DoD's $812M F-16 Production Contract with Lockheed Martin Faces Scrutiny for Lack of Competition

Contract Overview

Contract Amount: $812,129,445 ($812.1M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2007-07-27

End Date: 2017-11-30

Contract Duration: 3,779 days

Daily Burn Rate: $214.9K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: PEACE ONYX IV F-16 AIRCRAFT PRODUCTION PROGRAM UNDEFINITIZED CONTRACT ACTION

Place of Performance

Location: FORT WORTH, TARRANT County, TEXAS, 76108

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $812.1 million to LOCKHEED MARTIN CORPORATION for work described as: PEACE ONYX IV F-16 AIRCRAFT PRODUCTION PROGRAM UNDEFINITIZED CONTRACT ACTION Key points: 1. Significant spending on aircraft manufacturing, primarily with a single large contractor. 2. The contract's duration and value suggest a substantial, long-term commitment. 3. Potential risks include vendor lock-in and limited opportunities for competitive pricing. 4. The sector is dominated by a few major defense contractors, impacting market dynamics.

Value Assessment

Rating: questionable

The contract value of $812 million over 10 years is substantial. Without competitive bidding, it's difficult to assess if this price represents fair market value compared to similar aircraft production programs.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was not available for competition, indicating a sole-source or limited source award. This lack of competition likely resulted in higher prices and reduced opportunities for innovation or cost savings.

Taxpayer Impact: Taxpayers may have overpaid due to the absence of competitive pressure, as the government did not explore alternative vendors or pricing structures.

Public Impact

Taxpayers fund a major defense program without competitive pricing, raising concerns about value for money. The long-term commitment to a single provider could stifle innovation in aircraft manufacturing. Dependence on one contractor for critical F-16 production poses a strategic risk.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition
Potential for cost overruns
Long contract duration
Sole-source award

Positive Signals

Essential for national defense
Established contractor relationship

Sector Analysis

This contract falls within the Defense sector, specifically Aircraft Manufacturing. Spending in this sector is often characterized by high R&D costs, long production cycles, and significant government oversight due to national security implications. Benchmarks are difficult without competitive data.

Small Business Impact

The data indicates this contract was awarded to Lockheed Martin Corporation, a large prime contractor. There is no information suggesting significant subcontracting opportunities for small businesses within this specific contract action.

Oversight & Accountability

The 'UNDEFINITIZED CONTRACT ACTION' status suggests the contract terms were not fully finalized at the outset, potentially increasing oversight needs. The long duration and sole-source nature warrant close monitoring for performance and cost control.

Related Government Programs

Aircraft Manufacturing
Department of Defense Contracting
Department of the Air Force Programs

Risk Flags

Lack of competitive bidding
Potential for inflated pricing
Long contract duration without clear competition
Undefinitized contract action status
High contract value

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $812.1 million to LOCKHEED MARTIN CORPORATION. PEACE ONYX IV F-16 AIRCRAFT PRODUCTION PROGRAM UNDEFINITIZED CONTRACT ACTION

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 $812.1 million.

What is the period of performance?

Start: 2007-07-27. End: 2017-11-30.

What was the justification for awarding this contract on a limited/sole-source basis, and what steps were taken to ensure the best possible price under these conditions?

The justification for a limited or sole-source award typically involves unique capabilities, national security imperatives, or the absence of viable alternatives. Agencies must document these reasons thoroughly. To ensure the best price, the government might conduct market research, negotiate aggressively, and establish robust cost accounting standards for the contractor.

What are the long-term risks associated with relying on a single contractor for a critical defense asset like the F-16, particularly concerning supply chain resilience and future upgrades?

Long-term reliance on a single contractor creates significant risks, including supply chain vulnerabilities if the contractor faces production issues or financial instability. It can also lead to vendor lock-in, making future upgrades or alternative platforms more expensive and complex. This dependence reduces the government's leverage for negotiating favorable terms on future modifications or replacements.

How effectively has the Department of the Air Force managed this contract to ensure program objectives are met within the allocated budget, given its long duration and lack of competition?

Effectiveness is difficult to gauge without detailed performance metrics and cost audits. However, the 'UNDEFINITIZED CONTRACT ACTION' status and the absence of competition suggest potential challenges. Robust program management, including regular reviews, performance monitoring, and stringent cost controls, would be crucial to mitigate risks and ensure value for taxpayer money.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft Manufacturing

Product/Service Code: AEROSPACE CRAFT AND STRUCTURAL COMPONENTS

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp (UEI: 834951691)

Address: LOCKHEED BLVD, FORT WORTH, TX, 76108

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $1,455,889,445

Exercised Options: $1,455,889,445

Current Obligation: $812,129,445

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline