Department of Defense awards $95.4M contract for C-130J aircraft manufacturing support to Lockheed Martin Corp

Contract Overview

Contract Amount: $95,443,018 ($95.4M)

Contractor: Lockheed Martin Corp

Awarding Agency: Department of Defense

Start Date: 2023-07-21

End Date: 2027-03-31

Contract Duration: 1,349 days

Daily Burn Rate: $70.8K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: C-130J / COMBINED AIRCRAFT DELIVERY DEVELOPMENT INTEGRATION AND ENGINEERING (CADDIE) DMSMS A3 GROUPING

Place of Performance

Location: MARIETTA, COBB County, GEORGIA, 30063

State: Georgia Government Spending

Plain-Language Summary

Department of Defense obligated $95.4 million to LOCKHEED MARTIN CORP for work described as: C-130J / COMBINED AIRCRAFT DELIVERY DEVELOPMENT INTEGRATION AND ENGINEERING (CADDIE) DMSMS A3 GROUPING Key points: 1. Contract awarded to incumbent for ongoing support, raising questions about competitive pricing. 2. Sole-source award limits opportunities for market-driven cost efficiencies. 3. Long contract duration (over 3 years) necessitates careful performance monitoring. 4. Focus on aircraft manufacturing support indicates a critical role in fleet readiness. 5. The contract's value is significant within the specialized aircraft manufacturing sector. 6. Potential for cost overruns exists given the Cost Plus Fixed Fee pricing structure.

Value Assessment

Rating: fair

The contract value of $95.4 million for C-130J aircraft manufacturing support appears substantial. Without specific benchmarks for this type of specialized support, a direct value-for-money assessment is challenging. However, given the sole-source nature, there's a risk that the pricing may not reflect the most competitive market rates. The Cost Plus Fixed Fee (CPFF) structure, while common for complex development and engineering, can lead to higher costs if not managed diligently, as contractor overhead and profit are factored in.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis to Lockheed Martin Corp. This means that the Department of the Air Force did not conduct a competitive bidding process, likely due to the specialized nature of the work and the incumbent's existing role in the C-130J program. The lack of competition limits the government's ability to leverage market forces to achieve the lowest possible price and potentially explore innovative solutions from a wider range of suppliers.

Taxpayer Impact: The sole-source award means taxpayers may not be benefiting from the cost savings that could arise from a competitive procurement. This could result in a higher overall expenditure for the required aircraft manufacturing support services.

Public Impact

The primary beneficiaries are the Department of the Air Force and potentially other C-130J operators who rely on the aircraft's continued operational readiness. The contract delivers essential engineering, integration, and logistics support for the C-130J Super Hercules aircraft. Geographic impact is primarily centered around Lockheed Martin's facilities, likely in Georgia, where the C-130J is manufactured and supported. Workforce implications include the continued employment of skilled engineers, technicians, and support staff at Lockheed Martin.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition.
Cost Plus Fixed Fee structure may incentivize higher costs if not closely monitored.
Long contract duration increases exposure to potential cost escalations over time.

Positive Signals

Award to incumbent ensures continuity of critical support for the C-130J program.
Focus on integration and engineering suggests a deep understanding of the aircraft's complex systems.
The contract supports a vital military transport aircraft, contributing to national security.

Sector Analysis

The aircraft manufacturing sector is characterized by high barriers to entry, significant capital investment, and long product development cycles. This contract falls within the specialized segment of military aircraft sustainment and modification. Comparable spending benchmarks are difficult to ascertain without detailed knowledge of specific support requirements, but large sole-source contracts for established platforms like the C-130J are not uncommon, reflecting the specialized expertise and proprietary knowledge held by the original equipment manufacturer.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Furthermore, the prime contractor, Lockheed Martin, is a large aerospace corporation. While large prime contractors are often required to subcontract a portion of their work to small businesses, the specific subcontracting plan for this contract is not detailed here. The absence of a direct set-aside means small businesses are less likely to be directly awarded this specific contract, though they may participate as subcontractors.

Oversight & Accountability

Oversight for this contract will likely be managed by the Department of the Air Force contracting and program management offices. Accountability measures would be embedded within the contract's performance work statement and reporting requirements. Transparency may be limited due to the sole-source nature, but contract modifications and performance reviews would be subject to internal review. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

C-130J Super Hercules Sustainment
Aircraft Logistics Support Contracts
Defense Aviation Engineering Services
Military Aircraft Manufacturing and Integration

Risk Flags

Sole-source award
Cost Plus Fixed Fee contract type
Potential for cost overruns
Lack of competitive pricing pressure

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $95.4 million to LOCKHEED MARTIN CORP. C-130J / COMBINED AIRCRAFT DELIVERY DEVELOPMENT INTEGRATION AND ENGINEERING (CADDIE) DMSMS A3 GROUPING

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 $95.4 million.

What is the period of performance?

Start: 2023-07-21. End: 2027-03-31.

What is Lockheed Martin's track record with C-130J support contracts?

Lockheed Martin is the original equipment manufacturer (OEM) of the C-130J Super Hercules and has a long-standing relationship with the U.S. Air Force for its sustainment and upgrades. Their track record typically involves extensive experience in managing complex aircraft programs, including engineering, logistics, and supply chain support. Historically, they have been responsible for ensuring the operational readiness of the C-130J fleet. Performance metrics and past delivery orders under similar contracts would provide a more granular view of their recent performance, including on-time delivery, cost control, and technical issue resolution. However, specific details on past performance for this exact 'CADDIE DMSMS A3 GROUPING' are not publicly available in this data snippet.

How does the pricing of this contract compare to similar aircraft support contracts?

Direct comparison of pricing for this specific contract is challenging without access to detailed cost breakdowns and market intelligence for similar sole-source support agreements. The 'CADDIE DMSMS A3 GROUPING' contract is for specialized engineering, integration, and logistics support for the C-130J. Pricing for such services is heavily influenced by the proprietary nature of the technology, the required expertise, and the incumbent's established role. Given it's a sole-source award to Lockheed Martin, the pricing is likely based on their established rates and historical costs, rather than a competitive market benchmark. A fair comparison would require analyzing other sole-source contracts for similar platform support from different OEMs or, ideally, competitive bids for comparable services.

What are the primary risks associated with this sole-source contract?

The primary risks associated with this sole-source contract include potential lack of price competition, leading to higher costs for the government compared to a competitively procured contract. There's also a risk of contractor complacency, where the absence of competitive pressure might reduce incentives for efficiency and innovation. Furthermore, the Cost Plus Fixed Fee (CPFF) pricing structure carries inherent risks of cost overruns if the contractor's costs exceed initial estimates, although the fixed fee provides some predictability for the contractor's profit. Dependence on a single supplier for critical support also poses a supply chain risk if Lockheed Martin faces production issues or disruptions.

How effective is the C-130J program, and does this contract contribute to its effectiveness?

The C-130J Super Hercules is a highly versatile and widely used tactical airlifter, considered effective for a range of missions including troop and cargo transport, humanitarian aid, and special operations. Its effectiveness is crucial for global reach and rapid deployment capabilities. This contract, focused on 'COMBINED AIRCRAFT DELIVERY DEVELOPMENT INTEGRATION AND ENGINEERING (CADDIE) DMSMS A3 GROUPING,' directly contributes to the program's effectiveness by ensuring the continued engineering support, integration of new capabilities or modifications, and overall sustainment of the C-130J fleet. Without this type of support, the aircraft's reliability, maintainability, and ability to meet evolving mission requirements would be compromised.

What are the historical spending patterns for C-130J support by the Department of Defense?

Historical spending patterns for C-130J support by the Department of Defense have been substantial, reflecting the large fleet size and long operational life of the aircraft. The DoD consistently invests billions of dollars annually in aircraft sustainment, including maintenance, repair, overhaul, spare parts, and engineering support for platforms like the C-130J. Spending often involves a mix of competitively awarded contracts for common parts and services, and sole-source contracts with the OEM (Lockheed Martin) for specialized technical support, upgrades, and unique components. The total spending fluctuates based on modernization programs, fleet readiness requirements, and the age of the aircraft.

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: $95,443,018

Exercised Options: $95,443,018

Current Obligation: $95,443,018

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