DoD awards $84.6M for F-16V Block 70 Sims to Lockheed Martin, a sole-source contract

Contract Overview

Contract Amount: $84,624,179 ($84.6M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2021-12-14

End Date: 2027-12-31

Contract Duration: 2,208 days

Daily Burn Rate: $38.3K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIXED PRICE INCENTIVE

Sector: Defense

Official Description: FMS F16V BLOCK 70 SIMS

Place of Performance

Location: ORLANDO, ORANGE County, FLORIDA, 32825

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $84.6 million to LOCKHEED MARTIN CORPORATION for work described as: FMS F16V BLOCK 70 SIMS Key points: 1. Contract awarded on a sole-source basis, limiting price competition. 2. Fixed-price incentive contract type suggests shared risk between government and contractor. 3. Long duration of 2208 days indicates a significant, multi-year commitment. 4. Contract focuses on simulation and training systems for advanced aircraft. 5. High value suggests critical national defense capabilities are being supported. 6. No small business set-aside, potentially limiting opportunities for smaller firms.

Value Assessment

Rating: fair

Benchmarking the value of this specific contract is challenging due to its specialized nature (F-16V Block 70 Sims) and sole-source award. Without competitive bids, it's difficult to definitively assess if the $84.6 million represents optimal value for money. However, the fixed-price incentive structure implies an effort to control costs while ensuring performance. Comparisons to similar simulation systems for other advanced fighter jets would be necessary for a more robust value assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. This typically occurs when a specific contractor possesses unique capabilities or intellectual property essential for the requirement. The lack of competition means there was no direct price comparison through bidding, potentially leading to higher costs than if multiple firms had vied for the contract.

Taxpayer Impact: Taxpayers may face higher costs due to the absence of competitive pressure to drive down prices. The government relied on negotiation rather than market forces to determine the contract's price.

Public Impact

The primary beneficiaries are the U.S. Air Force personnel who will utilize the F-16V Block 70 simulation systems for training. The contract delivers advanced simulation capabilities crucial for pilot training and mission readiness. The contract's impact is primarily within the defense sector, supporting the operational readiness of F-16 fighter fleets. This contract supports specialized technical roles within Lockheed Martin and its supply chain, likely in engineering and simulation development.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potential cost savings for taxpayers.
Fixed-price incentive contracts can lead to cost overruns if not carefully managed.
Long contract duration increases exposure to potential scope creep or changing requirements.
Lack of small business involvement may limit broader economic impact and innovation.

Positive Signals

Award to a prime contractor with established expertise in advanced aircraft simulation.
Fixed-price incentive contract aims to balance cost control with performance incentives.
Contract duration supports long-term training needs for advanced aircraft systems.
Focus on simulation systems enhances pilot proficiency and reduces reliance on live-flight training.

Sector Analysis

The aerospace and defense sector is characterized by high barriers to entry, significant R&D investment, and long product development cycles. Simulation and training systems are a critical sub-segment, enabling realistic and cost-effective training for complex military platforms. Spending in this area is driven by the need for advanced warfighter capabilities and platform modernization. Comparable spending benchmarks would involve analyzing other simulation contracts for advanced fighter jets like the F-35 or F-22.

Small Business Impact

This contract was not set aside for small businesses, and the data indicates no indication of subcontracting goals for small businesses. As a sole-source award to a large prime contractor, the direct opportunities for small businesses are likely limited to potential subcontracts awarded by Lockheed Martin. The absence of a specific small business set-aside or subcontracting plan means the direct economic benefit to the small business ecosystem from this specific award is likely minimal.

Oversight & Accountability

Oversight for this contract will primarily fall under the Department of the Air Force and the Department of Defense's contracting and program management offices. Accountability measures are embedded within the fixed-price incentive contract structure, linking contractor profit to performance and cost targets. Transparency may be limited due to the sole-source nature, but contract actions and performance reports are typically subject to internal review and potentially Inspector General oversight if issues arise.

