DoD's $54.6M Lockheed Martin contract for aircraft engine parts awarded without competition

Contract Overview

Contract Amount: $54,594,803 ($54.6M)

Contractor: Lockheed Martin Corp

Awarding Agency: Department of Defense

Start Date: 2018-03-29

End Date: 2021-05-31

Contract Duration: 1,159 days

Daily Burn Rate: $47.1K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: ACAT 1; FYOC; INITIAL SPARE QUICK ENGINE CHANGE ASSEMBLIES (QECAS)

Place of Performance

Location: MARIETTA, COBB County, GEORGIA, 30063

State: Georgia Government Spending

Plain-Language Summary

Department of Defense obligated $54.6 million to LOCKHEED MARTIN CORP for work described as: ACAT 1; FYOC; INITIAL SPARE QUICK ENGINE CHANGE ASSEMBLIES (QECAS) Key points: 1. Contract awarded on a sole-source basis, limiting price discovery and potentially increasing costs. 2. Significant duration of over 3 years suggests a long-term need for these critical components. 3. The contract's value, while substantial, needs benchmarking against similar sole-source procurements. 4. Lack of competition raises concerns about contractor performance incentives and innovation. 5. The 'Aircraft Manufacturing' NAICS code indicates a specialized industrial base is involved. 6. Fixed-price contract type shifts some risk to the government if costs escalate unexpectedly.

Value Assessment

Rating: questionable

Benchmarking the value of this sole-source contract is challenging without comparable data. The $54.6 million price tag for initial spare quick engine change assemblies (QECAs) over 1159 days requires careful scrutiny. Given the lack of competition, it's difficult to assess if the government received optimal value. A detailed cost analysis by the agency would be necessary to confirm fair and reasonable pricing.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded using a sole-source justification, meaning only one contractor, Lockheed Martin Corp, was solicited. This approach bypasses the competitive bidding process, which typically involves multiple vendors submitting proposals. While sole-source awards can be justified in specific circumstances (e.g., unique capabilities, urgent needs), they generally lead to less price competition and potentially higher costs for the government.

Taxpayer Impact: The absence of competition means taxpayers did not benefit from potential cost savings that could have arisen from a bidding war among multiple suppliers. This can result in a higher overall expenditure for the required goods or services.

Public Impact

The primary beneficiaries are the U.S. Air Force units operating aircraft that utilize these QECAs. The contract ensures the availability of critical spare parts for aircraft engine maintenance and repair. Geographic impact is primarily within the operational theaters of the Air Force, with parts potentially being deployed globally. Workforce implications include supporting specialized manufacturing jobs within Lockheed Martin and its supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially leading to higher prices.
Lack of transparency in pricing due to no competitive bidding.
Potential for contractor lock-in, making future procurements difficult to re-compete.
Performance metrics and oversight are crucial to mitigate risks of a non-competitive award.

Positive Signals

Ensures availability of critical, potentially unique, aircraft components.
Fixed-price contract provides some cost certainty for the government.
Long-term contract duration suggests a stable supply chain for essential parts.

Sector Analysis

This contract falls within the Defense Industrial Base sector, specifically focusing on aircraft manufacturing and sustainment. The market for specialized aircraft components like QECAs is often concentrated among a few key manufacturers due to high barriers to entry, including intellectual property, specialized tooling, and stringent quality requirements. Spending in this area is critical for maintaining military readiness and operational capability.

Small Business Impact

There is no indication that this contract included a small business set-aside. Given the nature of the product (specialized aircraft engine components) and the sole-source award to a large prime contractor like Lockheed Martin, it is unlikely that significant subcontracting opportunities for small businesses were mandated or actively pursued through this specific award mechanism. Further analysis of Lockheed Martin's overall subcontracting plan would be needed to assess small business impact.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and program management offices. Accountability measures would include contract performance reviews, delivery tracking, and quality assurance checks. Transparency is limited due to the sole-source nature, but contract award details are usually publicly available through federal procurement databases. The Inspector General's office may conduct audits or investigations if performance or pricing concerns arise.

Related Government Programs

Aircraft Engine Component Procurement
Defense Logistics Agency (DLA) Spare Parts
Air Force Sustainment Programs
Lockheed Martin Defense Contracts

Risk Flags

Sole-source award
Lack of competition
Potential for cost overruns
Limited transparency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $54.6 million to LOCKHEED MARTIN CORP. ACAT 1; FYOC; INITIAL SPARE QUICK ENGINE CHANGE ASSEMBLIES (QECAS)

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 $54.6 million.

What is the period of performance?

Start: 2018-03-29. End: 2021-05-31.

What is the specific justification provided for awarding this contract on a sole-source basis?

The provided data indicates the contract was awarded as 'NOT COMPETED'. Typically, sole-source awards require a justification and approval (J&A) document outlining why full and open competition is not feasible or not in the government's best interest. Common reasons include the existence of only one responsible source, urgent and compelling needs that preclude competition, or specific national security requirements. Without access to the J&A for this specific contract, the precise justification remains unknown, but it would detail the rationale for approaching Lockheed Martin exclusively.

How does the $54.6 million price compare to similar sole-source procurements for aircraft engine components?

Direct comparison of this $54.6 million contract value for initial spare QECAs is difficult without access to specific, comparable sole-source procurements. The market for such specialized components is often limited, and pricing can vary significantly based on the specific engine type, quantity, lead times, and any unique technical requirements. However, for a multi-year supply of critical engine parts, $54.6 million is a substantial investment. A thorough value analysis would involve benchmarking against historical sole-source awards for similar items, factoring in inflation, and reviewing the contractor's cost breakdown if available.

What are the primary risks associated with awarding a contract of this magnitude without competition?

The primary risks of awarding a $54.6 million contract without competition include: 1) Paying a higher price than could be achieved through competitive bidding, as the contractor faces less pressure to offer the lowest possible cost. 2) Reduced incentive for the contractor to innovate or improve efficiency, as there is no competitive threat. 3) Potential for contractor 'lock-in,' making it difficult to switch suppliers or negotiate better terms in the future. 4) Limited transparency into the reasonableness of the price. These risks underscore the importance of robust government oversight and negotiation.

What is the expected performance period and delivery schedule for these engine parts?

The contract has a duration of 1159 days, which is approximately 3 years and 2 months. The start date was March 29, 2018, and the end date was May 31, 2021. This indicates a sustained period for the delivery of initial spare Quick Engine Change Assemblies (QECAs). The specific delivery schedule for individual components within this period would be detailed in the contract's delivery orders, outlining quantities and required delivery timelines to support Air Force readiness requirements.

What is the significance of 'INITIAL SPARE QUICK ENGINE CHANGE ASSEMBLIES (QECAS)' in the context of Air Force operations?

Quick Engine Change Assemblies (QECAs) are modular units designed to allow for rapid replacement of a damaged or malfunctioning engine section in the field, minimizing aircraft downtime. 'Initial spare' implies these are the first set of spare parts procured for a particular aircraft or engine program, crucial for establishing initial operational capability and ensuring immediate availability for maintenance. Their availability is critical for maintaining the readiness and operational tempo of Air Force aircraft fleets, directly impacting mission capability.

How does the 'Aircraft Manufacturing' NAICS code (336411) inform our understanding of this contract?

The North American Industry Classification System (NAICS) code 336411, 'Aircraft Manufacturing,' signifies that the contractor, Lockheed Martin Corp, is involved in the production of aircraft and aircraft parts. This classification suggests a high level of technical expertise, specialized manufacturing facilities, and adherence to stringent quality and safety standards required in the aerospace industry. Contracts under this code often involve complex engineering, advanced materials, and significant research and development, contributing to the high value and specialized nature of the procured QECAs.

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: FIRM FIXED PRICE (J)

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: $54,594,803

Exercised Options: $54,594,803

Current Obligation: $54,594,803

Subaward Activity

Number of Subawards: 11

Total Subaward Amount: $7,800,717

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: FA862516D6458

IDV Type: IDC

Timeline