DoD's $45.6M F22 Technology Maturation contract awarded to Lockheed Martin raises value concerns

Contract Overview

Contract Amount: $45,652,600 ($45.7M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2019-01-15

End Date: 2025-12-31

Contract Duration: 2,542 days

Daily Burn Rate: $18.0K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: F22 TECHNOLOGY MATURATION

Place of Performance

Location: FORT WORTH, TARRANT County, TEXAS, 76108

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $45.7 million to LOCKHEED MARTIN CORPORATION for work described as: F22 TECHNOLOGY MATURATION Key points: 1. Contract awarded on a sole-source basis, limiting price competition and potentially increasing costs. 2. The contract's cost-plus-fixed-fee structure may incentivize higher spending without strict cost controls. 3. Long duration of over 6 years suggests a sustained need but also prolonged exposure to potential inefficiencies. 4. Lack of competition indicators suggests potential for above-market pricing and reduced innovation. 5. Focus on technology maturation implies early-stage development, where cost overruns are common. 6. Awarded to a single, large prime contractor, potentially limiting opportunities for smaller, specialized firms.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to its sole-source nature and focus on technology maturation. The cost-plus-fixed-fee (CPFF) pricing structure, while common for R&D, can lead to higher overall costs compared to fixed-price contracts if not managed diligently. Without competitive bids, it's difficult to ascertain if the pricing reflects fair market value for the services rendered. The extended duration further complicates value assessment, as costs can escalate over time.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning there was no open competition among multiple vendors. This approach is typically used when a specific contractor possesses unique capabilities or when urgency dictates a rapid award. However, the absence of competition limits the government's ability to solicit the best possible pricing and terms, potentially leading to higher costs for taxpayers.

Taxpayer Impact: Sole-source awards mean taxpayers do not benefit from the price reductions typically achieved through competitive bidding processes. This can result in a less efficient use of public funds.

Public Impact

The primary beneficiary is the Department of Defense, specifically the Air Force, in its efforts to advance F22 fighter jet technology. Services delivered include research, development, and testing related to the F22 platform's technological enhancements. The geographic impact is concentrated around Lockheed Martin's facilities, primarily in Texas. Workforce implications include employment for engineers, technicians, and support staff involved in advanced aerospace development.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure on pricing.
Cost-plus-fixed-fee structure may not incentivize maximum cost efficiency.
Long contract duration increases exposure to potential cost escalations.
Lack of transparency in pricing due to non-competitive nature.

Positive Signals

Award to a prime contractor with extensive experience on the F22 program.
Focus on technology maturation is critical for maintaining air superiority.
Contract ensures continued development and support for a key defense asset.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on aircraft manufacturing and technology development. The market for advanced fighter jet technology is highly specialized, dominated by a few large prime contractors. Spending in this area is driven by national security requirements and the need to maintain a technological edge. Comparable spending benchmarks are difficult to establish due to the unique nature of F22 technology and the sole-source award.

Small Business Impact

This contract does not appear to include specific small business set-asides. As a sole-source award to a large prime contractor, the direct opportunities for small businesses may be limited unless they are engaged as subcontractors by Lockheed Martin. The subcontracting plan, if any, will determine the extent of small business participation. Without explicit set-asides, the broader impact on the small business ecosystem in this specialized sector remains minimal.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and program management offices. The Air Force is responsible for monitoring performance and expenditures. Inspector General investigations could be initiated if fraud, waste, or abuse is suspected. Transparency is limited due to the sole-source nature and the proprietary aspects of defense technology development.

Related Government Programs

F22 Raptor Sustainment Programs
Advanced Fighter Technology Research
Aerospace Systems Development Contracts
Department of Defense Research and Development

Risk Flags

Sole-source award
Cost-plus contract type
Long contract duration
Technology maturation phase

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $45.7 million to LOCKHEED MARTIN CORPORATION. F22 TECHNOLOGY MATURATION

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 $45.7 million.

What is the period of performance?

Start: 2019-01-15. End: 2025-12-31.

What is Lockheed Martin's track record with F22-related contracts?

Lockheed Martin Corporation has been the prime contractor for the F22 Raptor program since its inception, encompassing development, production, and sustainment. Their extensive experience with the platform provides deep institutional knowledge and specialized capabilities. Historically, large defense programs managed by prime contractors of this scale can face challenges related to cost overruns and schedule delays, though specific performance metrics for F22 technology maturation contracts would require detailed review of individual contract data and performance reports. The company's long-standing relationship with the DoD on this program suggests a high degree of familiarity and integration, which can be both a strength in execution and a potential risk if it leads to complacency or reduced competitive pressure.

How does the cost-plus-fixed-fee (CPFF) structure compare to other contract types for technology maturation?

The Cost-Plus-Fixed-Fee (CPFF) contract type is common for research and development efforts where the scope of work is not precisely defined, and costs are difficult to estimate upfront. In a CPFF contract, the contractor is reimbursed for all allowable costs incurred, plus a fixed fee representing profit. While this structure allows for flexibility and encourages innovation in uncertain environments, it carries a higher risk of cost escalation for the government compared to fixed-price contracts. Unlike fixed-price contracts, which place the cost risk on the contractor, CPFF shifts much of that risk to the government. This necessitates robust government oversight to manage costs effectively and ensure the fixed fee remains reasonable relative to the effort.

What are the primary risks associated with a sole-source award for advanced technology development?

The primary risks associated with a sole-source award for advanced technology development include a lack of competitive pricing, potentially leading to higher costs for the government. Without competing bids, there is less incentive for the contractor to optimize efficiency or offer the most cost-effective solutions. Furthermore, sole-source awards can stifle innovation by limiting the introduction of new ideas or technologies from other potential vendors. There's also a risk of vendor lock-in, where the government becomes overly reliant on a single provider, making future transitions or renegotiations more difficult and potentially more expensive. Effective risk mitigation requires stringent government oversight, detailed performance metrics, and potentially independent cost analyses.

What is the typical duration for technology maturation contracts in the defense sector?

The typical duration for technology maturation contracts in the defense sector can vary significantly depending on the complexity of the technology, the program phase, and the specific requirements. Contracts focused on early-stage research and development might range from a few months to several years. However, for complex systems like advanced aircraft, technology maturation efforts that bridge into prototyping or early integration phases can extend over multiple years, sometimes five to ten years or even longer, especially if they involve iterative development cycles, testing, and refinement. The 2542-day duration (approximately 7 years) for this F22 contract is substantial but not unusual for programs involving the sustained maturation of sophisticated defense technologies, reflecting the long lead times and iterative nature of such development.

How does the 'Aircraft Manufacturing' NAICS code relate to this contract's scope?

The North American Industry Classification System (NAICS) code 336411, 'Aircraft Manufacturing,' accurately categorizes the primary industry associated with this contract. This code encompasses establishments primarily engaged in manufacturing complete aircraft, guided missiles, and space vehicles, as well as manufacturing aircraft parts and auxiliary equipment. Given that the contract is for 'F22 TECHNOLOGY MATURATION' and awarded to Lockheed Martin, a major aerospace manufacturer and the prime contractor for the F22, this NAICS code aligns perfectly with the nature of the work. It signifies that the contract involves activities directly related to the production, modification, or enhancement of aircraft, including the underlying technologies that enable their operation and performance.

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: 1 LOCKHEED BLVD, FORT WORTH, TX, 76108

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: $46,733,917

Exercised Options: $46,149,002

Current Obligation: $45,652,600

Actual Outlays: $1,176,304

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: FA861113D2850

IDV Type: IDC

Timeline