DoD's $48.5M aircraft parts contract awarded to Lockheed Martin shows strong competition and fair pricing

Contract Overview

Contract Amount: $48,482,292 ($48.5M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2016-09-23

End Date: 2018-06-29

Contract Duration: 644 days

Daily Burn Rate: $75.3K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: IGF::OT::IGF ATARS FY17 REQUIREMENTS

Place of Performance

Location: ORLANDO, ORANGE County, FLORIDA, 32825

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $48.5 million to LOCKHEED MARTIN CORPORATION for work described as: IGF::OT::IGF ATARS FY17 REQUIREMENTS Key points: 1. The contract demonstrates a competitive award process, suggesting favorable pricing for the government. 2. Lockheed Martin, a major defense contractor, secured this award, indicating established capabilities. 3. The fixed-price contract type helps mitigate cost overrun risks for the Department of Defense. 4. Performance is situated in Florida, potentially impacting the local aerospace workforce. 5. This spending falls within the broader category of aircraft parts manufacturing, a critical defense sector.

Value Assessment

Rating: good

The contract value of approximately $48.5 million over its period of performance appears reasonable given the nature of specialized aircraft parts. Benchmarking against similar sole-source or limited-competition contracts for advanced aerospace components would be necessary for a definitive value assessment. However, the full and open competition suggests a degree of market validation for the pricing.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple bidders were likely solicited and evaluated. This competitive environment generally leads to better price discovery and potentially lower costs for the government compared to sole-source or limited solicitations. The number of bidders, if available, would further clarify the intensity of the competition.

Taxpayer Impact: A competitive award process for this contract means taxpayers likely benefited from a more efficient allocation of funds, securing necessary aircraft parts at a price driven by market forces rather than limited options.

Public Impact

The primary beneficiaries are the Department of the Air Force and its operational readiness, ensuring aircraft are equipped with necessary parts. The contract delivers essential aircraft parts and auxiliary equipment, crucial for maintaining military aviation capabilities. The geographic impact is concentrated in Florida, where the contractor will likely perform the work, potentially supporting local jobs and the aerospace supply chain. Workforce implications may include skilled labor in manufacturing, logistics, and quality assurance within the aerospace sector in Florida.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for supply chain disruptions if Lockheed Martin faces production issues.
Dependence on a single large contractor for critical parts could pose long-term strategic risks.

Positive Signals

Award to a reputable contractor with a proven track record in defense manufacturing.
Fixed-price contract structure provides cost certainty for the government.
Full and open competition suggests a healthy market for these types of parts.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on aircraft parts. The market for such components is characterized by high technical requirements, stringent quality control, and significant R&D investment. Comparable spending benchmarks would involve analyzing other contracts for similar aircraft components awarded by the DoD or other military branches, considering factors like part complexity and volume.

Small Business Impact

The contract data indicates that small business participation was not a specific set-aside (ss: false, sb: false). This suggests that the primary award was made to a large business, Lockheed Martin. There is no explicit information on subcontracting plans for small businesses within this data snippet, which could be a missed opportunity to engage the small business industrial base in this defense spending.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and financial management oversight bodies. Accountability measures are embedded in the firm-fixed-price contract terms, requiring delivery of specified parts. Transparency is generally maintained through contract award databases, though detailed performance metrics may not always be publicly accessible. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

DoD Aircraft Parts Procurement
Aerospace Manufacturing Contracts
Lockheed Martin Defense Contracts
Air Force Logistics and Sustainment
Federal Aviation Supply Chain

Risk Flags

Potential for supply chain vulnerabilities
Dependence on a single large prime contractor

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $48.5 million to LOCKHEED MARTIN CORPORATION. IGF::OT::IGF ATARS FY17 REQUIREMENTS

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 $48.5 million.

What is the period of performance?

Start: 2016-09-23. End: 2018-06-29.

What is Lockheed Martin's historical performance on similar fixed-price contracts with the Department of Defense?

Lockheed Martin has a long and extensive history of performing on fixed-price contracts with the Department of Defense across various platforms and systems. While specific performance metrics for this particular contract (336413) are not detailed in the provided data, the company's overall track record suggests a capacity to manage complex production and delivery schedules. Historically, fixed-price contracts aim to transfer risk to the contractor, and Lockheed Martin's continued success in winning such awards indicates a perceived ability to meet these terms effectively. However, like any large defense contractor, there can be instances of contract modifications, cost overruns on specific programs, or performance issues that are subject to government review and oversight. A deeper analysis would require examining contract performance reports and any associated corrective actions or awards.

How does the awarded price compare to industry benchmarks for similar aircraft parts?

Directly comparing the awarded price of approximately $48.5 million to specific industry benchmarks for 'Other Aircraft Parts and Auxiliary Equipment' is challenging without more granular data on the exact nature and quantity of parts procured under this contract. The North American Industry Classification System (NAICS) code 336413 covers a broad range of components. However, the fact that the contract was awarded under 'full and open competition' suggests that the pricing was deemed competitive within the market. Typically, the government would have conducted a price analysis, comparing proposed prices against historical prices for similar items, commercial price lists, or other government contracts. Given Lockheed Martin's position as a major supplier, their pricing is likely informed by established manufacturing costs and market rates, but without specific part details, a precise benchmark comparison is not feasible from the provided summary.

What are the primary risks associated with this contract, and how are they mitigated?

The primary risks associated with this contract include potential supply chain disruptions, quality control issues with the delivered parts, and the possibility of cost increases if the firm-fixed-price (FFP) structure proves inadequate for unforeseen manufacturing challenges. Mitigation strategies are inherent in the contract type and the selection of a large, experienced contractor. The FFP structure places the cost risk on Lockheed Martin, incentivizing efficient production. The Department of the Air Force likely has quality assurance representatives overseeing production and acceptance testing to ensure parts meet specifications. Furthermore, the selection of a well-established contractor like Lockheed Martin reduces the risk of contractor default or inability to perform. However, risks related to obsolescence of parts or shifts in technological requirements could still emerge over the contract's lifecycle.

What is the historical spending trend for aircraft parts and auxiliary equipment by the Department of the Air Force?

Historical spending by the Department of the Air Force (and the DoD broadly) on aircraft parts and auxiliary equipment is substantial and consistently high, reflecting the extensive operational fleet and maintenance requirements. While the specific amount for FY17 requirements under this contract was $48.5 million, annual spending across the Air Force for parts under NAICS code 336413 and similar categories typically runs into billions of dollars. This spending fluctuates based on modernization programs, operational tempo, depot maintenance schedules, and the retirement or introduction of aircraft types. The trend generally shows a sustained need for a wide array of components, from routine consumables to highly specialized and technologically advanced parts, underscoring the critical nature of this spending category for maintaining air superiority and readiness.

Does the contract's performance period (644 days) align with typical delivery timelines for aircraft components?

The performance period of 644 days (approximately 21 months) for this contract appears reasonable for the delivery of specialized aircraft parts and auxiliary equipment, especially considering it was awarded as a delivery order. The duration allows for manufacturing, quality assurance, and delivery processes. Typical timelines can vary significantly based on the complexity, quantity, and lead time required for specific components. For standard or high-volume parts, shorter delivery periods might be expected. However, for more complex or custom-manufactured items, a period of over a year is not uncommon. The fact that this was a delivery order under existing requirements suggests that the need was identified, and the contractor had the capacity to fulfill it within this timeframe, which aligns with standard procurement practices for such items.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Other Aircraft Parts and Auxiliary Equipment Manufacturing

Product/Service Code: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp (UEI: 834951691)

Address: 12506 LAKE UNDERHILL ROAD, ORLANDO, FL, 32825

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $48,774,888

Exercised Options: $48,774,888

Current Obligation: $48,482,292

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: FA822307D0001

IDV Type: IDC

Timeline