DoD awards $403M for 12 F-16 aircraft, raising questions about competition and value

Contract Overview

Contract Amount: $403,205,934 ($403.2M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2011-12-14

End Date: 2016-11-30

Contract Duration: 1,813 days

Daily Burn Rate: $222.4K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: PEACE A'SAMA A'SAFIYA II AIRCRAFT PRODUCTION BUY - 12 F-16 C/D BLOCK 50 AIRCRAFT

Place of Performance

Location: FORT WORTH, TARRANT County, TEXAS, 76108

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $403.2 million to LOCKHEED MARTIN CORPORATION for work described as: PEACE A'SAMA A'SAFIYA II AIRCRAFT PRODUCTION BUY - 12 F-16 C/D BLOCK 50 AIRCRAFT Key points: 1. Significant investment in advanced fighter aircraft production. 2. Contract awarded to a single, established defense contractor. 3. Potential for higher costs due to limited competitive bidding. 4. Long-term implications for air superiority and defense readiness. 5. Focus on aircraft manufacturing within the aerospace sector. 6. Performance hinges on Lockheed Martin's production capabilities.

Value Assessment

Rating: questionable

The contract value of over $403 million for 12 F-16 aircraft suggests a per-unit cost of approximately $33.6 million. Benchmarking this against publicly available data for similar F-16 variants and production runs is challenging without specific configuration details. However, given the sole-source nature of the award, there is a heightened risk that the pricing may not reflect the most competitive market rates. Further analysis would require comparing this to historical F-16 sales to other nations or previous US Air Force procurements of comparable models to ascertain true value for money.

Cost Per Unit: Approximately $33.6 million per aircraft (based on total contract value and quantity).

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple potential suppliers. The 'NOT AVAILABLE FOR COMPETITION' designation indicates that the Department of Defense likely determined that only Lockheed Martin Corporation could fulfill the requirement, possibly due to proprietary technology, existing production lines, or specific integration needs for these F-16 C/D Block 50 aircraft. The lack of competition limits the government's ability to leverage market forces to drive down prices and potentially explore innovative solutions from a wider range of vendors.

Taxpayer Impact: The absence of competition means taxpayers may not be benefiting from the most cost-effective pricing achievable through a bidding process. This could lead to a higher overall expenditure for these aircraft compared to a competitively awarded contract.

Public Impact

Enhances the air combat capabilities of the Department of the Air Force. Supports national defense objectives and potentially allied air forces through aircraft provision. Contributes to the sustainment and modernization of the U.S. fighter fleet. Impacts the aerospace manufacturing workforce, particularly in Texas where the contractor is based. Ensures the availability of a key tactical fighter platform for various operational scenarios.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price discovery and potential cost savings for taxpayers.
Lack of competition may reduce incentives for the contractor to offer the lowest possible price.
Long-term sustainment and upgrade costs for these specific F-16 variants are not detailed, posing future budget risks.
Dependence on a single contractor for critical aircraft production can create supply chain vulnerabilities.

Positive Signals

Acquisition of advanced F-16 C/D Block 50 aircraft directly supports U.S. air superiority goals.
Award to a prime defense contractor with established expertise in F-16 production suggests a high likelihood of successful delivery.
Firm Fixed Price contract type provides cost certainty for this specific procurement, mitigating cost overrun risks within the contract scope.
The contract duration and delivery schedule are defined, allowing for planning and integration into operational readiness.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on aircraft production. The market for advanced fighter jets is highly concentrated, dominated by a few major global players. Spending in this area is driven by national security requirements, technological advancements, and the need to maintain a modern military fleet. Comparable spending benchmarks would involve analyzing the costs of other advanced fighter jet procurements, both domestically and internationally, considering factors like aircraft variant, avionics, and production volume.

Small Business Impact

The provided data indicates that small business participation (sb) was false, and there is no explicit mention of small business set-asides for this contract. As a sole-source award to a large prime contractor, the direct impact on small businesses is likely limited to subcontracting opportunities. The extent to which Lockheed Martin will engage small businesses in the supply chain for these F-16s remains unstated and would require further investigation into subcontracting plans. Without specific set-aside goals, the direct benefit to the small business ecosystem from this particular contract award is minimal.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and program management structures, including the Air Force's acquisition oversight. The Inspector General's office within the DoD would have jurisdiction to investigate potential fraud, waste, or abuse. Transparency is facilitated through contract databases like FPDS, but detailed performance metrics and cost breakdowns may be considered sensitive. Accountability rests with the contracting officers and program managers responsible for ensuring delivery and adherence to contract terms.

Related Government Programs

F-16 Fighting Falcon Program
Advanced Tactical Fighter Programs
Department of Defense Aircraft Procurement
Lockheed Martin Defense Contracts
Foreign Military Sales (potential)

Risk Flags

Sole-source award raises concerns about price competitiveness.
Lack of detailed justification for sole-source award.
Potential for cost overruns if not managed tightly.
Dependence on a single supplier for critical defense assets.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $403.2 million to LOCKHEED MARTIN CORPORATION. PEACE A'SAMA A'SAFIYA II AIRCRAFT PRODUCTION BUY - 12 F-16 C/D BLOCK 50 AIRCRAFT

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 $403.2 million.

What is the period of performance?

Start: 2011-12-14. End: 2016-11-30.

What is the specific operational capability or mission set these 12 F-16 C/D Block 50 aircraft are intended to fulfill?

The specific operational capability these 12 F-16 C/D Block 50 aircraft are intended to fulfill is not explicitly detailed in the provided data. However, F-16 C/D Block 50 variants are known for their multi-role capabilities, serving effectively in air-to-air combat, air-to-ground attack, and reconnaissance missions. They represent a significant upgrade over earlier F-16 models, incorporating advanced avionics, radar systems, and weapons integration capabilities. This particular procurement likely aims to address specific gaps in the Air Force's tactical fighter fleet, potentially for training, attrition replacement, or to support specialized operational requirements where their proven performance and cost-effectiveness (relative to more advanced platforms like the F-35) are advantageous. Further context on the Air Force's strategic deployment plans would clarify the precise mission set.

How does the per-unit cost of these F-16s compare to recent F-16 sales to international partners or previous US Air Force acquisitions?

The per-unit cost of approximately $33.6 million for these F-16 C/D Block 50 aircraft requires careful comparison. Recent F-16 sales to international partners have varied significantly based on configuration, quantity, and support packages. For instance, sales of newer F-16V variants have been reported in the range of $50-$80 million per aircraft, including upgrades and support. However, Block 50/52 variants procured directly by the USAF in earlier years might have had different cost structures. Given this is a sole-source award and potentially for a specific configuration, direct comparison is difficult. Historical USAF F-16 procurements, especially those competed, might offer a more relevant benchmark, but specific data for Block 50/52 acquisitions by the USAF isn't readily available in the provided snippet. The absence of competition here suggests this figure might be higher than a competitively bid price for a similar configuration.

What are the key performance risks associated with Lockheed Martin's production of these specific F-16 variants?

Key performance risks associated with Lockheed Martin's production of these F-16 C/D Block 50 variants, while generally considered low given their extensive experience, could include supply chain disruptions for specific components, potential labor shortages in specialized manufacturing roles, or unforeseen technical challenges during integration of avionics or software updates. As this is a sole-source award, the government relies heavily on Lockheed Martin's established processes and quality control. Risks might also arise from the aging nature of the F-16 platform itself, potentially requiring more complex maintenance or upgrades than anticipated during production. However, Lockheed Martin's long history with the F-16 program suggests a high degree of predictability in meeting production schedules and quality standards, mitigating many common manufacturing risks.

What is the historical spending trend for F-16 aircraft procurement by the Department of Defense over the last decade?

Historical spending trends for F-16 aircraft procurement by the Department of Defense over the last decade show a general decline in new platform acquisitions as the focus shifted towards fifth-generation fighters like the F-22 and F-35. However, the DoD has continued to procure F-16s, often for attrition reserve, upgrades to existing fleets, or for foreign military sales programs managed by the U.S. government. Major procurement actions for new F-16s have been less frequent compared to previous decades. This $403 million contract for 12 aircraft represents a notable, albeit not unprecedented, expenditure for new F-16 production in recent years. The trend indicates a strategic decision to maintain and potentially expand the F-16 fleet's capabilities, possibly to bridge gaps or fulfill specific roles where the F-35 might be less suitable or cost-prohibitive.

Are there any specific technological advancements or unique features in these F-16 C/D Block 50 aircraft that justify a sole-source award?

The justification for a sole-source award for these F-16 C/D Block 50 aircraft likely stems from a combination of factors related to technological integration and production continuity. While the F-16 platform itself is mature, specific Block 50 configurations may incorporate unique avionics suites, software, or integration with specialized weapons systems that are proprietary to Lockheed Martin or require specific expertise only they possess. Furthermore, maintaining the existing production line for these specific variants might be deemed more cost-effective and timely than establishing production with another manufacturer or re-tooling for a different aircraft. The government may have determined that Lockheed Martin holds the unique technical data, manufacturing capabilities, and intellectual property necessary to produce these aircraft to the required specifications without unacceptable delay or cost, thereby justifying the sole-source designation.

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, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $406,761,119

Exercised Options: $406,761,119

Current Obligation: $403,205,934

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline