DoD awards $118M sole-source contract for C-130J aircraft systems support to Lockheed Martin

Contract Overview

Contract Amount: $118,248,309 ($118.2M)

Contractor: Lockheed Martin Corp

Awarding Agency: Department of Defense

Start Date: 2026-06-01

End Date: 2028-05-31

Contract Duration: 730 days

Daily Burn Rate: $162.0K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: C-130J/DMS A2 GROUPING (SMDPS, CMDUS, MFCDS, AMUS, CNBPS, DCUS)

Place of Performance

Location: MARIETTA, COBB County, GEORGIA, 30063

State: Georgia Government Spending

Plain-Language Summary

Department of Defense obligated $118.2 million to LOCKHEED MARTIN CORP for work described as: C-130J/DMS A2 GROUPING (SMDPS, CMDUS, MFCDS, AMUS, CNBPS, DCUS) Key points: 1. Contract awarded on a sole-source basis, limiting competitive pricing benefits. 2. Significant value suggests critical support for a key military aircraft platform. 3. Cost-plus-fixed-fee structure may incentivize cost escalation. 4. Long-term contract duration indicates ongoing need for these specialized services. 5. Focus on aircraft manufacturing and support places it within a high-value defense sector. 6. No small business set-aside indicates a focus on large prime contractor capabilities.

Value Assessment

Rating: fair

The contract value of $118.2 million for C-130J aircraft systems support is substantial. However, without comparable sole-source contracts for similar specialized systems, a precise value-for-money assessment is challenging. The cost-plus-fixed-fee (CPFF) pricing structure, while common for complex R&D or support, carries inherent risks of cost overruns compared to fixed-price contracts. Benchmarking against industry standards for aircraft systems maintenance and sustainment would be necessary for a more definitive value assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. This typically occurs when a single contractor possesses unique capabilities, intellectual property, or is the original equipment manufacturer, as is likely the case with Lockheed Martin for the C-130J. The lack of competition means that price discovery through market forces was not utilized, potentially leading to higher costs for the government.

Taxpayer Impact: The absence of competition means taxpayers may not benefit from the cost savings that could arise from a competitive bidding process. The government relies on negotiation and oversight to ensure fair pricing in sole-source situations.

Public Impact

The U.S. Air Force benefits from continued operational readiness of its C-130J Super Hercules fleet. Services include support for various integrated systems (SMDPS, CMDUS, MFCDS, AMUS, CNBPS, DCUS) essential for aircraft functionality. The contract's geographic scope is likely global, supporting deployed C-130J aircraft. This contract supports high-skilled jobs within the aerospace and defense industry, primarily at Lockheed Martin.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially increasing costs for taxpayers.
Cost-plus-fixed-fee contract type can lead to cost overruns if not closely managed.
Long contract duration (2 years) requires sustained oversight to ensure performance and cost control.
Reliance on a single contractor for critical systems support creates vendor lock-in.

Positive Signals

Award to incumbent contractor (Lockheed Martin) ensures continuity of essential support for a critical aircraft.
Contract specifies support for multiple key systems, indicating comprehensive sustainment.
Clear end dates provide a defined period for service delivery and future planning.

Sector Analysis

The aerospace and defense sector is characterized by high barriers to entry, significant R&D investment, and long product lifecycles. Aircraft manufacturing and sustainment, particularly for military platforms like the C-130J, represent a substantial segment of this market. Spending in this area is driven by national security requirements and the need to maintain aging fleets. Comparable spending benchmarks would involve analyzing other sustainment contracts for major military aircraft programs, which often run into hundreds of millions or billions of dollars over their lifespan.

Small Business Impact

This contract was not competed with a small business set-aside and was awarded directly to Lockheed Martin Corporation, a large prime contractor. There is no indication of subcontracting plans for small businesses within the provided data. This suggests that the specialized nature of the support required is likely handled by the prime or its large subcontractors, with limited direct opportunities for small businesses on this specific award.

Oversight & Accountability

Oversight for this contract will primarily reside with the Department of the Air Force contracting and program management offices. Accountability measures will be tied to the performance standards within the Cost Plus Fixed Fee (CPFF) contract. Transparency may be limited due to the sole-source nature, but contract modifications and performance reports should be available through federal procurement databases. The Inspector General's office within the Department of Defense would have jurisdiction over any potential fraud, waste, or abuse.

Related Government Programs

C-130J Super Hercules Sustainment Programs
Aircraft Parts and Auxiliary Equipment Manufacturing
Defense Logistics Support Services
Military Aircraft Maintenance and Repair
Aerospace Systems Support Contracts

Risk Flags

Sole Source Justification
Cost-Plus-Fixed-Fee Pricing Risk
Potential for Cost Overruns
Lack of Competitive Benchmarking

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $118.2 million to LOCKHEED MARTIN CORP. C-130J/DMS A2 GROUPING (SMDPS, CMDUS, MFCDS, AMUS, CNBPS, DCUS)

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 $118.2 million.

What is the period of performance?

Start: 2026-06-01. End: 2028-05-31.

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, established track record of providing sustainment, upgrades, and support services for this aircraft platform globally. Their history includes numerous contracts with the U.S. Air Force and international partners for various aspects of C-130J operations, maintenance, training, and system integration. This includes managing complex supply chains, providing technical expertise, and ensuring fleet readiness. Given their OEM status, they possess unique institutional knowledge and proprietary data essential for supporting the aircraft's specialized systems, making them the logical, and often sole, provider for certain critical support functions.

How does the $118.2 million value compare to similar C-130J support contracts?

The $118.2 million value for a two-year contract (2026-2028) for specific C-130J systems support is significant but falls within the expected range for sustainment of major military aircraft components. Annual sustainment costs for large fleets can easily reach tens or hundreds of millions of dollars, depending on the scope of services, number of aircraft supported, and complexity of systems. For instance, broader C-130J sustainment contracts, encompassing logistics, maintenance, and upgrades for the entire fleet, have historically been valued in the hundreds of millions to billions of dollars over longer periods. This specific award appears to cover specialized systems, suggesting it's a component of a larger overall sustainment strategy.

What are the primary risks associated with this sole-source, cost-plus-fixed-fee contract?

The primary risks associated with this sole-source, cost-plus-fixed-fee (CPFF) contract are twofold. Firstly, the sole-source nature eliminates competitive pressure, potentially leading to higher prices than if the contract were competed. The government relies heavily on negotiation and robust cost analysis to mitigate this. Secondly, the CPFF structure, while providing flexibility for evolving requirements, can incentivize the contractor to incur higher costs, as their fee is a percentage of the total cost. This necessitates stringent oversight from the government to monitor expenditures, control scope creep, and ensure that costs are reasonable and allocable to the contract's objectives. Without diligent management, cost overruns are a significant risk.

How effective is the Air Force likely to be in overseeing this contract?

The effectiveness of the Air Force's oversight will depend on several factors, including the availability of skilled contracting officers and technical representatives, the robustness of their cost-monitoring systems, and the clarity of performance metrics defined in the contract. Given Lockheed Martin's long-standing relationship and OEM status, the Air Force likely has established processes for managing such contracts. However, the inherent complexities of CPFF and sole-source awards require continuous vigilance. Effective oversight involves regular audits, performance reviews, and proactive communication to ensure that the contractor is delivering required services efficiently and that costs remain within acceptable parameters, aligning with the government's best interests.

What are historical spending patterns for C-130J sustainment?

Historical spending patterns for C-130J sustainment by the U.S. Air Force and other operators have consistently involved substantial, multi-year commitments. These contracts typically cover a range of services including depot maintenance, component repair and overhaul, spare parts provisioning, technical data, engineering support, and sometimes fleet management software. Annual spending can range from tens to hundreds of millions of dollars per year, depending on the fleet size, age, operational tempo, and specific sustainment strategy employed (e.g., Performance-Based Logistics). The total lifecycle cost for operating and sustaining a fleet like the C-130J often runs into the billions of dollars, reflecting the long-term investment required for such critical assets.

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: $118,248,309

Exercised Options: $118,248,309

Current Obligation: $118,248,309

Subaward Activity

Number of Subawards: 10

Total Subaward Amount: $2,808,511

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