DoD's $137.6M Raptor Enhancement Contract Awarded to Lockheed Martin Amidst Limited Competition

Contract Overview

Contract Amount: $137,602,072 ($137.6M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2022-03-01

End Date: 2026-12-31

Contract Duration: 1,766 days

Daily Burn Rate: $77.9K/day

Competition Type: NOT COMPETED

Pricing Type: FIXED PRICE INCENTIVE

Sector: Defense

Official Description: E014042 ADVANCED RAPTOR ENHANCEMENT AND SUSTAINMENT (ARES)

Place of Performance

Location: FORT WORTH, TARRANT County, TEXAS, 76108

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $137.6 million to LOCKHEED MARTIN CORPORATION for work described as: E014042 ADVANCED RAPTOR ENHANCEMENT AND SUSTAINMENT (ARES) Key points: 1. Contract value of $137.6 million over its period of performance. 2. Sole-source award to Lockheed Martin Corporation, raising questions about competition. 3. Significant duration of 1766 days, indicating a long-term commitment. 4. Fixed Price Incentive (FPI) contract type suggests shared risk between government and contractor. 5. Focus on aircraft manufacturing (NAICS 336411) within the defense sector. 6. Contract awarded by the Department of the Air Force, a major DoD component.

Value Assessment

Rating: fair

The contract value of $137.6 million for aircraft enhancement and sustainment appears substantial. Without specific benchmarks for similar 'Raptor Enhancement and Sustainment' programs, a direct value-for-money assessment is challenging. The FPI contract type aims to incentivize performance, but the lack of competition could lead to less favorable pricing than a fully competed contract. Further analysis would require understanding the scope of work and comparing costs to industry standards for similar advanced aircraft sustainment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis to Lockheed Martin Corporation. The data indicates no other bidders were considered. Sole-source awards typically occur when a specific contractor possesses unique capabilities or intellectual property essential for the requirement, or in cases of urgent need. The absence of a competitive bidding process means that the government did not benefit from price discovery through market competition, potentially leading to higher costs.

Taxpayer Impact: Taxpayers may be paying a premium due to the lack of competitive pressure to drive down costs. The government's negotiating position is weakened without alternative offers.

Public Impact

The primary beneficiaries are the U.S. Air Force and potentially other branches utilizing the 'Raptor' aircraft, ensuring operational readiness and capability. Services delivered include enhancement and sustainment, crucial for maintaining the effectiveness of advanced military aircraft. The geographic impact is likely concentrated around Air Force bases where these aircraft are stationed and maintained, with potential implications for the Texas region (ST: TX). Workforce implications include the need for highly skilled technicians and engineers at Lockheed Martin and potentially supporting industries involved in aircraft maintenance and upgrades.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potentially inflates costs for taxpayers.
Long contract duration (1766 days) increases exposure to potential cost overruns or scope creep.
Fixed Price Incentive contract, while sharing risk, can still lead to higher final costs if performance targets are met.
Lack of transparency in the sole-source justification process.
Potential for contractor lock-in due to specialized nature of 'Raptor' systems.

Positive Signals

Ensures sustainment and enhancement of critical 'Raptor' aircraft, maintaining national security capabilities.
Lockheed Martin's established expertise in 'Raptor' systems likely ensures high-quality service delivery.
FPI contract structure provides incentives for contractor performance and cost control.
Long-term contract provides stability for sustainment operations and planning.
Awarding to a known entity may expedite delivery of critical upgrades and maintenance.

Sector Analysis

The defense sector, particularly aircraft manufacturing and sustainment, is characterized by high technological complexity and significant government investment. Contracts like this are vital for maintaining the operational readiness of advanced military platforms. The market is often dominated by a few large prime contractors like Lockheed Martin, especially for specialized systems. Spending benchmarks for similar aircraft sustainment programs can vary widely based on the platform's age, complexity, and upgrade requirements.

Small Business Impact

This contract does not appear to have a small business set-aside component (SB: false). Given the sole-source nature and the specialized requirements of advanced aircraft sustainment, it is unlikely that significant subcontracting opportunities for small businesses will be mandated or readily available, unless Lockheed Martin proactively engages them for specific components or services not directly related to core sustainment expertise.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Air Force's contracting and program management offices. Accountability measures are embedded within the Fixed Price Incentive contract terms, linking payment to performance and cost targets. Transparency may be limited due to the sole-source nature, but contract modifications and performance reports are typically subject to internal review and potentially audits by the Government Accountability Office (GAO) or the Inspector General.

