DoD awards $14.7M for F-22 sensor enhancement kits, a sole-source contract to Lockheed Martin

Contract Overview

Contract Amount: $14,760,744 ($14.8M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2023-04-13

End Date: 2026-06-30

Contract Duration: 1,174 days

Daily Burn Rate: $12.6K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: F-22 SENSOR ENHANCEMENT GROUP A KITS ORDERING PERIOD 2

Place of Performance

Location: FORT WORTH, TARRANT County, TEXAS, 76108

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $14.8 million to LOCKHEED MARTIN CORPORATION for work described as: F-22 SENSOR ENHANCEMENT GROUP A KITS ORDERING PERIOD 2 Key points: 1. Contract awarded on a sole-source basis, limiting price competition. 2. Focus on enhancing F-22 sensor capabilities suggests a critical upgrade for aging aircraft. 3. The contract type (Cost Plus Fixed Fee) can lead to cost overruns if not closely managed. 4. Delivery order signifies a specific need within a larger potential program. 5. The duration of the order (1174 days) indicates a substantial, long-term requirement. 6. No small business set-aside, potentially excluding smaller specialized firms.

Value Assessment

Rating: fair

Benchmarking the value of this specific delivery order is challenging without comparable sole-source sensor enhancement kits for the F-22. However, the Cost Plus Fixed Fee (CPFF) contract type carries inherent risks of cost escalation. While a fixed fee provides some incentive for the contractor to control costs, the government bears the majority of the cost risk. Close oversight will be crucial to ensure the final cost aligns with the expected value of the enhanced sensor capabilities.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis to Lockheed Martin Corporation. This means that the Department of the Air Force did not conduct a competitive bidding process. Sole-source awards are typically justified when only one responsible source can provide the required supplies or services. In this case, it is likely due to Lockheed Martin's unique position as the prime contractor for the F-22 program and their proprietary knowledge of the aircraft's systems.

Taxpayer Impact: Sole-source awards limit the potential for competitive pricing, which can result in higher costs for taxpayers compared to a fully competed contract. The absence of competition means taxpayers do not benefit from the downward price pressure that multiple bidders would typically exert.

Public Impact

The primary beneficiaries are the U.S. Air Force and the F-22 Raptor fleet, receiving upgraded sensor capabilities. This contract delivers critical sensor enhancement kits, aiming to maintain and improve the F-22's technological edge. The geographic impact is primarily within the Department of Defense's operational sphere, with potential implications for bases where F-22s are stationed. Workforce implications may include specialized engineers and technicians at Lockheed Martin involved in the design, manufacturing, and integration of these kits.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Fixed Fee contract type increases cost risk for the government.
Sole-source award limits competitive pricing and potential cost savings for taxpayers.
Lack of small business participation may limit access to specialized innovation.

Positive Signals

Addresses critical sensor enhancement needs for a key strategic asset (F-22).
Contract awarded to the original equipment manufacturer, likely ensuring system compatibility and expertise.
Delivery order indicates a specific, defined requirement within a broader program.

Sector Analysis

This contract falls within the Aircraft Manufacturing sector, specifically supporting advanced fighter aircraft. The F-22 Raptor is a fifth-generation stealth fighter, and maintaining its technological superiority requires continuous upgrades. Spending on specialized components and enhancements for such platforms is common within the defense industry. Comparable spending benchmarks would typically involve other sole-source or limited-competition contracts for advanced avionics and sensor upgrades on high-value military aircraft.

Small Business Impact

This contract does not include a small business set-aside, nor is there any indication of subcontracting requirements for small businesses. As a sole-source award to a large prime contractor, it is unlikely to directly benefit the small business ecosystem unless Lockheed Martin voluntarily includes them in their supply chain. This could represent a missed opportunity to foster innovation and capacity within small defense contractors.

Oversight & Accountability

Oversight for this contract will primarily fall under the Department of the Air Force's contracting and program management offices. Given the sole-source nature and CPFF structure, rigorous oversight of cost, schedule, and performance will be essential. The Defense Contract Management Agency (DCMA) would likely be involved in monitoring contractor performance and costs. Transparency may be limited due to the sole-source justification, but contract modifications and performance reports should be accessible through federal procurement databases.

Related Government Programs

F-22 Raptor Sustainment
Advanced Avionics Procurement
Aerospace Manufacturing
Defense Logistics Agency (DLA) Support
Air Force Materiel Command (AFMC) Contracts

Risk Flags

Sole-source award
Cost Plus Fixed Fee contract type
Lack of small business participation

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $14.8 million to LOCKHEED MARTIN CORPORATION. F-22 SENSOR ENHANCEMENT GROUP A KITS ORDERING PERIOD 2

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 $14.8 million.

What is the period of performance?

Start: 2023-04-13. End: 2026-06-30.

What is Lockheed Martin's track record with F-22 upgrades and sole-source contracts?

Lockheed Martin Corporation, as the prime contractor for the F-22 program, has an extensive track record with all aspects of the aircraft's lifecycle, including upgrades and sustainment. Their deep institutional knowledge and proprietary data make them the logical, and often only, source for certain modifications. Historically, sole-source awards to Lockheed Martin for F-22 specific work have been common due to these factors. While this ensures continuity and leverages existing expertise, it also necessitates robust government oversight to ensure fair pricing and prevent cost overruns, as competitive pressures are absent.

How does the Cost Plus Fixed Fee (CPFF) contract type compare to other pricing arrangements for this type of procurement?

The Cost Plus Fixed Fee (CPFF) contract type is often used for research and development or complex projects where the scope is not fully defined at the outset, or where innovation is a key component. In this case, it means the government pays the contractor's actual costs plus a predetermined fixed fee. This contrasts with Fixed Price contracts, where the price is set upfront, shifting more risk to the contractor. For sensor enhancement kits, where design and integration complexities can arise, CPFF can be justified. However, it places a significant cost risk on the government, as the contractor is incentivized to complete the work but not necessarily to minimize costs beyond what is necessary to achieve the fixed fee. This makes diligent government oversight of incurred costs paramount.

What are the potential risks associated with a sole-source award for critical aircraft components?

The primary risk of a sole-source award for critical aircraft components like F-22 sensor enhancement kits is the lack of price competition. Without multiple bidders vying for the contract, the government may pay a higher price than if the contract were competed. This can lead to inefficient use of taxpayer funds. Additionally, sole-source awards can sometimes reduce the incentive for the contractor to innovate or improve efficiency, as they face no direct competitive pressure. There's also a risk that the government might overlook alternative solutions or technologies that could be offered by other companies if a competitive process were undertaken. Ensuring fair and reasonable pricing through robust negotiation and cost analysis becomes critical.

What is the historical spending pattern for F-22 sensor enhancements or similar upgrades?

Historical spending on F-22 enhancements and similar upgrades has been substantial, reflecting the high cost of maintaining a fleet of advanced fifth-generation fighter aircraft. The F-22 program itself has seen significant investment over its lifecycle. Specific spending on sensor enhancements would be part of broader sustainment and modernization efforts. These types of upgrades are often procured through sole-source or limited-competition contracts due to the specialized nature of the technology and the prime contractor's unique position. Tracking specific dollar amounts for individual enhancement kits can be complex, as they are often bundled into larger sustainment contracts or awarded as delivery orders against existing indefinite-delivery/indefinite-quantity (IDIQ) vehicles. The trend is generally towards continuous, albeit costly, upgrades to maintain operational relevance.

How does the geographic location of contract performance (Texas) influence this contract?

The contract indicates performance location as Texas (ST: TX). For a defense manufacturing contract like this, Texas is a significant hub for aerospace and defense industries, hosting numerous facilities for major contractors like Lockheed Martin. The presence of skilled labor, established supply chains, and potentially existing infrastructure related to F-22 production or sustainment in Texas likely contributed to this location being chosen. While the direct impact on taxpayers is minimal regarding location choice itself, it signifies reliance on established industrial bases within the US that support critical defense programs. It also means that jobs and economic activity related to this contract are likely concentrated within that state's defense sector.

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 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: $16,008,979

Exercised Options: $16,008,979

Current Obligation: $14,760,744

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