DoD awards $1.95B C-130J contract to Lockheed Martin, raising concerns over competition and value

Contract Overview

Contract Amount: $1,949,541,131 ($1.9B)

Contractor: Lockheed Martin Corp

Awarding Agency: Department of Defense

Start Date: 2018-07-18

End Date: 2026-07-31

Contract Duration: 2,935 days

Daily Burn Rate: $664.2K/day

Competition Type: NOT COMPETED

Pricing Type: FIXED PRICE INCENTIVE

Sector: Defense

Official Description: ACAT I, C-130J FIVE YEAR ORDERING CONTRACT

Place of Performance

Location: MARIETTA, COBB County, GEORGIA, 30063

State: Georgia Government Spending

Plain-Language Summary

Department of Defense obligated $1.95 billion to LOCKHEED MARTIN CORP for work described as: ACAT I, C-130J FIVE YEAR ORDERING CONTRACT Key points: 1. Significant contract value of $1.95 billion for C-130J aircraft. 2. Sole-source award to Lockheed Martin limits competitive pricing. 3. Potential for inflated costs due to lack of competition. 4. Aircraft Manufacturing sector sees substantial DoD spending.

Value Assessment

Rating: questionable

The $1.95 billion contract value is substantial. Without competitive bidding, it's difficult to assess if this price is optimal compared to potential market alternatives or previous contracts for similar aircraft.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award to Lockheed Martin. This significantly limits price discovery and potentially leads to higher costs for taxpayers.

Taxpayer Impact: The lack of competition means taxpayers may be paying a premium for these aircraft, as there was no pressure from competing bids to drive down the price.

Public Impact

Taxpayers may be overpaying for C-130J aircraft due to the sole-source nature of the contract. The Department of the Air Force relies on a single supplier for critical aircraft, raising potential supply chain risks. Lack of transparency in pricing due to non-competitive award.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award
Lack of competition
High contract value
Potential for overpricing

Positive Signals

Essential military aircraft acquisition
Long-term contract provides stability

Sector Analysis

This contract falls within the Aircraft Manufacturing sector, a critical area for defense spending. Benchmarks for similar large-scale aircraft procurement contracts are often high, but competitive pricing is key to value.

Small Business Impact

This contract does not appear to involve small business participation, as indicated by the 'sb': false flag. The prime contractor is a large corporation, and there's no information on subcontracting to small businesses.

Oversight & Accountability

The sole-source nature of this large contract warrants close oversight to ensure fair pricing and prevent potential waste, fraud, or abuse. Transparency in cost justification is crucial.

Related Government Programs

Aircraft Manufacturing
Department of Defense Contracting
Department of the Air Force Programs

Risk Flags

Lack of competitive bidding
Potential for inflated costs
Sole-source dependency
Limited transparency in pricing
Significant taxpayer investment without demonstrated value optimization

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $1.95 billion to LOCKHEED MARTIN CORP. ACAT I, C-130J FIVE YEAR ORDERING CONTRACT

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 $1.95 billion.

What is the period of performance?

Start: 2018-07-18. End: 2026-07-31.

What is the justification for awarding this contract solely to Lockheed Martin without competition?

The justification for a sole-source award typically involves unique capabilities, proprietary technology, or a lack of viable alternatives. However, for a major aircraft platform like the C-130J, a thorough market analysis should have been conducted to ensure no other capable manufacturers could fulfill the requirement, especially for a five-year ordering contract.

How can the Department of Defense ensure fair pricing on this sole-source contract?

The DoD can employ several strategies to ensure fair pricing, including rigorous cost analysis, benchmarking against similar aircraft (even if not identical), negotiating profit margins carefully, and potentially incorporating incentive clauses that reward cost savings. Independent cost estimators and audits are also vital.

What are the long-term risks associated with relying on a single supplier for a critical aircraft like the C-130J?

Long-term risks include potential supply chain disruptions if the sole supplier faces production issues, limited leverage for future negotiations, and the possibility of escalating costs over time without competitive pressure. It also hinders the development of alternative capabilities within the defense industrial base.

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: FIXED PRICE INCENTIVE (L)

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: $1,951,122,398

Exercised Options: $1,951,122,398

Current Obligation: $1,949,541,131

Subaward Activity

Number of Subawards: 640

Total Subaward Amount: $108,585,525

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: FA862516D6458

IDV Type: IDC

Timeline