DoD's $33.5M C-130J upgrade kit contract awarded to Lockheed Martin without competition

Contract Overview

Contract Amount: $33,455,918 ($33.5M)

Contractor: Lockheed Martin Corp

Awarding Agency: Department of Defense

Start Date: 2018-04-18

End Date: 2022-06-01

Contract Duration: 1,505 days

Daily Burn Rate: $22.2K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: LOA AT-D-QAB: ROYAL AUSTRALIAN AIR FORCE (RAAF) C-130J BLOCK UPGRADE (BU) 7.0/8.1 TRIAL KIT INSTALLATION (TKI) - UCA

Place of Performance

Location: MARIETTA, COBB County, GEORGIA, 30063

State: Georgia Government Spending

Plain-Language Summary

Department of Defense obligated $33.5 million to LOCKHEED MARTIN CORP for work described as: LOA AT-D-QAB: ROYAL AUSTRALIAN AIR FORCE (RAAF) C-130J BLOCK UPGRADE (BU) 7.0/8.1 TRIAL KIT INSTALLATION (TKI) - UCA Key points: 1. The contract's value, while substantial, needs to be assessed against the scope of the upgrade and potential long-term benefits for the RAAF's C-130J fleet. 2. The sole-source award to Lockheed Martin, the original equipment manufacturer, raises questions about potential price inflation and the lack of competitive pressure. 3. The contract's duration of approximately four years suggests a complex integration process for the Block Upgrade 7.0/8.1 trial kit. 4. Performance context is limited without specific details on the trial kit's functionality and expected improvements. 5. The 'Aircraft Manufacturing' sector context indicates this is a specialized, high-value component of military aviation support. 6. The absence of small business involvement suggests this is a large-scale, prime contractor-led effort.

Value Assessment

Rating: questionable

Benchmarking the value of this specific upgrade kit is challenging without detailed technical specifications and a clear understanding of the improvements it offers to the RAAF's C-130J fleet. Given the sole-source nature, it's difficult to assess if the pricing reflects competitive market rates. The cost-plus-fixed-fee structure, while common for complex development, can lead to cost overruns if not managed tightly. Without comparative data on similar upgrade kits or independent cost estimates, a definitive value-for-money assessment is hindered.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, Lockheed Martin Corp., was solicited. This approach is typically justified when a single source possesses unique capabilities or intellectual property essential for the requirement, such as the original manufacturer of the aircraft. The lack of competition means there was no opportunity for other qualified companies to bid, potentially limiting price discovery and innovation.

Taxpayer Impact: For taxpayers, a sole-source award can mean a higher price than if the contract had been competed. Without competitive pressure, the contractor may have less incentive to offer the most cost-effective solution.

Public Impact

The primary beneficiaries are the Royal Australian Air Force (RAAF) personnel who will operate the upgraded C-130J aircraft, potentially leading to enhanced mission capabilities. The services delivered include the installation of a trial kit for Block Upgrade 7.0/8.1, aimed at modernizing the aircraft's systems. The geographic impact is primarily within Australia, where the RAAF operates its C-130J fleet. Workforce implications may include specialized technicians for the installation and integration of the upgrade kit, likely within Lockheed Martin's operations or authorized service centers.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potential cost savings for the government.
Cost-plus-fixed-fee contract type can incentivize cost increases if not rigorously overseen.
Lack of transparency in the justification for sole-source procurement.
Limited public information on the specific technical benefits and necessity of this particular upgrade kit.
The contract's duration and complexity may present integration risks.

Positive Signals

Awarded to the original equipment manufacturer, ensuring compatibility and specialized knowledge.
Focus on upgrading critical military aircraft systems, potentially enhancing operational readiness.
The trial kit approach suggests a phased implementation, allowing for testing and refinement.
The contract supports ongoing sustainment and modernization of a key defense asset.

Sector Analysis

This contract falls within the aerospace and defense sector, specifically focusing on aircraft modification and upgrade services. The market for such specialized services is dominated by original equipment manufacturers (OEMs) like Lockheed Martin due to proprietary knowledge and design rights. Comparable spending benchmarks would involve other major aircraft upgrade programs, which are typically high-value, long-term endeavors requiring significant technical expertise and investment.

Small Business Impact

This contract does not appear to have a small business set-aside component, nor is there explicit mention of subcontracting goals for small businesses. Given the nature of the work, which involves complex aircraft systems and proprietary technology, it is likely that the prime contractor, Lockheed Martin, will handle the majority of the work internally or with large, specialized subcontractors. This limits direct opportunities for small businesses within this specific contract's execution.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and program management offices, specifically within the Department of the Air Force. Accountability measures would be tied to the cost-plus-fixed-fee structure, requiring detailed reporting and justification of costs. Transparency is limited due to the sole-source nature and the proprietary aspects of the upgrade, but contract award details are publicly available through federal procurement databases.

Related Government Programs

C-130J Super Hercules Sustainment
Foreign Military Sales (FMS) - Australia
Aircraft Modernization Programs
Avionics Upgrade Contracts
Defense Logistics Agency (DLA) Aviation Support

Risk Flags

Sole-source award justification requires scrutiny.
Potential for cost overruns under CPFF contract type.
Lack of competitive bidding may lead to suboptimal pricing.
Technical details of the upgrade kit are not publicly specified.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $33.5 million to LOCKHEED MARTIN CORP. LOA AT-D-QAB: ROYAL AUSTRALIAN AIR FORCE (RAAF) C-130J BLOCK UPGRADE (BU) 7.0/8.1 TRIAL KIT INSTALLATION (TKI) - UCA

Who is the contractor on this award?

The obligated recipient is LOCKHEED MARTIN CORP.

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 $33.5 million.

What is the period of performance?

Start: 2018-04-18. End: 2022-06-01.

What is the specific technical scope and expected performance improvement from the C-130J Block Upgrade 7.0/8.1 trial kit?

The provided data does not detail the specific technical scope or expected performance improvements of the C-130J Block Upgrade 7.0/8.1 trial kit. This upgrade likely pertains to avionics, software, or system enhancements designed to maintain or improve the operational capabilities, safety, and maintainability of the C-130J aircraft. Without further documentation or technical specifications, it is difficult to quantify the exact benefits. However, such upgrades typically aim to address obsolescence, incorporate new technologies, improve situational awareness for aircrews, or enhance mission-specific functionalities. The 'trial kit' designation suggests this is a pilot installation to validate the upgrade before broader implementation.

How does the $33.5 million cost compare to similar C-130J upgrade efforts or other military aircraft modernization programs?

Direct cost comparisons for this specific 'trial kit installation' are difficult without more granular data on the scope of work and the specific components included. However, major aircraft modernization programs, especially those involving avionics and system overhauls, can range from tens to hundreds of millions of dollars per aircraft or fleet. The $33.5 million for a trial kit installation on a platform like the C-130J, particularly when awarded sole-source to the OEM, appears to be within the expected range for significant system upgrades. However, a true value assessment would require benchmarking against the specific functionalities delivered and the number of aircraft affected by this trial.

What is Lockheed Martin's track record with C-130J upgrades and modifications, particularly for international partners?

Lockheed Martin, as the original equipment manufacturer (OEM) of the C-130J Super Hercules, has an extensive and unparalleled track record with upgrades and modifications for this aircraft platform. They are responsible for the initial design, production, and ongoing sustainment of the C-130J fleet worldwide. This includes numerous upgrade programs, service life extensions, and integration of new mission systems for various international partners, including the Royal Australian Air Force (RAAF). Their deep institutional knowledge and proprietary data make them the logical, and often sole, source for such complex modifications.

What are the potential risks associated with a sole-source award for this C-130J upgrade kit?

The primary risk associated with a sole-source award is the potential for inflated pricing due to the lack of competitive pressure. Without competing bids, the government may pay more than if multiple vendors had vied for the contract. Another risk is reduced incentive for the contractor to innovate or optimize costs, as there is no direct competitor to outperform. Furthermore, sole-source awards can sometimes mask underlying issues with market readiness or a lack of viable alternative suppliers, which could indicate a broader systemic risk. There's also a risk of vendor lock-in, making future upgrades or modifications more expensive.

What is the historical spending pattern for C-130J upgrades and modifications by the Department of Defense or its allies?

Historical spending on C-130J upgrades and modifications by the DoD and its allies reflects a continuous effort to maintain and enhance the capabilities of this long-serving transport aircraft. While specific figures for individual upgrade kits are not readily available in aggregate, the overall sustainment and modernization budget for C-130 fleets is substantial. Contracts for avionics upgrades, structural enhancements, and mission system integration are common. These often involve significant sums, especially when dealing with proprietary systems and the OEM. Spending patterns indicate a consistent investment in keeping the C-130J fleet operationally relevant against evolving threats and technological advancements.

How does the cost-plus-fixed-fee (CPFF) contract type influence the management and oversight of this upgrade project?

The Cost-Plus-Fixed-Fee (CPFF) contract type means that Lockheed Martin will be reimbursed for all allowable costs incurred in performing the work, plus a predetermined fixed fee representing profit. This structure is often used for research and development or complex projects where the scope is not fully defined at the outset. For oversight, it necessitates rigorous monitoring of costs to ensure they are allowable and reasonable. The government must actively manage the contractor's performance and expenditures to prevent cost overruns beyond the anticipated fee. While the fee is fixed, the total contract cost can fluctuate, placing a significant burden on the contracting officer to control spending and ensure value.

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

Address: 86 SOUTH COBB DR, MARIETTA, GA, 30063

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: $33,455,918

Exercised Options: $33,455,918

Current Obligation: $33,455,918

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: FA862515D6591

IDV Type: IDC

Timeline