is challenging due to the sole-source nature of this F-22 contract and the unique capabilities of the aircraft. Sole-source awards inherently lack the price discovery mechanism of competitive bidding, often resulting in higher prices than if multiple bidders vied for the contract. Advanced fighter jets are complex, high-cost platforms, and their pricing is influenced by factors like technological sophistication, production volume, and sustainment requirements. To benchmark this contract's value, one would need to compare its unit costs (if discernible) or overall value against other sole-source or competitively procured fifth-generation fighter programs, adjusting for differences in scope, quantity, and contract type. Without such detailed comparative data, assessing whether $7.58 billion represents a fair price is speculative.

What are the primary risks associated with a sole-source contract of this magnitude for critical defense assets like the F-22?

The primary risks associated with a sole-source contract of this magnitude for critical defense assets like the F-22 include: 1. **Cost Overruns:** Without competitive pressure, the contractor may have less incentive to control costs, potentially leading to prices exceeding initial estimates. 2. **Reduced Innovation:** The lack of competition can stifle innovation, as the contractor may not feel compelled to explore more efficient or advanced solutions. 3. **Dependency and Lock-in:** The government becomes highly dependent on a single supplier, making it difficult and costly to switch providers or introduce new competitors later. 4. **Potential for Inefficiency:** The absence of market forces might allow inefficiencies in production or sustainment processes to persist. 5. **Limited Bargaining Power:** The government's negotiating position is weakened, potentially resulting in less favorable terms and conditions.

What is the historical spending pattern for the F-22 program, and how does this $7.58B contract fit into that trend?

The F-22 program has historically represented a significant and costly investment for the U.S. Air Force. Initial development and production phases involved substantial outlays, with total program costs running into the tens of billions of dollars. This $7.58 billion contract, awarded in 2005 and spanning through 2016, likely covers a significant portion of the aircraft's production run and initial sustainment phases. Its value aligns with the high per-unit cost and complex manufacturing associated with advanced stealth fighter technology. Analyzing historical spending would involve examining annual appropriations, total contract values for different production lots, and sustainment funding over the F-22's lifecycle to understand how this specific award contributes to the overall financial commitment to the platform.

What are the implications of this contract for the future of the F-22 fleet and potential follow-on programs?

This contract, covering manufacturing and sustainment, is crucial for ensuring the operational readiness and longevity of the existing F-22 fleet. It signifies a continued commitment to the platform's role in air superiority missions. The substantial investment suggests the F-22 will remain a key asset for the foreseeable future. For potential follow-on programs, this contract's execution and performance could influence future decisions. Successful delivery and cost management might bolster confidence in Lockheed Martin's capabilities for subsequent advanced aircraft programs. Conversely, significant issues could prompt the Air Force to explore alternative strategies or contractors for future air combat platforms, though the specialized nature of the F-22 makes direct replacement difficult.

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

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp

Address: LOCKHEED BLVD, FORT WORTH, TX, 76108

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $14,957,376,538

Exercised Options: $7,568,131,666

Current Obligation: $7,581,647,887

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline