Air Force awards $43.7M to Lockheed Martin for C-130J core services, a sole-source contract

Contract Overview

Contract Amount: $43,687,402 ($43.7M)

Contractor: Lockheed Martin Corp

Awarding Agency: Department of Defense

Start Date: 2021-12-18

End Date: 2026-02-28

Contract Duration: 1,533 days

Daily Burn Rate: $28.5K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: C-130J / CADDIE CORE SERVICES

Place of Performance

Location: MARIETTA, COBB County, GEORGIA, 30063

State: Georgia Government Spending

Plain-Language Summary

Department of Defense obligated $43.7 million to LOCKHEED MARTIN CORP for work described as: C-130J / CADDIE CORE SERVICES Key points: 1. Contract awarded on a sole-source basis, limiting competitive pricing benefits. 2. Long-term contract duration suggests potential for sustained spending. 3. Firm Fixed Price contract type offers cost certainty for the government. 4. Focus on core services for C-130J aircraft indicates critical operational support. 5. No small business set-aside noted, potentially impacting small business participation. 6. High dollar value warrants close scrutiny of performance and value. 7. Contract awarded as a delivery order, suggesting it's part of a larger indefinite-delivery/indefinite-quantity (IDIQ) vehicle.

Value Assessment

Rating: fair

This contract's value is difficult to benchmark without knowing the specific services included and the overall IDIQ ceiling. As a sole-source award, there's an inherent risk of paying a premium compared to a competitively bid contract. The firm fixed-price structure provides cost predictability, but the absence of competition means the government relies heavily on Lockheed Martin's pricing justification. Further analysis would require comparing the unit costs of specific services to industry standards or previous contracts for similar support.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one bidder, Lockheed Martin Corp., was solicited. This approach is typically used when only one responsible source is available or when there is a compelling justification for not seeking competition. The lack of multiple bidders means there was no price competition, which could lead to higher costs for the government compared to a fully competed contract. The justification for this sole-source award would need to be thoroughly reviewed to ensure it aligns with federal procurement regulations.

Taxpayer Impact: Taxpayers may be paying a higher price due to the absence of competitive bidding. Without competition, there is less pressure on the contractor to offer the most cost-effective solution.

Public Impact

The U.S. Air Force benefits from continued core services for its C-130J Super Hercules fleet, ensuring operational readiness. This contract supports the maintenance, sustainment, and potentially upgrade services for a critical military transport aircraft. The primary geographic impact is likely at Air Force bases where C-130J aircraft are operated and maintained. The contract supports jobs within Lockheed Martin and its supply chain, particularly in areas related to aerospace engineering and aircraft maintenance.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and may result in higher costs.
Long contract duration could lock in potentially suboptimal pricing if not managed effectively.
Lack of small business participation noted, potentially missing opportunities for economic inclusion.
Reliance on a single contractor for core services creates vendor lock-in risk.

Positive Signals

Firm Fixed Price contract provides cost certainty for the government.
Focus on core services ensures critical support for a key military asset.
Delivery order structure implies it's part of a potentially pre-vetted IDIQ, suggesting some level of prior oversight.

Sector Analysis

The aerospace and defense sector is characterized by high barriers to entry, significant R&D investment, and long product lifecycles. Contracts for aircraft manufacturing and sustainment, like this one for the C-130J, represent a substantial portion of federal spending in this area. The market is often dominated by a few large prime contractors, such as Lockheed Martin, who possess the specialized knowledge, facilities, and security clearances required. Benchmarking spending in this sector involves comparing contract values to the total cost of ownership for similar aircraft fleets and the cost of competing sustainment services.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Furthermore, the 'ss' (small business subcontracting) is also false. This suggests that small businesses are not explicitly targeted for subcontracting opportunities under this specific award. While Lockheed Martin may engage small businesses in its broader supply chain, this contract does not mandate their inclusion. This could limit opportunities for small businesses to participate in providing services for the C-130J program.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Air Force's contracting and program management offices. As a sole-source award, there may be enhanced scrutiny on the justification and pricing. Transparency is limited by the non-competitive nature. Inspector General (IG) jurisdiction would apply if any fraud, waste, or abuse is suspected. The firm fixed-price nature simplifies some aspects of oversight by focusing on delivery and performance rather than cost reconciliation.

Related Government Programs

C-130 Hercules Sustainment Programs
Air Mobility Command Aircraft Maintenance Contracts
DoD Aircraft Fleet Support Services
Lockheed Martin Aerospace Services Contracts

Risk Flags

Sole-source award lacks competitive pricing pressure.
Long contract duration may not reflect current market rates.
Absence of small business subcontracting requirements.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $43.7 million to LOCKHEED MARTIN CORP. C-130J / CADDIE CORE SERVICES

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 $43.7 million.

What is the period of performance?

Start: 2021-12-18. End: 2026-02-28.

What is the historical spending trend for C-130J core services with Lockheed Martin?

Analyzing historical spending requires access to detailed contract databases beyond the provided data. However, given the C-130J's long service life and Lockheed Martin's role as the prime manufacturer, it's probable that spending on its core services has been consistent over many years. The current $43.7 million award, spanning from late 2021 to early 2026, represents a significant but potentially typical annual outlay for sustainment of a major aircraft platform. Without prior contract data, it's difficult to ascertain if this represents an increase, decrease, or stable level of investment. Factors influencing historical spending would include fleet size, operational tempo, modernization efforts, and the specific services included in previous contracts.

How does the firm fixed-price (FFP) structure impact risk for this contract?

The Firm Fixed Price (FFP) contract structure places the majority of the cost risk on the contractor, Lockheed Martin. This means the government agrees to pay a set price regardless of the contractor's actual costs incurred. For the government, this provides budget certainty and predictability, as the total cost is known upfront. The risk for the government lies in ensuring the FFP is fair and reasonable, especially in a sole-source environment where competition is absent. If Lockheed Martin's costs are lower than anticipated, they benefit from higher profit margins. Conversely, if their costs exceed the FFP, they absorb the loss. This structure incentivizes the contractor to manage costs efficiently to maximize profit.

What are the specific 'core services' covered under this contract?

The provided data abbreviates 'C-130J / CADDIE CORE SERVICES' but does not detail the specific services included. Typically, 'core services' for a major aircraft platform like the C-130J encompass a range of activities essential for maintaining operational readiness. This could include scheduled and unscheduled maintenance, repair and overhaul (ROH) of components, logistics support, technical data management, engineering support, and potentially software maintenance for onboard systems. The 'CADDIE' acronym might refer to a specific system or program within the C-130J's support structure. A comprehensive understanding would require reviewing the contract's statement of work (SOW).

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

The provided data indicates the contract was 'NOT COMPETED' and lists the contract type as 'sole-source'. Federal Acquisition Regulation (FAR) Part 6 outlines the policies for contracting without full and open competition. Common justifications include: only one responsible source exists with the unique capability to perform the work; the agency received fewer than two offers in response to a solicitation for a sole-source requirement; or the award is made pursuant to statutory authority. For Lockheed Martin and the C-130J, the justification likely stems from their status as the original equipment manufacturer (OEM) and the sole entity possessing the proprietary technical data, specialized tooling, and expertise required for certain core sustainment functions. A formal Justification and Approval (J&A) document would detail the specific rationale.

What is the potential impact of the contract's duration (1533 days) on overall program costs?

The contract duration of 1533 days, approximately 4.2 years, provides a substantial period for the Air Force to receive critical C-130J core services from Lockheed Martin. From a cost perspective, a longer duration can offer stability and predictability, potentially allowing for better long-term resource planning for both the government and the contractor. It may also enable the contractor to achieve economies of scale in their operations. However, a long duration, especially in a sole-source context, also carries the risk of price escalation or locking the government into a potentially non-optimal price if market conditions or technology evolve significantly during the contract period. Regular performance reviews and potential for contract modifications would be key oversight mechanisms.

Industry Classification

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

Product/Service Code: SPECIAL STUDIES/ANALYSIS, NOT R&D › SPECIAL STUDIES - NOT R and D

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: $43,755,646

Exercised Options: $43,687,402

Current Obligation: $43,687,402

Subaward Activity

Number of Subawards: 4

Total Subaward Amount: $1,239,627

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: FA862520D3000

IDV Type: IDC

Timeline