Related Government Programs

F-16 Fighter Jet Modernization Programs
Advanced Flight Simulation Systems
Department of Defense Training and Readiness Contracts
Lockheed Martin Defense Contracts
Aircraft Manufacturing and Support

Risk Flags

Sole-source award
Potential for cost overruns in FPI contracts
Long contract duration increases risk exposure

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $84.6 million to LOCKHEED MARTIN CORPORATION. FMS F16V BLOCK 70 SIMS

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 $84.6 million.

What is the period of performance?

Start: 2021-12-14. End: 2027-12-31.

What is Lockheed Martin's track record with similar F-16 simulation contracts?

Lockheed Martin Corporation, as the prime contractor, has extensive experience with the F-16 platform, including its simulation and training systems. They are the original manufacturer of the F-16 and have been involved in various upgrades and sustainment programs throughout its lifecycle. Their track record typically includes delivering complex systems for advanced aircraft, often under sole-source or limited-competition scenarios due to proprietary technology and platform integration. Specific performance data on past simulation contracts would require deeper analysis of contract performance reports and historical spending, but their position as a primary defense contractor suggests a substantial history of fulfilling such requirements.

How does the $84.6 million cost compare to other advanced fighter jet simulation contracts?

Directly comparing the $84.6 million cost for F-16V Block 70 Sims to other advanced fighter jet simulation contracts is challenging without specific, comparable data points. Factors such as the complexity of the simulation (e.g., fidelity, number of scenarios, integration with other systems), the number of units procured, and the contract type (fixed-price vs. cost-plus) significantly influence pricing. Contracts for more advanced platforms like the F-35, which involve highly integrated virtual environments and cutting-edge technology, often command higher price tags. However, the duration of this F-16 contract (over 5 years) suggests a substantial scope. A comprehensive benchmark would require analyzing contracts with similar scope, duration, and technological sophistication for platforms like the F-15, F-18, or F-22.

What are the primary risks associated with this sole-source, fixed-price incentive contract?

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 a higher price than could be achieved through open competition. The government relies heavily on negotiation and cost realism analysis to ensure fair pricing. Secondly, while FPI contracts aim to incentivize cost control by sharing savings or overruns between the government and contractor, they can still be susceptible to cost growth if the target costs are not accurately estimated or if unforeseen technical challenges arise during the contract's long duration. Scope creep, where requirements expand beyond the initial agreement, also poses a risk, potentially increasing costs and impacting delivery schedules.

How effective are simulation systems like these in enhancing pilot readiness compared to live-flight training?

Simulation systems, such as the F-16V Block 70 Sims, are highly effective tools for enhancing pilot readiness, often complementing rather than replacing live-flight training. They offer a safe, controlled environment to practice complex maneuvers, emergency procedures, and mission scenarios that might be too dangerous or costly to replicate in actual aircraft. Simulations can provide high-repetition training on specific skills, allow for immediate feedback and debriefing, and expose pilots to a wider range of tactical situations. While they cannot fully replicate the physical G-forces or environmental factors of actual flight, they significantly reduce the cost and risk associated with training, allowing pilots to achieve a higher level of proficiency before engaging in expensive and potentially hazardous live flights.

What is the historical spending trend for F-16 simulation and training systems by the Department of Defense?

Historical spending on F-16 simulation and training systems by the Department of Defense has been substantial and ongoing, reflecting the platform's long service life and continuous modernization efforts. As the F-16 has undergone various upgrades (e.g., from older blocks to the Block 70/72 variants), the need for updated simulation and training capabilities has persisted. Spending typically fluctuates based on specific upgrade programs, fleet readiness requirements, and the lifecycle of training infrastructure. While precise historical figures for simulation systems alone require detailed analysis of procurement data, overall F-16 sustainment and modernization budgets run into billions of dollars over decades, with simulation being a critical component of that investment to ensure pilot proficiency and operational effectiveness.

Industry Classification

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

Product/Service Code: TRAINING AIDS AND DEVICES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIXED PRICE INCENTIVE (L)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp

Address: 100 GLOBAL INNOVATION CIR, ORLANDO, FL, 32825

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $94,302,091

Exercised Options: $84,624,179

Current Obligation: $84,624,179

Subaward Activity

Number of Subawards: 62

Total Subaward Amount: $19,022,287

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline