DoD's $506.6M Advance Procurement for Aircraft Manufacturing Awarded to Lockheed Martin
Contract Overview
Contract Amount: $506,636,677 ($506.6M)
Contractor: Lockheed Martin Corporation
Awarding Agency: Department of Defense
Start Date: 2008-11-26
End Date: 2014-11-30
Contract Duration: 2,195 days
Daily Burn Rate: $230.8K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: FIRM FIXED PRICE
Sector: Defense
Official Description: ADVANCE PROCUREMENT FOR LOT 10
Place of Performance
Location: FORT WORTH, TARRANT County, TEXAS, 76108
State: Texas Government Spending
Plain-Language Summary
Department of Defense obligated $506.6 million to LOCKHEED MARTIN CORPORATION for work described as: ADVANCE PROCUREMENT FOR LOT 10 Key points: 1. Significant investment in aircraft manufacturing, specifically for Lot 10. 2. Sole-source award to Lockheed Martin suggests a lack of competitive alternatives or strategic sourcing. 3. Long contract duration (2008-2014) indicates a substantial, multi-year commitment. 4. The 'Aircraft Manufacturing' NAICS code points to a critical defense industrial base component.
Value Assessment
Rating: questionable
The contract value of $506.6M for advance procurement is substantial. Without specific unit costs or comparison data for similar advance procurement contracts for aircraft, assessing its value is difficult. The lack of competition raises concerns about potential overpricing.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was not competed, indicating a sole-source award. This method limits price discovery and potentially leads to higher costs for taxpayers as there is no market pressure to offer competitive pricing.
Taxpayer Impact: The absence of competition in a contract of this magnitude could result in millions of dollars in unnecessary spending for taxpayers.
Public Impact
Taxpayers may be paying a premium due to the lack of competitive bidding. The long-term nature of the contract ties significant federal funds to a single supplier. This award impacts the broader aerospace and defense industrial base.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Lack of competition
- High contract value
- Long contract duration
Positive Signals
- Advance procurement ensures supply chain readiness
- Supports critical defense manufacturing capabilities
Sector Analysis
This contract falls under the Aircraft Manufacturing sector, a critical component of the defense industrial base. Spending in this sector is often characterized by high R&D costs, long production cycles, and significant government oversight due to national security implications.
Small Business Impact
The data indicates this contract was awarded to Lockheed Martin Corporation, a large prime contractor. There is no information suggesting that small businesses were involved as subcontractors or partners in this specific award, which is common for large sole-source defense contracts.
Oversight & Accountability
Given the sole-source nature and significant value, robust oversight would be crucial to ensure fair pricing and contract performance. The contract's long duration necessitates continuous monitoring by the Department of the Air Force to manage risks and ensure value for money.
Related Government Programs
- Aircraft Manufacturing
- Department of Defense Contracting
- Department of the Air Force Programs
Risk Flags
- Lack of competition may lead to inflated prices.
- Long contract duration increases exposure to market and cost fluctuations.
- Potential for cost overruns without strong oversight.
- Limited transparency into the sole-source justification and pricing.
Tags
aircraft-manufacturing, department-of-defense, tx, definitive-contract, 100m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $506.6 million to LOCKHEED MARTIN CORPORATION. ADVANCE PROCUREMENT FOR LOT 10
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 $506.6 million.
What is the period of performance?
Start: 2008-11-26. End: 2014-11-30.
What was the justification for awarding this contract on a sole-source basis, and were alternative competitive strategies considered?
Sole-source awards are typically justified when only one responsible source can provide the required supplies or services. For advance procurement, this might be due to unique manufacturing capabilities, proprietary technology, or existing production lines. However, the government should always explore if competition is feasible, even for specialized components, to ensure the best value and price for taxpayers.
How does the $506.6M advance procurement cost compare to industry benchmarks for similar aircraft programs?
Benchmarking this advance procurement cost requires detailed analysis of similar contracts for comparable aircraft programs, considering factors like aircraft type, complexity, and production volume. Without access to specific cost breakdowns and market data, it's challenging to definitively state if $506.6M is competitive. However, the lack of competition inherently raises concerns about potential price inflation compared to a fully competed scenario.
What mechanisms are in place to ensure cost control and prevent overruns throughout the multi-year duration of this contract?
For a multi-year contract like this, cost control mechanisms typically include firm fixed-price agreements (as indicated), regular performance reviews, audits, and potentially incentive clauses. The Department of the Air Force would be responsible for diligent contract management, monitoring expenditures against milestones, and ensuring Lockheed Martin adheres to the agreed-upon pricing and delivery schedules to mitigate financial risks.
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
Address: LOCKHEED BLVD, FORT WORTH, TX, 76108
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business
Financial Breakdown
Contract Ceiling: $506,636,677
Exercised Options: $506,636,677
Current Obligation: $506,636,677
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: NO
Timeline
Start Date: 2008-11-26
Current End Date: 2014-11-30
Potential End Date: 2014-11-30 00:00:00
Last Modified: 2023-01-27
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)