Related Government Programs

F-22 Raptor Sustainment Programs
Advanced Fighter Aircraft Maintenance Contracts
DoD Aircraft Modernization Programs
Lockheed Martin Defense Contracts
Air Force Aviation Readiness Initiatives

Risk Flags

Sole Source Award
Lack of Competition
Potential for Cost Overruns (FPI)
Long Contract Duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $137.6 million to LOCKHEED MARTIN CORPORATION. E014042 ADVANCED RAPTOR ENHANCEMENT AND SUSTAINMENT (ARES)

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 $137.6 million.

What is the period of performance?

Start: 2022-03-01. End: 2026-12-31.

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

Lockheed Martin Corporation is the prime contractor for the F-22 Raptor program, responsible for its development, production, and sustainment. Their track record with this specific platform is extensive, encompassing decades of experience. They also hold numerous other large-scale defense contracts across various platforms and systems for the U.S. military and international allies. While this deep experience suggests a high likelihood of successful execution, it also underscores their dominant position and the challenges in fostering competition for specialized sustainment services. Past performance reviews and contract histories for similar large, complex sustainment programs would provide further context on their reliability, cost control, and adherence to schedules.

How does the $137.6 million contract value compare to historical spending on 'Raptor' sustainment?

Comparing the $137.6 million contract value to historical spending on 'Raptor' sustainment requires access to detailed historical contract data for the F-22 program. This specific contract covers a period from March 1, 2022, to December 31, 2026 (1766 days). To assess if this amount is reasonable, one would need to analyze annual sustainment costs for the F-22 fleet over previous years, factoring in inflation, fleet size, operational tempo, and the specific enhancements included in this contract. Without such comparative data, it's difficult to determine if this represents an increase, decrease, or stable level of investment compared to past sustainment efforts.

What are the primary risks associated with this sole-source, Fixed Price Incentive contract for the Air Force?

The primary risks associated with this sole-source, Fixed Price Incentive (FPI) contract are twofold. Firstly, the sole-source nature eliminates competitive pressure, potentially leading to higher costs than if the contract were competed. The government may not achieve the best possible price. Secondly, while FPI contracts aim to share risk and incentivize performance, they can still result in significant cost growth if the target cost is not well-defined or if the contractor incurs unexpected expenses. The government bears a portion of cost overruns above the target cost, up to a ceiling. For the Air Force, the risk is paying more than necessary and potentially facing cost overruns if performance targets are ambitious or unforeseen technical challenges arise.

How effective is the FPI contract type in ensuring program effectiveness and value for money in this context?

The Fixed Price Incentive (FPI) contract type is intended to provide a balance between cost control and performance motivation. In the context of 'Raptor' enhancement and sustainment, it aims to ensure that Lockheed Martin is incentivized to meet performance objectives (e.g., aircraft availability, upgrade completion) while also managing costs. If the target cost and incentive sharing arrangements are well-structured, it can lead to better value than a simple cost-plus contract. However, its effectiveness is highly dependent on the accuracy of the initial cost estimates and the clarity of performance metrics. For taxpayers, the value for money depends on whether the achieved performance justifies the final cost, especially considering the lack of competition which inherently weakens the government's negotiating leverage.

What are the potential implications of this contract on the broader defense industrial base and competition?

This sole-source award to Lockheed Martin reinforces its dominant position in the 'Raptor' sustainment ecosystem. It limits opportunities for other firms, including potential competitors or specialized sustainment providers, to enter the market or gain experience on this platform. This can stifle innovation and reduce long-term competition within this specific niche of the defense industrial base. While necessary for maintaining current capabilities, such sole-source awards can contribute to contractor lock-in and potentially higher sustainment costs over the long term if alternative solutions are not explored or fostered.

Are there specific performance metrics or milestones tied to the $137.6 million award that indicate expected outcomes?

The provided data does not detail the specific performance metrics or milestones tied to the $137.6 million award. However, as a Fixed Price Incentive (FPI) contract, it inherently includes provisions for performance targets and cost incentives. These typically relate to factors such as aircraft readiness rates, delivery schedules for enhancements, quality of maintenance, and potentially specific technological upgrade achievements. The 'incentive' aspect means that the final price paid by the Air Force will vary based on how well Lockheed Martin meets or exceeds these pre-defined targets, and how costs are managed relative to the negotiated target cost. A thorough review of the contract's Statement of Work (SOW) and special contract requirements would be necessary to identify these specific metrics.

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: FIXED PRICE INCENTIVE (L)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp

Address: 1 LOCKHEED BLVD BLDG 10, 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: $142,349,510

Exercised Options: $142,349,510

Current Obligation: $137,602,072

Actual Outlays: $127,250

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: FA861122D0001

IDV Type: IDC

Timeline